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just say no [to austerity measures]

October 29, 2012

Almost a year ago, I read an article in the Nation about the rise of the ‘austerity class’ and the growing popularity of deficit reduction measures in political discourse called “How the Austerity Class Rules Washington.” It got me thinking about how the inherent contradictions within capitalism that give rise to crises always seem to put government into a tricky position. On the one hand, it makes sense, especially from the point of view of a household, to have a ‘balanced budget,’ i.e., to be ‘austere’ today and save any discretionary income for future hardships, invest it for future returns, or both. And, utilizing this rather ‘common sense logic,’ people want their government to be ‘responsible’ and have a balanced budget just like any household should.

The problem with this type of approach, however, is that if everyone is saving and investing on a national scale (i.e., not consuming), or if they have little in the way of discretionary income to begin with, especially in the midst of an economic downturn, higher unemployment will result due to lack of demand, and the value of any investments will be greatly reduced since no one’s consuming the goods and services being produced. When this inevitably happens, people begin to scream at the government to do something, which either means some kind of conservative austerity plan to reduce spending and increase investments, or else some kind of liberal stimulus plan to promote aggregate demand and boost employment.

Unfortunately, neither solution can eliminate the contradictions within capitalism that naturally lead to boom and bust cycles and financial crises; but the latter makes far more sense to me in that it helps boost employment, which further stimulates demand and speeds recovery, and doesn’t come at the expense of people who need help the most in the form of cuts to things like food stamps, low-income housing, Medicaid, Pell grants, and unemployment insurance, which is precisely the kind of spending conservative austerity plans tend to target. But instead of the latter, all I’ve been hearing during the current election cycle is a lot of austerity talk, much of it directed towards social programs like Medicare and Social Security.

I’m not really a huge fan of Paul Krugman, but I think he brings up a fairly decent (albeit obvious) point in an op-ed he wrote earlier in the year called “The Austerity Agenda” that was originally made by John Maynard Keynes 75 years ago: that by pumping money into the system during slumps, the government can stimulate aggregate demand and help put people back to work in times of economic decline, and their subsequent spending will further help speed economic recovery. And conversely, that ‘starving the beast’ (i.e. the government) will most likely do little besides prolong and/or exacerbate the slump of an already depressed economy.

The bottom line is that austerity measures, particularly in combination with lower taxes on the wealthy and fewer regulations for corporations, ultimately hurt the working class and poor, eroding years of hard won gains by the latter while strengthening the former’s capacity to accumulate more profit, as well as letting them off the hook for their greed and irresponsible behaviour. By “using deficit panic as an excuse to dismantle social programs,” then, capital and the oligarchical ruling class have essentially found a way to utilize austerity measures as a means of privatizing gains and socializing losses under the guise of, ironically, fiscal responsibility.

The financial crisis of 2008 and the ensuing recession did a lot of damage the economy, from destabilizing financial institutions and the housing market, leading to failures and foreclosures, to creating chronic unemployment across the country. And the impact from that was further exacerbated by a federal deficit largely created by two unfunded wars and tax cuts for the wealthy (thanks, GWB!). But instead of attacking the bloated military budget in any significant way, raising taxes on the wealthy and corporations (which are at historically low levels), and instituting strong financial reforms (instead of lukewarm reforms like Dodd-Frank), the trend has been to gradually take it out on the backs of the elderly, the poor, students, and the working class via austerity measures aimed at cutting spending on things like education, healthcare, transportation, etc.

I think that’s the wrong approach, and I urge everyone else who also thinks it’s the wrong approach to be more vocal about it. Vote for candidates who’ll stand with working people to oppose these kinds of measures. Start writing your current representatives and tell them that you oppose these kinds of measures and want them to support different solutions. And if you have the time, join other like-minded individuals demonstrating against austerity cuts and for things like an end to war and a smaller military budget, an end to the Bush-era tax cuts, higher taxes on large corporations and capital gains, and other solutions that don’t target an already beleaguered working class or the members of our society who need government help the most.

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