THE WORLDWIDE AUSTERITY MADNESS

By Philip Loepfe

[This article published on the Basler Zeitung website April 1, 2011 is translated from the German on the Internet, bazonline.ch/wirtschaft/konjunktur/Der-weltweite-Sparwahnsinn/story/19519106/print.html.]

In the US the government could cut off the money supply. In Europe the deficit countries will be fighting for years in a depression. The reason is an absurd austerity mania seizing the world as in the 1930s.

In Washington a bizarre budget war is now raging. It is a little like the city of Zurich in the last weeks. In the local Zurich council, an alliance led by the SVP pushed through an austerity program that accomplished nothing, is unfair to state employees and makes soccer fans wait longer for a real stadium. What is now happening in the US Congress is even more grotesque and far more dangerous. Billions that should be saved overnight are involved there, not millions. If necessary, the House of Representatives dominated by republicans threatens to cut off the government’s money supply. Savings should be forced in this way.

What is central is ideology. If the republicans should prevail, US soldiers will not stop fighting and pensions for seniors will continue to be paid out. Everything will simply be a little more complicated. Republican hardliners want to teach government a lesson. These hardliners are Christian-libertarian Taliban.

THE OBVIOUS NOT RECOGNIZED

It does not look better on the European side of the Atlantic. The old continent is more intensely infected by austerity mania than the US. Angela Merkel and Nicolas Sarkozy pushed through a bailout package in Euro land that causes headshaking among economists. The “Economist” even speaks of a mixture of “confusion and flop.” What is obvious is not recognized: that countries like Greece, Iceland and probably Portugal are bankrupt and cannot be revitalized without changing the terms of the debts.

This fact is swept under the carpet because it would mean that French and German banks write off enormous sums and must be revitalized themselves. This is not expected of the taxpayer. Instead austerity programs are exacted on the Greeks, Irish and Portuguese which are inhuman and counter-productive. “The austerity program will harm growth,” the “Economist” writes. “This will make their debts too expensive. In Greece a state debt of 160 percent of the gross domestic product is expected, in Ireland 125 percent and in Portugal 100 percent forcing up the interests on their state bonds. The result is a downward spiral.”

THE PANIC-STRICKEN AUSTERITY POLICY

While the deficit-sinners are beaten into misery by Merkel and Sarkozy, the Brits volunteer for this. The conservative-liberal government of David Cameron holds to a very severe austerity program although failure is clearly manifest. Economic growth dwindles, trust falls and the political tensions increase. At the end of March 2011 hundreds of thousands demonstrated peacefully in London.

The fact that people knew where a panic-stricken austerity policy will inevitably lead development is depressing. The US demonstrated this at the beginning of the 1930s. Neither the government nor the Federal Reserve intervened in a helping way when a dying of banks started and after the stock market crash. Instead savings and a balanced budget were emphasized rigorously. Andrew Mellon was Treasury secretary at that time. Mellon was an unapproachable and wealthy man who was primarily interested only in his art collection. The fate of the common people left his cold. Therefore he gave the legendary advice on combating the crisis to President Herbert Hoover: “Liquidate everything, workers, stocks, farmers and real estate.” The result of this policy was the Great Depression.

RELATED LINK:

Video: “Austerity, Security and Resistance” 1 hr, www.vimeo.org

As austerity measures intensify around the world, the axe has come down particularly hard on public- and private-sector unions, the un/underemployed, and those denied status, with particularly marked gendered and racialized dimensions. Massive state retrenchment in the realm of social services, health care, education, pensions, unemployment insurance and stimulus spending, has been matched by wage controls, the selling off of assets and resources, as well as tax shifting for competitiveness, the weakening of environmental laws and employment standards. While resistance from student, trade union and community activists is noted, the state and its police force have responded in the most aggressive of ways. These presentations starkly reveal who will pay and who will profit as the transition from rescue to recovery increasingly returns not just to neoliberalism, but a more authoritarian form at that.

George Rigakos, Carleton University: "Security, Pacification & the Fabrication of Social Order"

Justin Paulson, Carleton University: "Social Movements & the Crisis"

Greg Albo, York University: "From Rescue Strategies to Exit Strategies: A Working Class Response?"

CSRCproject.ca

vimeo.com/23314501