Government interventionist policies can have a short-term adverse effect on economic productivity and growth, but almost all the positive effects of government intervention have a latency if 30-40 years. Most of what we call "austerity" is the reduction or removal of interventions with adverse effects. However, the positive effects are likely to take more then five years to unfold. Annual fluctuations are more about the emotional volatility of investors, not about the fundamentals on which long-term growth must rest.

The way to think about austerity is as a way to bring consumption by unproductive members of society down to sustainable levels. Present levels are far from sustainable. The only such imbalance that is sustainable in the long-term is consumption by children who can eventually be expected to repay the investments in their upbringing, but even that can be unsustainable if there are too many children.

Annual economic indicators are useless, even dangerously misleading, as guides for policy planning.