“We have abandoned the common good. We have been stripped of our rights and voice. Corporations write our laws and determine how we structure our society. We have all become victims. There are no politicians or institutions, no political parties or courts, that are independent enough or strong enough to resist the corporate onslaught. Greater and greater numbers of human beings will be consumed. The poor, the vulnerable, the undocumented, the weak, the elderly, the sick, the children will go first. And those of us watching helplessly outside the gates will go next.” –Chris Hedges. When you understand the key purposes for Austerity Measures, referred to euphemistically in the U.S. as “Sequestration”, “Deficit Reduction”, “Entitlement Reform”, “Fiscal Responsibility” and “Increasing payroll tax “, are to “(1) shift the burden of paying for crisis and bailouts (from the creditors/creators of the crisis), onto the total population, (2) reduce the economic footprint (privatization/monetization) of the government, and (3) reduce creditors(/crisis creators)‘ concerns about rising US debt levels.” Richard Wolff, you begin to see that this urgent and well reported “debate” over Sequestration is just the latest installment of U.S. Government Kabuki Theater. The White House and Congress twice agreed to go into sequestration in 2011. Both sides are not talking, they are preparing for the list of cuts and positioning for the public relations disaster afterwards. There is a high probability that these cuts will go into effect. Even in the face of mountains of evidence from past and present day Europe that austerity does not enable economic growth, but does increase the potential for violence and social unrest. Austerity functions primarily as means by which the international banking cartels and the transnational corporate network ensures attractive returns on their investments/looting/fraud/market manipulation. It enriches those in the 1% at the expense of the poor, elderly, & disenfranchised. It fails to address one essential factor that accompanies the current depression. Inequality. Inequality and wealth concentration has equaled and exceeded levels reached in the last Great Depression. Raising the minimum wage a paltry $1.75 will have no significant effect on inequality or quality of life among the nearly 1 in 2 Americans living in or near poverty. There is no addressing of the hidden tax of rising food prices created by the creditors/creators of the crisis’ unregulated and dangerous speculation on commodities markets. Austerity measures will actually make life significantly worse for the poor and less fortunate, creating more sick people, less housing, more hunger, less safety. This is the first in a series of points of danger for our economy, enshrined in a series of laws which are the result of every accommodation the president has made over the last year and a half. Over the next 10 weeks, we will lurch from crisis to crisis, and the economic decision-making apparatus will remain in chaos through his deference. The “least” among us are being sacrificed. Who will be next?”
By Richard D. Wolff @ Truthout:
Austerity policies include various combinations primarily of government spending cuts and secondarily of general tax increases. Republicans and Democrats have endorsed austerity since 2010. Austerity was the result of their deal on taxes last December 31: increasing the payroll tax on wages and salaries from 4.2 to 6.2 percent. Austerity is what they are negotiating now in regard to federal spending cuts.
After 2010, with “recovery” underway for them following bailouts for them, large private capitalist interests focused on three key interests. First, they wanted to ensure that the bailouts’ costs were not paid for by higher taxes on corporations and the rich. By stressing government spending cuts and broad-based tax increases, austerity policies serve that interest. Second, they worried about crisis-heightened government economic intervention and power and wanted to reduce them back to pre-crisis levels. Austerity’s focus on reduced government spending lessens the government’s economic footprint. Third, because big banks and other large capitalists are among the major creditors of the US government, they wanted signs that their crisis-increased holdings of US debt were safe investments for them. Austerity policies provide just those signs, as we shall show.
Austerity in the US, unlike in Europe, is renamed and packaged for the public as “deficit reduction programs” or “fiscal responsibility.” Distractions such as “fiscal cliffs” and “debt ceilings” focus public attention on mere secondary details of austerity. Politicians, media and academics use such distractions to wrangle over whose taxes will go up how much and which recipients of government spending will suffer what size cuts. They do not debate austerity itself; that is, they do not debate very idea of raising mass taxes and cutting spending in a deep and long economic downturn. They do not explore the interests served and undermined by any austerity policy. So we will.
Austerity promoters repeatedly insist that the dominant economic problem today is government budget deficits. They ignore why those deficits occurred (the crisis plus bailouts). They demand that both parties and the media endorse austerity because cuts in government spending and increased taxes will reduce deficits. They hype austerity as the solution all must embrace. Otherwise, they fear, a different and dangerous logic might win popular support. In that logic, since capitalism regularly causes crises that cause deficits, another solution for deficits would be changing from capitalism to another economic system not beset by regular crises.
Austerity policies, we are told, will reduce deficits and thereby meet what “the credit market” demands. In other words, those who have lent to the US government (by buying its debt securities) want guarantees of interest and repayment. By cutting government spending and raising taxes, austerity policies redirect government funds to the government’s creditors, thereby reassuring them.
Distracting references to an anonymous “market” avoid identifying the government’s creditors. However, major creditors holding US public debt are easy to list: large banks, insurance companies, large corporations, wealthy individuals and central banks around the world. Austerity justified as satisfying “the market” in fact serves those US creditors first and foremost.
Austerity is thus the policy preferred by the private capitalist interests that (1) brought on the crisis, (2) secured the government bailouts almost exclusively for themselves, and (3) are that government’s chief creditors. Led by major banks, those interests now threaten the government (that just bailed them out) with higher interest rates or no more credit unless it imposes higher taxes (mostly on others) and reduced spending (mostly on others) to lower its deficits. Distracting struggles over “fiscal cliffs” and “debt ceilings” serve nicely to disguise the reality that both parties’ austerity policies represent and illustrate gross government subservience to large capitalists.
Austerity, US style, has its Keynesian economist critics. They point out that the United States has been able to borrow trillions at historically low interest rates through this crisis. US deficits have not worried “the market” at all. Policies should therefore not be driven by deficits. Keynesians insist that raising mass taxes and cutting spending during an economic downturn will reduce outlays on goods and services by taxpayers and government, thereby worsening unemployment. They thus ridicule the argument that austerity, by cutting deficits, will stimulate investment by capitalists.
For Keynesians, austerity is thus unneeded and counterproductive. They prefer to exit the crisis by more stimulus (lower taxes and higher government spending) funded by higher deficits. The resulting economic growth, they believe, will automatically lower government budgetary imbalance. The government can then later, if and when needed, impose tax increases and reduce government spending to shrink deficits. In a growing economy, austerity policies avoid the devastating effects they have in depressed economies (as shown by the recent histories of Greece, Portugal, the UK and others).
Setting aside the question of the validity of Keynesian arguments, they miss key purposes of austerity policies. Those policies do not primarily seek to overcome crisis or resume economic growth. Rather, as argued above, they aim chiefly to (1) shift the burden of paying for crisis and bailouts onto the total population, (2) reduce the economic footprint of the government, and (3) reduce creditors’ concerns about rising US debt levels. If austerity policies achieve these objectives, their failure to end the crisis quickly is a price that corporations and the rich are more than happy to pay (or rather, have others pay).
That Republicans and Democrats concur on austerity and differ only on its secondary details testifies to what they share. Both depend financially on capitalist corporations and their top executives. Both serve and never question capitalism. For all the victims of capitalism today – the unemployed, those foreclosed out of their homes, those with reduced job benefits and job security, students with unsustainable schooling debts and poor job prospects, millions without medical insurance, and so on – supporting those parties perpetuates their victimization.
The Oldspeak Journal 