When I first went to hear Blyth, a Scots-born professor of political economy from Brown University give his lecture “Austerity: The History of a Dangerous Idea” last month at the University of Toronto, I went in prepared to hear ideas I disagreed with. I’d gone because I’d recently heard a podcast featuring Steve Keen, an economist from the University of Western Sydney, talk about the ease with which societies forced into austerity slip into authoritarian, then totalitarian responses as populism sweeps civil order away. That had disturbed me. So I thought, even though I am on the record (see “Why a Deficit is Immoral” here on It’s Just a Jump to the Left, then a Step to the Right) as favouring balanced budgets — which, when you’ve been spending more than you take in, requires austerity to rebalance them — I’d better hear more arguments for spending your way out of trouble.
Well, I’m convinced of one thing: we are definitely on the horns of a dilemma, and, much like Bugs Bunny in “Bully for Bugs” when Toro comes up behind him, we’re all feeling the heat and thinking “stop steaming up my tail”.
When it comes to our politics, we can A-B-C or D. Let me explain.
A is for austerity. This is the path currently being run in most of the western world: programmes are cut back, means tests are imposed where they didn’t exist before, infrastructure maintenance is further deferred, and zero régimes are imposed on public sector wages and benefits, all in a desperate attempt to wrestle deficits into some degree of order. Call it governance by the bankers (since, in many cases, central bankers and international institutions run by bank-related processes are used to set policy rather than the elected representatives of citizens, who are, in turn, whipped into shape by their party leaders to “ork, ork” on command as trained seals), of the bankers (all other issues are subordinated to the debt, the debt rating, the deficit, and the sanctity of the world’s banking industry), for the bankers (who received the bailouts after creating a colossal mountain of interlocking agreements and debt blowing repeated bubbles masquerading as growth and allowing the tower of cards to collapse rather than letting the institutions die). Individuals, their lives, and their needs, are held hostage to the few.
B is for balance. It’s what’s been missing, is generally missing, and is likely to often be missing into the near future, in our affairs. A balanced society would recognize, for instance, that infrastructure maintenance is not deferrable; that untoward unfunded pension and programme obligations are a danger; that new infrastructure still needs to be built for its knock-on effects; that the poor, the unemployed, etc. do not just “go away” or disappear because you define them out of existence, or tell them “get a job”, or cut off their benefits. It’s that if you want to be a Keynesian, pumping debt into the economy during recessions to “stimulate” a restart, you have to also be a Keynesian, withdrawing money from the economy during the resulting boom, and trimming programmes back not when times are hard, but when they’re good. (Not much of that around in the past half century, now, is there?)
C is for commonweal. Politics is supposed to be about the morality of “we” (just as ethics is about the morality of “I”, or “what should I do?”). We have bodies that call themselves commonwealths; we have the notion (as John Ralston Saul cogently argued in his book A Fair Country: Telling Truths about Canada) in this country of bien-être or commonweal as one of our founding principles, yet we, in Canada and abroad, generally fail to live up to this. Instead we become NIMBYs (not in my backyard), BANANAs (build absolutely nothing anywhere near anyone) and other forms of selfishly-interested loudmouths posing as concerned citizens (but really far more interested in tonight’s hockey game, their next raise, and gunning the motor of their SUV or pickup truck).
If B and C, when practised, actually go together, then A as practised is just waiting for its partner: D, for debt. Debt has been the core of our financial system — it is, in fact, what our money is — and it is the driver of our need for endless growth at whatever cost. Our response to the stumble of the 1970s was to fake everything, and this, at the end of the day, is debt’s role, as Karl Denninger ably pointed out in Leverage: How Cheap Money will Destroy the World.
So this is our conundrum. We have a debt-fuelled society, one that cannot prosper without jacking debt even higher — but, as Blyth points out, you need the right kind of debt to get an effect. Absorbing banks’ debts to pretend they’re solvent (when they’re not) adds to the pile, but unproductively. Yet, at the same time, if we’re to restore balance — and in a no/slow growth world we can’t afford to simply hope that somehow growth from outside magically lifts up individuals enough to make up for simply slamming more taxes and fees down and keeping the rest of the game running as is — we’re going to have to cut something, somewhere.
Let’s call that targeted austerity, to assume and establish a balance, for the purposes of commonweal.
Only then can we move to remove the role of debt — which requires endless growth simply to cover the interest involved — from the core of our world. For only that way can balance be maintained and the commonweal (as much as anything can be in, given uncertainty) be assured.
If this sounds like the polar opposite of the choices the politics of your locale puts in front of you, you’re no doubt right. But fixing that requires that we do more than fan the flames of, and respond to, populist rhetoric.
We must engage, with each other, or surely we will fall separately.