A few years ago we commented (in Moments of Excess) that tactics of militant protest and direct action seemed to have spread, been usurped or hijacked even, by other rather dubious campaigns, such as the Countryside Alliance and Fathers 4 Justice. We then dismissed ‘militant lobbying’ and went on to talk about constitutive politics. Certainly both the Countryside Alliance and Fathers 4 Justice were pretty marginal campaigns in the grand scheme of things. But we might now be witnessing the emergence of more worrying movements… of activists arguing for austerity.
There is certainly this tendency within climate change politics. The group Plane Stupid calling for more taxes on aviation and an end to short-haul flights, for example. Yeah, the growth in aviation’s an environmental problem. But occupying the offices of EasyJet, for heaven’s sake? Is aviation more of a problem when flights are ‘cheap’, i.e., when poorer people fly?
Or take George Monbiot who, at 2007’s climate camp by Heathrow, called for a stronger state to manage climate change and suggested ‘we’ might have to put down anti-austerity riots. Apparently we heard this wrong. In fact, Monbiot was calling for ‘us’ to ‘riot for austerity’! That’s even better. It’s what he said in 2004, according to a BBC report:
People don’t riot for austerity; they riot because they want more, not less. We have to riot for less.
Apparently inspired by Monbiot, there is now a group called Riot for Austerity, the ‘90% reduction project’.
(We’re already trying to engage with this stuff: our article on antagonism and a blog post or two; a presentation we’ve made at The Common Place and at climate camp, responses to Monbiot at climate camp. Hopefully one of us will get about to posting something about our climate camp experiences this year.)
But climate change isn’t the only looming crisis. Economists and policy-makers are increasingly worried about so-called global imbalances and the United States’ ‘twin deficits’: the fiscal deficit (the excess of government spending over government revenues) and the trade deficit (the difference between spending on imports of goods and services and export revenues). ‘America is consuming more than it produces’, ‘Americans are living beyond their means’ are the soundbites.
The twin deficit problem is real. Both deficits have been steadily getting bigger over the past three decades. The fiscal deficit is now about $9.5 trillion c $31,600 for every US resident or two-thirds of annual GDP. (If you include ‘unfunded entitlements’ such as Social Security and Medicare, the figure nudges $53 million or $175,000 per person.) For years, economists have been going on about heavily-indebted poor countries, an important enough concern for them to have their own acronym, HIPC. The United States is now a heavily-indebted rich country. The annual trade deficit is now about 9 percent of GDP. Economists and politicians are in a tizz about that too, blaming ‘China’ or ‘Mexico’.
Some pundits are talking about four deficits. A third is the savings deficit: since the 1980s, the household savings rate –-the difference between income and spending – has been declining and is now hovering around zero. Basically, the average American spends everything they earn and many spend way more than they earn, i.e. their savings rate is negative. The fourth deficit is a ‘leadership deficit’: because politicians and other ‘leaders’ have allowed these other three deficits to emerge and get out of hand.
There’s lots of reasons for all of this and lots of contradictions. The US Treasury has been able to borrow money easily (and thus finance the fiscal deficit) because the US dollar remains the global reserve currency: other nation-states’ monetary authorities – particularly those of ‘developing’ countries – still wish to hold US dollar-denominated assets, such as US Treasury bills. Given this demand for dollars, the US Treasury only has to pay low interest rates and there’s an ample supply of money flowing into the country to balance the net outflows on the trade account. Former World Bank chief economist turned critic Joseph Stiglitz writes of money ‘flowing uphill, from the poor to the rich’. This persistent demand for dollars also means the value of the dollar remains high so imports are cheap and Americans are able to buy more imported goods and services, which contributes to the trade deficit problem. And the relatively low interest rates means it’s cheaper and easier to borrow money and people are less likely to save.
But let’s leave some of this economics behind and look a little deeper. Since the 1970s – oil price ‘shocks’, global recession, etc. – real wages (including social wages) have been falling in the United States and throughout most of the planet. Austerity. But, to some extent, Americans have been able to defend their living standards by getting more into debt. Low interest rates and rising property prices – the property bubble – have both helped. (If your house rises in value, even if the mortgage company owns most of it, you can borrow more money against its value.) Result: rising deficits. But the fact that the US working class has been able to defend its standard of living to this extent also means there hasn’t been enough austerity. Economists continue to bemoan the ‘structural weaknesses’ of that economy and the ‘adjustments’ that are required.
But all of this is what you’d expect of economists and policy-wonks. What’s more interesting is some of the public discourse.
The Concord Coalition has been around since 1992. Apparently it’s ‘a nationwide, non-partisan, grassroots organization advocating fiscal responsibility’. The Coalition has recruited chief executives and economists from establishment think-tanks like the Brookings Institution to its cause and is currently running a ‘Fiscal Wake-Up Tour’, that involves ‘public figures and thinkers with diverse perspectives traveling the country to discuss our nation’s budgetary challenges and entitlement problems’. (Note: ‘entitlement problems’ basically means the social wage is too high.) All this might be similar Margaret Thatcher’s intellectual guru, Keith Joseph, who toured Britain in the late 1970s trying to popularise free-market (neoliberal) ideas, but on a much larger scale. The Coalition has just produced a film, I.O.U.S.A., which, according to both Reuters and The Economist, may ‘be to the US economy, what An Inconvenient Truth was to the environment’
A more recent group, set up last year by four students, is Concerned Youth of America. Like the Concord Coalition they are concerned about the rising deficits and ‘fiscal irresponsibility’:
Across this country, young adults are looking to the 2008 presidential candidates for a change of policy and for fiscal responsibility. We will no longer support the culture of deficit spending and pork barrel legislation. The youth of America will have to bear that burden, crippling our future and America’s economic might.
Over two-and-a-half centuries after colonists fought for their rights against an oppressive British Empire, American youth are facing the scourge of “taxation without representation” once more. Even though we did not enact the current spending polices, we will have to pay for them through our taxes. Through the burgeoning federal debt, a malignant tumor has grown as a result of irresponsible fiscal policy at the highest levels of our government. Debts accumulated to pay for bloated and inefficient entitlement programs and the War in Iraq will have to be paid for not by the current leadership, but by us, the youth of America.
The irresponsible spending policies of today will weaken the American economy if not stopped.
As today’s leaders, businessmen, parents, and grandparents age and retire, their children and grandchildren will have to bear the burden of a bloated debt. Those children will face high taxation to service exploding interest payments. By allowing this disastrous spending to continue, they condemn their children to live without American economic strength. They condemn their children to live under a government unable to care for its citizens. Paying the interest on the debt alone will leave our nation impotent, helpless to fund worthwhile programs, and captive to our lenders.
This is not an issue of large government or small government, conservatism or liberalism, Democrat or Republican. This is an issue of America’s future. Our position is simple: the generation with power, especially the next president, must maintain fiscal responsibility at all times. The next president must spend only what the government collects in revenues, while only deficit spending during recessions and emergencies. Not only is this a fair position. For America’s youth, it is a necessary one.
Of course, some of this makes sense. CYA want to save themselves from ‘crushing debt’ and there’s little doubt Latin American and African proletarians were crushed by debt following the international debt crisis of the 1980s (Latin America’s ‘lost decade’)… except in the wake of that debt crisis, many Latin American and African governments were encouraged to take on more debts. Their recalcitrant populations were crushed by ‘adjustment’ imposed – sometimes literally – at gunpoint. And we also have to understand that many of those governments only took on debt in the first place in order to meet or neutralise local demands. A similar story to current US indebtedness?
But essentially CYA are arguing for austerity. I think this might be a terrain we may need to start fighting on much more seriously.