I’ve never understood the whole current austerity fad thing. I mean, businesses are showing record profits, the stock market is way up. Don’t get me wrong, we do need to conserve natural resources, but that doesn’t mean we have to lower our quality of life. In fact, not burning tons of polluting fuels will definitely raise our quality of life.
Businesses have cycles, and there are times companies have to conserve money. If you are good at business you learn that there is fat in any budget, which you can cut, and there are things that you can’t cut. In fact, often when things are lean, you need to increase spending to kickstart things. I think this comic says this brilliantly.
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There’s no single explanation because there are so many factors at play.
For one, there are plenty of people who truly believe in expansionary austerity, which Krugman terms the “confidence fairy.” The idea is that if you eliminate government funding, private markets will grow because of confidence that the climate is friendly enough to let businesses succeed. So it’s only austerity in regard to government spending.
The expansionary austerity crowd is closely related to the Reaganite supply siders. They take a very selective interpretation of what happened during the ’80s (St. Reagan changed the government from taking away 90% of your hard-earned money to only 10%…yeah, really…because there is only one tax bracket), while wholly ignoring the context (the 2008 crash and the Great Recession, which grew out of banking crises and *private* enterprise failures, and have teetered on the edge of deflation, are EXACTLY like the ’81 recession which resulted from double digit inflation and stagnating wages…uh huh, really…). And they have been aching for the opportunity to prove Keynes wrong (despite the fact that the Keynesians seem to have the best economic models describing what is currently happening).
Then you have the angry white, working class male phenomenon. Manufacturing has been decimated in the past couple of decades, and the 2008 crash was no different. This sector is predominantly white and male. They lost their jobs and they’re angry. All they know is Obama’s been in office for 3 years and things haven’t magically gotten better. So they are willing to blame him, because most people have no idea how the economy functions.
You also have the angry employed that don’t understand economics, either. For instance, I’ve had discussions with several people about the current problem of unemployment that is driven by lack of demand. I’ve heard things like, “Well, those unemployed should go buy a lawn mower and take the bus across town, offering to mow people’s lawns.” Again, Keynes comes into play here, because he definitively showed that supply of labor does not create its own demand. Just because you offer to mow someone’s lawn doesn’t mean anyone’s going to pay you to do so. But forget about that wishy washy ivory tower stuff. “Those people” are just too lazy to find a job.
Related to this last point, there is an undercurrent of a cultural shift that has occurred in the last couple of decades. It’s the repugnant legacy of Ayn Rand. In the extreme form, financial wealth is the only measure of success and the leaders of business are inherently the best and brightest; consequently, eliminating taxes on the wealthy provides the property *incentives* to the poor to strive to be rich. More moderated forms of this view have appeared in mainstream discussion in terms like the “ownership society” and the frequent invocation of the American “entrepreneurial spirit.”
The effect of this cultural shift is the unwinding of the social contract. Now, there is no assumption that people go to college to benefit society by becoming enlightened citizens. Instead, you go to college to get a good job for your own benefit. Hence, there is no need for the state to support and subsidize your higher education. Furthermore, since “everyone is an entrepreneur,” your failure to become a billionaire is your own fault. You made the choice to study psychology instead of finance, so suck it up and go flip burgers.
With the rise of the Tea Party, this ideology has spread into government. You now have people elected into office on the premise that they want to eliminate government services and make government run more like a business. Despite the fact that government is NOT a business, and they know it. Many of these people are just millionaires who spout this anti-government, pro-capitalist rhetoric to get elected for the sole purpose of cutting their own taxes and enriching themselves further. Because they got to where they are on their own, damnit. It was all that entrepreneurial, mover-and-shaker business mojo that they had. Because every man is an island.
Urgh. That was more than I really wanted to write. Sorry for the rant. I’m just fed up with the rightward shift in this country.
I was going to say something similar, but you hit the nail on the head. Well put!
hear hear!
Well said, Michael.
To add one more subtle point, part of the “privitization” push you allude to is that the giovernment currently handles trillions of dollars a year and tens of trillions in long term assets. Every rich Repubublican wants to get their hands on that money to use it to make more money.
Can you imagine how many hundreds of millions you could sock away if your were the privatized “Scoial Security” trust fund manager? How many hundreds of millions of “management fees” you could siphon out of Medicare and Medicaid if the program was under private management?
Fundamentally, conservatives want to stop giving money to the government for things they do not PERSONALLY support, make the government give THEMSELVES as much money as possible, and finally use the shreds of government that remains to force everyone else to abide their PERSONAL beliefs.
We have to stop them.