It seems the Austerians have managed to move Europe’s economy toward another recession. Right now we are enjoying lower gas prices as a result, but there are Austerian sympathizers hard at work in US politics hell bent on following the EU into the abyss. I’m not sure what planet they’re on, but below is a short list of the belt-tightening I’ve already undergone thanks to conservative economic policies.
(US News) — Americans ought to understand this, because new pro-growth policies in Europe would require the same kind of stimulus spending that has fallen out of favor here. There’s a further complication: The countries that most need stimulus spending—Greece, Portugal, Spain, and Italy—would need to get it from richer northern European nations like Germany that aren’t in a giving mood. “Saying you want less austerity simply means you want Santa Claus, because you need funding and the markets will not fund you,” Citigroup chief economist Willem Buiter said at the recent Milken Institute global conference in Los Angeles. “It’s daydreaming.”
I wish I was daydreaming, I wish Santa was around. But this is all too real for millions of us. Here’s just a few of the thing I haven’t bought since Mr. Buiter and his zillionaire pals crashed the economy.
1. A sports jacket, new suit, or tie.
2. Dress shoes; the only shoes I’ve bought for the last few years are flip-flops and 1 pair of cheap tennis shoes.
3. Silverware or frying pan, pots, etc., of any kind.
4. Blender, coffee maker, or any kitchen appliance outside of a hand operated can opener.
5. Any vacation beyond sitting at home on a day off and damn little of that.
6. Gym membership, dental work, any kind of cologne or after shave.
7. A nice restaurant, overnight or weekend trip for pleasure, or any kind of haircut beyond the cheapest, rock bottom discount I can find.
This is just a partial list, I could go on for a long time. I drive a ten year-old truck, wear threadbare clothes, and live in a squalid, tiny studio apartment on the near poverty wages in the one job I could find that wasn’t a temp position with no benefits. And to get that low paying dead-end job I had to move half way across the country where I now toil away for an incredibly profitable company while making peanuts. I’m not sure where the Austerians think the millions of people like me are going to find room to ‘tighten our belt’. Another recession stacked on top of this disastser and for millions of us the next round of belt-tightening will mean we have the ‘freedom’ to choose between food, shelter, or medicine.
But if we don’t tighten our belts they might have to ask some billionaire to make do with a 98 meter yacht rather than the 100 meter one he wanted. And that would be, you know, the beginning of the end for civilisation.
The Austerians have also pushed the UK back into recession, quite independently of the Eurozone. But austerity itself is not the aim; it’s increasing economic inequality. That has been happening throughout the rich countries (and many of the poor ones – South America contains most of the exceptions) for over three decades now; to those responsible, you having to “toil away for an incredibly profitable company while making peanuts” is a feature, not a bug. There’s a strong argument that this growth in inequality was responsible for the financial crisis of 2007-8: demand was only kept up, as real incomes for most people fell, by an asset/credit boom, while huge amounts of liquid capital held by the tiny-fraction-of-1% sought ever new ways of making money out of money. But the response has been to call for cuts in wages, in pensions and in welfare (except for the banks), while the rich get richer still. We’ll see on June 17th if the Greek people have the courage to say “No!” – and it would take real courage. If they vote for the anti-austerity left, the Austerians will aim to punish them as severely as possible, to deter anyone else from following their lead.
In Canada, our government has taken a long term approach to austerity. They paid out stimulus money and ket the economy going during the worst of the recession. After that, they spent on the military and decreased taxes to businesses and high earners. Now they say they must lay off civil servants and decrease benefits to the lower income bracket. By running up the worst deficit since the 1970s, they have made it very difficult for any succeeding government to restore those benefits.
KG, it’s a little more complicated than that, e.g.:
http://uk.reuters.com/article/2012/05/25/uk-britain-economy-idUKBRE84N0N720120525
(Some other research I follow suggests that hours worked went up, so unless our collective productivity fell sharply, the official GDP figures are below where they really should be.)
A buddy of mine had the whole GOP speil down pitch perfect yesterday, right down to the ‘families have to tighten their belts, so does the government.’ It was an article of faith for him, he seemed emotionally wed to the concept, incapable of facing facts or accepting years of undisputed empirical experience that would threaten the rw mythology.
Given that, with the experience of the great depression and all, we know that austerity and expenditure cutting is not the answer and that Keynes gave us a sound theoretical basis for knowing why austerity is not the answer, one wonders why governments keep pushing this completely discredited course of action.
My own belief is that governments are conspiring with the oligarchs who control them to create and maintain a permanent peasantry who will form a semi-starving unprivileged mass that will be there to inspire fear in the middle-class and render them docile for fear of relegation to the peasantry. Shit, it worked for most of the economic history of the human race. Back to the days of the workhouse, starvation in the streets, near universal illiteracy and over 200 capital offenses….soon we shall all be playing Old Stephen to the Bounderbys that own the world.
In the US it’s part of the starve the beat and ratchet-down stratgey. The end goal is basically to eliminate all taxes and regulations, at least as far as super rich people go. One way to do that is to reduce government spending, particularly on programs that help the middle class and poor by taxing the rich. But that’s unpopular, so there’s a giant multilayered industry which basically fools people into voting agianst their own interests and for the super rich. One part of that industry works to bring out the deficit monster whenever needed to cut social spending. I imagine it’s the same in other nations.
cm’s changeable moniker,
The rise in government spending would presumably be from increased benefits as people are layed off, at least in part. As to the hours worked, I don’t know, but it’s apparently the fall in construction that has pushed the economy into recession. If the government knew any reason to cast doubt on the reality of the return to recession, we’d have heard plenty about it.