Austerity. What Is It Good For?

January 29, 2012

Austerity is in the air.

Can you smell it? It’s acrid, like burning hair, with a hint of pungency as if wafting upwards from Satan’s unwashed bum. Unpleasant. Vile. But an absolute necessity in these days of economic uncertainty.

Or so we are being told at the turn of every newspaper page, radio channel, and at every level of government. Prepare for the Big Cut. We’ve been living too high off the hog for too long, living way beyond our means. Poke another hole further along your belt and tighten up.

All a great heaping pile of steaming bullshit, of course, from the root causes right up to the tip of the stiffy we’re being screwed with.

[Don’t believe us? Put Alex Himelfarb, Trish Hennessy and Sol Chrom on your immediate reading list. – ed.]

What I don’t understand about this coming age of austerity is how it’ll help anyone other than those who’ve already benefitted most from the supposed bacchanalian descent into debt that we’ve all been participants in. How will everyone spending less turn things around and grow our economy? I get the whole government cuts reduce deficits pitch but that’s only a part of the whole equation. Those cuts result, usually, in lost jobs and, ultimately, further lost revenue to governments in the form of taxation. Lower revenue means more cuts. A vicious, downward cycle; the snake eating its own tail.

Austerity2Prosperity is another mythical kingdom bordering on the Republic of Debtfreetopia that baffled Urban Sophisticat here earlier this week. Sounding good on paper or up on a blackboard but how exactly does it work in real life? It would be nice if someone could point to an actual occurrence of this theory working in practice. And if you’re about to write ‘Canada in the mid-90s’, don’t bother. You’ve already pounded back the koolaid and are blindly singing along to the set playlist.

We here in Toronto are looking down the barrel of some serious labour disruption next month entirely because we have a mayor who wants to dismantle city workers’ unions in order to contract out city services to private companies that pay their workers less, provide fewer benefits. The goal, we are told, is to save the taxpayers’ money although the case for that in many circumstances is actually quite iffy. For every example of, say, contracted out waste collection, there’s a counter example of municipalities contracting waste collection back in house. It’s a wash.

Instead of busting up unions on the theory that private sector workers can do any job more efficiently for less money, prove it first. Being wrong about that will wind up costing us all much more in the end. Mistakes always do.

Even if a case can be made that contracting out government services does save the said government money with the savings passed along to taxpayers, what is the bigger societal cost that comes with workers making less money? For the sake of pocketing 25, 50 cents per weekly curb side collection, how does a community benefit having workers make half of what they were paid before? I’m catastrophizing, you say? That won’t happen. Fearmonger.

Exhibit A. Caterpillar Inc. A company tax incentivized up the wazoo and how do they pay the economy back? Demand to cut themselves some $30 million in labour costs, thank you very much. Take it or leave it, and by leave it, we mean, the province for a more pro-low wage jurisdiction.

“That’s the game. That’s just the way the game is played,” claimed Metro Morning’s business commentator, Michael Hlinka. [Just a ‘yo’ away from claiming gangsta character status on The Wire. It’s all in the game, yo.— ed.] To Mr. Hlinka’s point of view, organized labour is a monopoly. And poor ol’, put upon free marketers like Caterpillar Inc. with only their 58% 4th quarter earnings increase and record revenues have no choice but to freely move their capital elsewhere if their workers insist on demanding their fair share of the wealth.

That’s the game. That’s just the way the game is played. Which leaves us with this kind of headline on a regular basis: More Canadians in low-paying jobs.

I am old enough to remember and to have voted in the 1988 federal election. It was the Free Trade election, and those standing in opposition who said that it would be the start of a rush to the bottom were labelled knee-jerk, parochial, backward-looking nationalists. [If you say so, old man. – ed.] Free trade was the way of the future. Glorious wealth will be sprinkled on more people. Don’t fight the future. It is inevitable.

Yet here we are, nearly 25 years later and more Canadians in low-paying jobs. Income inequality has grown to a degree that has not been seen here since the 1920s. And now we’re being told to prepare for austerity.

Tell me again, how that’s going to make everything better.

lavishly submitted by Acaphlegmic


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