The verdict has been in for several years – although the U.S. has just recently been added to the mix – austerity does not work. The cuts in vital programs has not produced the surge in employment or the boom in the economy that neoliberal forces across the globe said it would – you may color this writer cynical, but somehow I believe they never thought it would.
Nevertheless, people all around the world are pushing back against the rising tide of economic devastation and have decided that a life and future of economic dignity is worth fighting for.
The worldwide anti-austerity movement
Tens of thousands of people rallied in Spain’s capital of Madrid in February as part of a series of protests against economic austerity and political corruption. The demonstration was organized under the banner of “Citizen Tide,” a call for a grassroots uprising to stop a wave of privatizations, layoffs and cuts to public services.
In February, millions of workers walked off the job in Greece in a one-day strike against fiscal austerity. It, too, was part of a series of actions against the wage cuts and tax hikes imposed as a condition of Greece’s international bailout.
More than 100,000 people marched across Ireland earlier this year to protest the country’s austerity policies. The demonstrations were held under the banner of “Lift the Burden,” a call to end the public bailout of the country’s banking debts.
In Portugal, thousands of protesters gathered outside the country’s parliament in November of last year, as lawmakers gave final approval to an austerity budget that included the biggest tax hikes in modern history as part of a bid to meet the terms of an international bailout.
The budget vote was widely seen as ensuring a third year of economic recession for the hard-hit nation. Portugal’s unemployment rate was a record 15.8 percent at the time.
On Nov. 14 of last year, millions of workers in Europe joined a general strike protesting the wave of spending cuts and tax hikes as the continent continued to implement its austerity measures. Spanish and Portuguese workers coordinated their strike with work stoppages that took place in Greece, Italy, France and Belgium.
The Occupy movement in the United States has done phenomenal work over the past couple of years to highlight income inequality, corporate malfeasance and to demonstrate how our nation’s budget priorities are an accurate reflection of our values. Their protests were met with repression and violence as well.
And yes, the international community of the poor and working class, by protest and mass movements, are saying they will no longer acquiesce to the whims and agendas of the wealthiest 1 percent of the world.
The pro-austerity house of cards
The anti-austerity movement is not only rooted in moral and financial justice, but it now seems to be grounded in simple math and sound economic policy as well. This was mathematical and fiscal flaw was covered quite well in an April 19 BBC News magazine piece.
In January 2010, at the annual meeting of the American Economic Association, Professor Carmen Reinhart and the former chief economist of the International Monetary Fund, Ken Rogoff, presented a research paper called Growth in a Time of Debt.
“Reinhart and Rogoff postulated that economic growth slows dramatically when the size of a country’s debt rises above 90 percent of Gross Domestic Product, the overall size of the economy.”
This was considered a godsend to many conservative policymakers across the globe (including the U.S.) because the paper’s findings appeared to buttress their call for drastic cuts in government spending — E.U. commissioner Olli Rehn and House Budget Chair Paul Ryan have both quoted a 90 percent debt-to-GDP limit to forward their austerity approaches.
Enter Thomas Herndon, Ph.D. student at the University of Massachusetts Amherst. Herndon, in his research, tried to replicate Reinhart and Rogoff’s results, but his attempts proved to be unsuccessful. He eventually corresponded with Reinhart and Rogoff and they sent him the actual working spreadsheet from which their results were derived.
What Herndon discovered was a basic error in the spreadsheet. “The Harvard professors had accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt) — Australia, Austria, Belgium, Canada and Denmark were missing.”
There also appears to have been other discrepancies in the data, as well as significant data for some countries were missing. The sum total of the Amherst study found that although high levels of debt is still connected with lower growth, the debt-growth relationship is far more tenuous than the Reinhart and Rogoff paper suggests.
What continues to be missing from this argument in the U.S., is that for every half a trillion dollar deficit that the government has spent into the economy, it’s created twice as much, $1 trillion, in the form of giveaway to the banks.
So what the conservative voices clamoring for cuts in public spending are essentially saying is that public debt (in the form of Medicare, Medicaid, Social Security, pensions, etc.) is bad, but the government-subsidized private debt of the big banks is good and acceptable.
And yet in the drive for austerity, the commitment to the poor and working class, the disabled, elderly and disenfranchised is viewed as the financial downfall of the various nations’ economies.
Physical, mental health consequences of austerity
In the book titled, “The Body Economic: Why Austerity Kills,” written by David Stuckler, an Oxford University political economist, and Sanjay Basu, an epidemiologist at Stanford University, the mental, emotional and physical health toll of austerity is examined:
— More than 10,000 suicides during the Great Recession/Depression across Europe and North America
— 10 percent rise in depression diagnoses – this adds up to approximately 1 million people
— Five million Americans lost access to health care
— 10,000 families in the U.K. lost their homes
— HIV rates are up 200 percent in Greece since 2011 due to cuts in funding
— An epidemic of malaria has also arisen in Greece due to cuts in funding
Stark numbers to be sure and yet there’s more. In the U.S.:
— Preschoolers have been kicked out of Head Start
— Meals on Wheels is delivering to fewer elderly people
— Native American health services have been reduced
— The long-term unemployed will receive drastically reduced benefit checks
— Thousands of cancer patients on Medicare have been turned away from clinics.
This is what austerity looks like; this is what a cold and calculated devotion to a Randian ideology of makers and takers looks like. Austerity is an up to 10 percent tax hike on the life savings of the people of Cyprus; austerity is the nearly two million private sector employees working on behalf of America that earn wages too low to support a family — $12 or less per hour, and austerity is the 35,000 doctors, nurses and other health workers that have lost their jobs in Greece.
As the Obama administration and the conservatives in Congress are ramping up for another debt ceiling fight, the aforementioned devastation may only be the beginning as President Obama himself has proposed cuts to crucial social safety net programs.
Conclusion
During the 2012 presidential election, a video was released showing Romney, disparagingly, talking about the contemptible 47 percent. It was said to have changed the tide of the election and ultimately led to Romney’s big loss in November.
And yet, with those who had been hankering for deep government cuts, for all intents and purposes, ahead in this struggle between the debt/deficit purists and government stimulus spending forces, one could argue that although American neoliberalism may have lost the battle for the presidency, they are actually winning the war when it comes to the reality of austerity.
The views expressed in this article are the author’s own and do not necessarily reflect Mint Press News’ editorial policy.