Why did the practise of Austerity in domestic economics spread with the advent of neoliberalism? Neoliberal institutions which preach reduced trade barriers also impose austerity.
I understand that Reagan and Thatcher used austerity to lower inflation. But Reagan cutting taxes was literally the only time tax cuts on rich and austerity which is a consequence of those cuts meant more prosperity for others via trickle down, as Paul Krugman, demonstrates in his book, after post-Reagan presidents like Bush, W Bush, Trump cut taxes it didn't lead to the SAME economic boom as Reagan because there was no investment boom:
This is because:
- Reagan cutting taxes was accompanied by interest rate changes of the FED which had earlier imposed a recession, which was mainly what caused the boom
- Cutting taxes from highs of 90% to new drastic lows can lead to a boom but cutting corporate taxes from 29 - 23% is not a 90-50 drop therefore when Bush Sr., Bush Jr., Trump etc. followed the same trickle down policy there was no investment growth.
So does it logically follow that free trade between countries must lead to decreased social services for healthcare, transit etc. I do understand social services generally mean govt. monopoly therefore violating the free market. Is that it ?
Can social democracies not be successful in international trade ?