Thursday, August 18, 2011

4 lessons from the long (hot?) summer

Everyone seems to be writing top ten lists these I'll try a top four...

1. Austerity is not the answer

Perhaps the most ubiquitous news in the main stream media this summer surrounded the economy. This economic news is always written with assumptions that have nothing to do with the well being of most people. It typically sounds like this: Markets are dropping (or economic indicators are falling), this is unhealthy, we must all do more to ensure deficits are kept under control for the economy to return to "health". Of course "health" in the business section of most daily papers has nothing to do with earning a decent living for ordinary people, but rather profits for those with money to invest in stocks, bonds or other facets of the "market". This creates a completely biased picture of the world economy. It aims at convincing those of us with not so much to begin with that somehow we have to do some "belt tightening" to ensure that "markets" are back in shape (or said another way, to ensure that government debt is not "too high"). What is completely missing from this version of events is the fact that while the market has in fact failed to deliver to millions and millions of people, somehow it is us that should be expected to pay to fix the problems. In the US, this means "restructuring" of medicare and social security (READ reduce benefits and defer benefits until a later age). In Europe this means "austerity" in the form of massive cuts to social programs, government jobs and wages, and infrastructure. In Canada this means cuts to federal spending and further cuts to health care and education at the provincial levels - despite increasing demands/needs.

The "austerity" program is completely misplaced. In fact, cutting back on government spending during a recession is a recipe for prolonging that recession. It contracts the economy, reduces the amount of dollars available for spending (by cutting wages and reducing the numbers of government workers and those receiving unemployment benefits) and thereby reduces the tax revenues available to pay off government debt. The net effect is often a reduction in revenues resulting in an INCREASE in the debt to GDP ratio (rather than the purported reduction used as a rationale for cutting).

Moreover the "austerity" programs are patently unfair. They are a transfer of wealth to the rich from the poor. They are essentially a way to make the poor pay for the debt. If increased revenues are what is needed, the answer is to increase taxes on the wealthy - particularly at a time in history when the gap between the rich and poor has never been greater. There is plenty of wealth in the is that wealth that should be used to bear the burden of "fixing" the economy.

2. Social problems cannot be ignored

Much hay has been made of the London riots. They ought to be a wake up call. When hundreds and thousands of young people feel so despondent, and have so little invested in their local communities, we need to be looking beyond the behaviour and examining why a generation feels so alienated. It is more than simply looking at the cuts and joblessness and how these have impacted a whole layer of young people and their vision of the future - it is about the way our society has increasingly put profit before people. Commercialization, materialism, destruction of the planet. Cameron is right in one way about the "moral" issue - but it is in some sense his morals that are the problem - the morals that place the daily increase in stock market prices above the value of all citizens to a healthy and happy life.

3. We need more politics, not less

The downgrading of the US triple A rating supposedly due to the "bickering" of US politicians should be a warning sign that there is growing discontent amongst the moneyed classes for democratic institutions. I found it shocking that so many commentators in the main stream press blamed legitimate and necessary democratic discussion and actions as somehow "disruptive" to "fixing" the economy. This happened not only with reference to the US debt ceiling, but also with Greece and other parts of Europe where the citizens are speaking up loudly to oppose more and more severe austerity programs. Real democracy means accepting that the citizenry have a legitimate place to contest the actions of governments. Growing awareness in Europe that government actions have more to do with "who" will pay is testing the boundaries of liberal democracies. Even the HST referendum in BC is a small scale example of the people putting democracy to the test.

4. Defending social services is more critical than ever

In the midst of the fear mongering related to a "double dip" recession or the demographic challenges of the aging baby boomers, defending our social programs is more critical then ever. It was interesting to see how Germany is better able to deal with a contracting workforce because of their amazing employment insurance programs which make employers pay to keep a pool of money to retain workers at part time employment in times of contraction. This is in stark contrast to the massively increasing unemployment rolls in the US. Good social programs are essential to the well being of everyone and should be safeguarded and enhanced. Now is exactly the wrong time to eliminate or reduce them and the rationale that "the money isn't there" is just bogus. The money has been diverted into corporate profits and is enriching a very few at the expense of the many. Even the American "tea party"-ers recognize a good thing when they have it - so comes the ironic slogan "keep your government hands off my medicare".

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