It's been all the talk, nay, all the rage at the G-20 talks in Toronto.
It's all about cut, cut, cut.
And why? Because of the current global financial crisis (read: meltdown), of course. We're all told again and again and again in the media about how bad many developed countries' public finances are and how it is so necessary for austerity measures to be introduced so that the 'deficits' can be brought under control.
It all sounds so utterly convincing - if one hears it enough times (and, boy, don't we just). After all, the finances of a country need to be 'balanced', right?
Wrong.
This current obsession with 'balancing the books' of countries so that debt levels can be somehow 'stabilized' is NOT the only solution to governments around the world. Yet, the way many leaders and 'economic experts' (now there's perhaps the biggest oxymoron of our times...) speak, one would believe that only by slashing away at any public spending are governments going to get out of their current debt spiral.
This austerity obsession, deliriously manic in its 'all-or-nothing' worldview, has taken its grip. And it will not let go. Thus the need to dissect just what all this austerity will actually mean:
- slashed public (read: government) spending on health
- slashed public spending on education
- slashed public spending on infrastructure
- slashed public spending on social services
- slashed public spending on social upliftment programmes
- slashed public spending on single mothers
- slashed public spending on poor children
- slashed public spending on the poor - period
- slashed everything that creates any semblance of a welfare, communitarian state
- more selling of public (government-owned) assets
- more privatization, including of public utilities
- more 'open markets' (i.e. to foreign, cheaper imports)
- less trade barriers of any kind - whatsoever
- diminished unionization and union powers
- 'liberalization' of labour laws (as if workers being protected and having minimum rights somehow needs to be 'liberated')
- less restrictions on banks and other financial institutions
Friedman is thankfully dead, but his nihilistic vision of economics is alive and well, i.e. the market always 'knows best', the market should be left completely unregulated, there should be no government interference in the market, etc. That magic 'market' that knows best and will make all of our lives so much better. You know - all that utter neoconservative economic crap that got us into this whole mess in the first place...
The very antithesis of Friedmanite economics is that of the Keynesians, the economic theory that dominated world economics and public financing from the 1930s until Friedman started to rear his ugly, perverse head in the 1970s.
We can thank the brilliant British economist John Maynard Keynes (in the photo) for his brand of 'caring capitalism' economics. Brilliant because the Americans stuck in the nightmare of the Great Depression in the early 1930s can thank Keynes for getting them out of it. The New Deal anyone? Where the hell do people think Franklin D. Roosevelt got the idea to pump money into the American economy with huge public works, thereby creating jobs and new prosperity?
The post-World War II Marshall Plan, not to mention the social welfare-based market economies of Western Europe from 1945 to the 1980s, were entirely Keynesian in theory and practice.
Where the Friedmanite (aka monetarists) cultists dictate that in bad times one should switch off the public spending taps, Keynesians believe that governments should spend, spend, spend. Keynesian theory says that in order to create wealth one must spend money to do so. Pump the economy full of cash, even if it creates more initial public debt.
Friedmanites, cultish to the hilt in their governments-out-of-markets-at-all-times hysteria, say this is madness. Debt is debt and debt is bad, they preach. So, it's slash, slash, slash for them.
Oh, but do make sure that the banks and stock markets remain completely unregulated so that they can run riot like the financial terrorists that some of them wish to be...and plunge us into this crisis all over again.
Yeah, the Friedman approach makes perfect sense.
And so we now live in this surreal and schizophrenic world of contemporary global finance and public spending. On the one hand, governments have pumped huge amounts of public money into the economy. That's Keynesian, whichever way you look at it. Except they've thrown all the money at the speculators and at the rogues (i.e. the banks, investment houses, etc), rather than benefiting the savers and those needing work in the economy. Ummmm, Keynes would not have approved.
On the other hand, governments resolutely refuse to really clamp down on banks, financial institutions on the whole, stock markets, etc. It's all been so wimpish, so piecemeal, so ineffective. And, worse still, now plunged into further debt because of bailing out banks, governments all over now insist on slashing public spending so that they can 'control the public debts'...!!! They simply can't seem to get out of the Friedman horror show that has gripped the world's economic imagination since the 1980s.
Hence the current economic schizophrenia.
It's madness. Just yesterday on the Keiser Report on Russia Today TV, Ellen Brown, who has written the critically acclaimed book "Web of Debt" (which I absolutely must read ASAP), spoke of how ridiculous it was that the new British government have been quoted as saying that they will need to slash spending in order to save the welfare state. She stated that warped logic was akin to "starving the patient even more in order to save the patient." In a word - preposterous.
Governments do NOT need to slash public spending in order to jumpstart ailing and debt-ridden economies. On the contrary - more than ever, they need to inject huge amounts of money into protecting those who save and don't merely speculate and, more importantly, making huge investments in job creation, skills development and other socio-economic programs. Yes, a country will get into more debt. A lot more debt even - without a doubt. Initially, that is. But at least the 'stimulus plan' will be effective in the long run - more jobs actually created, more spending power as a result by all citizens, more sustained growth.
The 1930s New Deal anyone?
AND, most importantly, at least public money will be kept in the public domain for the public good and not handed over to the robber barons just so that they can loudly say NO whenever anyone asks to borrow some of 'their' precious money (which is actually the public's, but anyway)...
Austerity is not inevitable. Austerity is not the only way.
Austerity. It's the 'A' word that should be an 'F' word.
Do you get my point?