A hair shirt is an uncomfortable, scratchy shirt that is worn for religious reasons. Making yourself uncomfortable makes you more aware of your sins. I've never heard of "hair shirt economics", but I think it means to cut spending and balance the budget, even if it makes people unhappy. It is painful, but good for you.

A hair-shirt is a shirt with hair on the inside. Apparently it is extremely irritating to the skin, and I think it also causes infections. Some Christian monks wore it in Medieval (that is, the period 500-1200) Europe. This is a form of asceticism, which is an aspect of many cultures ('rites of passage') and religions, for example Hinduism. In religion, the purpose is to build discipline I guess - but much more than that, the purpose is to have experiences said to be of a spiritual or mystical type. Also, it is fair to say that the human body, and the worldly life (as opposed to the afterlife in heaven), have often been scorned in many forms of Christianity (a philosophy I disagree with, personally). Therefore it was sort of considered intrinsically good to harm the 'sinful' body. These negative views on the body and worldly life are usually considered fairly silly and extreme in the modern West, by both Christians and non-Christians, and ascetic practices are usually considered extreme and bizarre. So, if I call a person's economic views 'hair-shirt economics', that means they think a certain policy is painful but necessary, but I think it is not necessary at all. I might say, 'the US must start paying down its national debt by 2012 - this will be painful, but a default in 2025 will be even worse'. Another person might say, 'no, the US can (and should) still borrow more - that's just hair-shirt economics'. Someone might say 'we must do ____ in order to stop inflation - this will hurt the economy somewhat, but in the long run inflation will be far worse. Another person with a different opinion says, 'a little inflation is not going to be seriously harmful, but doing _____ certainly will be - this is hair-shirt economics'.

um, well. lemonade (not lemon-aid) is a drink made out of the juice of lemons.. i don't know the other one.