The Austerity Con

[arkirk]

The problem seems to be purely ideological; The GFC provided a convenient excuse, but the media and the right-wing of politics in Australia are banging the same 'deficit must be eliminated' drum - despite our having been left practically unscathed by the GFC, and despite our Debt to GDP ratios being incredibly small by world standards. (Australian Government debt was 29.9% of GDP in 2012, according to the CIA World Factbook; cf 72.5% for the USA, and 90% for the UK, from the same source).

It seems that the voting public find it easy to understand 'debt is bad, mmkay'; and that they are easily frightened by large numbers (anything expressed in millions is an unthinkably large sum; and millions, billions or trillions are interchangeable psychologically, because it all just screams "HUGE DEBT!!!"). On the other hand accepting that 'shitloadsillions' of dollars of debt might not be all bad is hard; and understanding why debt is good at times, and bad at other times is even harder; so selling the opposite message is really difficult.

It is irrelevant whether a policy is in the best interests of the voters; what matters is whether they can be readily scared by headlines into thinking that it is.

I wish I had a dollar for every Australian on Facebook, or in news article and blog comments who has parroted the 'Labor left us with a huge debt' meme. The facts show that this is rubbish; the facts also show that under right-wing governments in Australia, deficits have actually been far higher than under Labor; but like 'The earth is flat, and at the centre of the universe', everybody knows that 'Labor governments created a mountain of debt, and only the LNP can fix this problem'. That not one word is true is, sadly, irrelevant - it is what people 'know' when they cast their votes.

Labor did not create most of the current debt; even now, there isn't what any sane person would call a 'mountain' of debt; the LNP can't 'fix' this, their policies make things worse, not better; and there isn't an actual problem - which is a key reason why trying to fix it makes things worse. Apart from 'a', 'of' and 'the', pretty much every word of this thing that 'everybody knows' is wrong. But everybody 'knows' it.

How much easier it must be to sell the line that 'our debt is killing us', when you actually have a noticeable debt. If right-wing politicians can sell this lie when Debt to GDP is less then 30%, it is hardly impressive that they manage to sell it in a country which has a Debt to GDP in the 90% range.

I do not know a lot about the political situation in Australia. I am surprised that the electorate there seems, from what you have said, to give the plutocracy the benefit of the doubt. I thought that was an American aliment.

It's CONTAGIOUS!

 

[Axulus]

Those handouts when to tax filers. Which excludes all those who do not file taxes. But, I suspect in the last bailout, there appeared to be much more concern about the stability and viability of the financial system and little to none about the stability and/or viability of households. For some odd reason,directly bailing out lenders who knowingly made bad loans (or bought bad loans) seemed more morally upright than directly bailing out borrowers, even though the latter would have solved more than one problem.

I received one of those checks from Bush. It didn't pay the light bill for that month........that was a gesture, not any real help at all.

Most people received $300/person, and it was up to $600/adult, and an additional $300/kid. For a married family of 4, that would be up to $1,800. That is a reasonable chunk. However, I agree that it could've been a little larger (maybe a 2nd payment would've been in order to spread it out a bit).

What I don't fully understand is the automatic assumption that such payments must automatically come from the US treasury instead of printed by the federal reserve. As long as the federal reserve maintains its mandate for stable prices, and such transaction by the federal reserve is consistent with the mandate, it seems like an alternative that should be considered more often.

 

[Loren Pechtel]

The point is that Austerity is a con. Austerity is never the right approach to shortfalls in human welfare. Austerity is something the government does to poor people...and only poor people.

It depends on the situation.

Government spending should rise in bad economic times to reduce the harmful effects. In that case austerity makes no sense.

However, we also have situations like Greece where they are living beyond their means on a sustained basis. Painful as it is they must either cut spending or raise taxes in such a situation.

 

[bilby]

I do not know a lot about the political situation in Australia. I am surprised that the electorate there seems, from what you have said, to give the plutocracy the benefit of the doubt. I thought that was an American aliment.

It's CONTAGIOUS!

It certainly seems to be; but recent state election results, and the implosion of support for federally for the PM and his right-wing coalition, suggest that Australians only had a relatively mild case, and have recovered fairly quickly.