Its been argued for quite some time by economists like Paul Krugman that in times of recession what’s needed is not austerity but stimulus. Furthermore, the deeper the recession the greater the stimulus needed.
His argument is not motivated by ideology nor is it academic. He is careful and methodical in making his case using history and the available economic indices, all of which prove, as in the case of Europe for instance, that the austerity measures imposed on the middle classes are exasperating, expanding and indeed causing the current economic crisis. But the European leaders responsible for implementing these errant policies seem either blissfully unaware or indifferent to their effects. Krugman once compared it to a medieval doctor who is driven to save a dying patient by bleeding him further.
In the case of the United States, he observes on his blog that:
“It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.
What an utter disaster.”
And it continues. Here in Canada as Parliament resumes we have the Conservative government resolutely pushing the same notions of austerity in the form of pension reform, no doubt to be followed by an incremental defunding of universal health care and anything else characterized as an entitlement.
While I know many people voted Conservative in the last election, my suspicion is that they wouldn’t have had these proposals been front and centre as campaign promises as in
‘If elected we promise to eliminate your retirement pensions. You can bank on it!’
Or
‘As Canadians, we want to be more like Americans, so if elected count on us to bleed off the social safety nets including health care to ensure that only the wealthy are entitled to their entitlements.’
Had they said that, their campaign would have run aground faster than an Italian cruise ship.
But unlike Professor Krugman, their arguments are ideological and part of broader attempts to concentrate wealth at taxpayers’ expense.
And economic policy makers from Europe to North America continue to refuse to acknowledge, at least publicly, that their ideas are causing, not solving, recent economic woes.
It’s as if they’re all self-medicating from the same bottle of blue pills, revealing, I suppose, that neoliberalism is one hell of a drug.
