Austerity is a bad thing. As I’ve pointed out before, when an economy is suffering from lower demand, the last thing you want to do is squeeze the pocketbooks of the very people who you want to have out there spending money. But, here’s another thing: it makes you sick. Literally.
So, say a group of doctors who have looked at the madness of austerity sweeping through Europe. The doctors— Martin McKee, Marina Karanikolos, Paul Belcher and David Stuckler—found that:
However, austerity has been not only an economic failure, but also a health failure, with increasing numbers of suicides and, where cuts in health budgets are being imposed, increasing numbers of people being unable to access care. Yet their stories remain largely untold. Here, we argue that there is an alternative to austerity, but that ideology is triumphing over evidence.
For many months, the political and financial aspects of the crisis have filled the headlines. However, behind those headlines, there are many individual human stories that remain untold. They include people with chronic diseases unable to access life sustaining medicines, persons with rare diseases who are losing income support and forced to care for themselves, and those whose hopes of a better life in the future have been dashed see no alternative but to commit suicide. So far, the discussion has been limited to finance ministers and their counterparts in the international financial institutions. Health ministers have failed to get a seat at the table. As a consequence, the impact on the health and well-being of ordinary people was barely considered until they made their feelings clear at the ballot box.
I would add a more specific observation not touched on by the doctors, with the caveat that I could only play a doctor on television. The depression people feel has to be about the feeling that, hey, “I had nothing to do with this crisis, it was brought on by greedy bankers but you are blaming me for it and making me pay the costs”. There has to be an element of anger, frustration and despair.
This is all relevant to what we see happening in Australia. True, austerity is not the order of the day. But, when The Coalition and its business allies are, every day, telling people productivity isn’t high enough and its the fault of workers — even though the productivity crisis is a myth—and, when those same forces, The Coalition and its business allies, attack relentlessly the Fair Work framework — even though that Fair Work framework has benefited people throughout the country— it is not a big leap forward to a society where the health of our work workers declines because of the stress they feel at work.
Remember, forty percent of Australians are shackled with insecure work. That makes for a landscape that will hurt people—not just in their bank accounts but in their physical well-being.
No one really knows which way the global economy is headed. Predictions are not a science: one day markets rise because certain people *think* some indicators look good—only to reverse themselves the very next day. But one thing is clear: real people don’t like austerity which will influence the direction of political alignments. Take the Dutch.
The Wall Street Journal wrings its hands today over this (subscription required):
A far-left party is emerging as a front-runner in next month’s elections in the Netherlands, as it benefits from growing voter resentment toward the German-led austerity drive and euro-zone bailouts.
A win by the anti-austerity Socialist Party could threaten to unravel a cost-cutting plan agreed under the current government in April, and also could derail stringent budget targets for 2013 set by the European Commission and fiercely advocated by Prime Minister Mark Rutte.
…But recent polls suggest Dutch voters, frustrated with austerity at home and increasingly wary of bailing out Southern European governments, may reject the package. The Socialist Party, which didn’t support the austerity plan, would win the most seats in the 150-member Parliament—about 37, or seven more than Mr. Rutte’s Liberal Party, recent polls by research firms TNS NIPO and Peil.nl show.
Consider the source—The Wall Street Journal—when you consider the epithet “far left” but pay close attention to this:
The Socialist Party doesn’t shy from controversy: It wants to curtail the European Central Bank’s independence by establishing “democratic supervision” over the bank and to broaden the ECB’s mandate, currently limited to ensuring price stability, to allow it to stimulate the economy to create jobs.
The idea that central banks—whether the Reserve Bank in Australia, the ECB or the US Federal Reserve Bank—should be more democratic and transparent, and, most important, be focused on creating jobs, not just price stability, is hardly radical. If you just pitched that to the average person, without putting the tag of “far left” on the idea, it would be a very broadly supported policy.
We are in a world where people are being taken out and economically shot, executed by the terror of the balance sheet. Turn to Europe and you’ll see the plan: a troika — the International Monetary Fund, European Central Bank and European Commission — keep thinking that the path to a stable world is by making their balance sheets work, no matter how many people must suffer.
Sharan Burrow, the General Secretary of the International Trade Union Confederation (ITUC), has it exactly right, when she led a delegation to meet with the Greek labour minister and called out the Troika for pursuing mindless austerity:
The Troika needs to start by looking at the incomes of working people and unemployed. If you have more than 20% of the workforce unemployed and 50% young people excluded from secure jobs and livelihoods, and a minimum wage that has been cut by up to 32%, people will not be able to survive.
It takes a union leader to understand what is up and what is down, what is reality for people:
There is a lack of sanity of the part of these institutions. You can’t keep putting money into the bond markets and the banks, but have countries where people can’t eat, feed their children or pay their bills. This is an economic model that is not creating jobs, protecting livelihoods or providing the social protection that people need to stabalise the economy.
Burrow’s final point sums up the world we live in:
People are being discarded, as the interests of banks and bond markets come before families.
Now, we could say, and we would be right, that these policies are insane, immoral and economically dubious. Except that the Troika, and the institutions representing the bond holders and banks don’t operate in a moral world — meaning, a world where economic policy is built around bringing prosperity to the people. If that were the case, bankers would be in jail, the richest among us would pay far higher taxes and, rather than impose austerity on people who had no hand in creating the current crisis, we’d be spending trillions of dollars to make sure people had jobs — and a way to put food on the table.
Pause on that final point. We aren’t talking about fur coats and mansions. As Burrow says, this is about people being able to eat.
It’s worth keeping in mind, when we think of what happens in our economic lives, that global financial events trigger waves everywhere. That’s perhaps stating the obvious–so, when bankers get a “stay-out-of jail” card anywhere, it sends a message to every one of the financial global elite. Take Barclay’s.
Let’s chuckle–with a bit of dark laughter–at this pathetic “settlement”:
Barclays has agreed to pay more than $450 million to resolve accusations that it attempted to manipulate key interest rates, the first settlement in a sprawling global investigation involving many of the world’s biggest banks.
The British bank struck a deal with regulators in Washington and London, as well as the Justice Department. The settlement is seen as the first in a series of potential cases against other major financial firms.
This is not change. In fact, this kind of settlement guarantees one thing: it will happen again. The message to these guys is simple: if you do this again, you will not lose your freedom–meaning, go to jail–and you will not even lose your jobs. Indeed, we will help raise your level of mirth, comfort and happiness because, while you sock away more pay and benefits to buy your 3rd or 4th mansion, the SHAREHOLDERS will pay for your misdeeds.
This is crony capitalism defined. And the regulators–and political leadership–are simply reinforcing the game. Not that it’s surprising. The little fish get jailed–sometimes–bthe bigger crimes committed that have imposed austerity and joblessness on millions of people go unpunished. Think of this: the CEO of Goldman Sachs Lloyd Blankfein is still a free man–despite a key investigation in the U.S. that found, “a financial snake pit rife with greed, conflicts of interest, and wrongdoing”
And this is a message heard from Sydney to London to Wall Street–you will not be jailed.
You see, the justice system is just for the little people–not for the elites.
Read Essential's ongoing research on the public response to Covid-19.
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- Performance of Scott Morrison
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- Preferred Prime Minister
- Views towards re-electing the federal Coalition government
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- Importance of Australia’s international reputation
- Scott Morrison’s impact on Australia’s international reputation
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