The Anti Austerity Movement

France has a new president, a new regime and a ‘new’ philosophy in the middle of Europe and a world that had, apparently, gone the way of austerity. Basically, countries were cutting back on social expenditure; on investing in public works and simply, preferring to pay down country debt over increasing government expenditure to shore up reduced demand spending.

The U.S. stimulus package – where the Obama administration assigned more than $ 800 billion to shore up the U.S. and world economy in the middle of the worst recession since the Great Depression – has been lampooned, lambasted and completely misrepresented by the Republican Party since January 2009. Their argument – the conservatives, that is – is that borrowing money to spend on an economy that is going to the dogs is a bad idea because it adds to deficits, which are, on their own, akin to diabolical for borrowing more money in the future. The GOP has ferried in all their economic exemplars to dismiss what is positive about conventional Keynesian economics.

Politically speaking, their argument is more palatable than Obama’s: The Democrats want to spend money they do not have and are increasing the country’s debt which is already sky high. They will not entertain how effective China’s stimulus package and investment in infrastructure and social services has been to the Middle Kingdom.

However, in France, this anti stimulus talk and austerity has fallen on deaf ears. Probably because of their proximity to Greece, Turkey, Spain, Portugal and Ireland, the French did not want to have to deal with the pain of a recession when they could receive the pleasure of government expenditure now. And so they hired an avowed socialist as president. The man intends to tax 75% of the rich’s income to pay for public services, and the French proletariat applauds in contradistinction to the bourgeoisie who are aghast at the sheer impudence and lese majeste of the masses.

Because France has to deal with partners such as the most austere Germany and the overall European Union, Monsieur Hollande may not necessarily get to give the people what they want. However, many French immigrants and also the French people project their hopes on their new leader in Obamaesque proportions. Mostly from African or Caribbean countries, these immigrants benefit from government expenditure just like they may have experienced in their home countries. On the other end of the spectrum is the outrage expressed by taxpayers over the ‘waste’ of resources on those ‘undesirables.’

In this regard, there is a big difference between the United Kingdom and German and France. The latter countries do not necessarily have as favorable immigration policies as the former. It also helps that most people in the world consider English their lingua franca over French itself and even more, over German. Eurostat figures say that in 2008, the UK grew because of net migration while Germany no longer accepted unskilled migrants. France, for its part, experienced a brief immigration boom in 2007 but curtailed this practice, leading to increasing political unrest over hardline policies such as the expulsion of thousands of Roma and the removal of French citizenship from immigrants found guilty of attacking police officers. Unfortunately, this means that Britain [slightly behind Malta] is Europe’s most overcrowded country.

Interpretively, there is a chance that just like the American conservative abhors public expenditure on those who, ostensibly do not ‘want’ to pull themselves up by their bootstraps, the Europeans may have seen minorities, immigrants and other generally underprivileged classes as a drain on the public good. It is the opinion of this paper that this is where austerity measures on public expenditure seem to stem. However, these measures seem to forget that public consumption contributes to a great many economies. Private consumption is more 70% of the U.S. economy and this is mostly from employed folks. Which means that we cannot concentrate on just the graphs of demand and supply or the ledgers that show debt versus the economy. There are macroeconomic elements to consider. More employed people means more consumption which means more people get taxed or actually contribute to the coffers of those who create goods and services and also employ more. It seems as though those in favor of austerity forget their virtuous or vicious circles. That notwithstanding, it would behoove anyone to insist on austerity and proper management or projections – the kind they demanded from the Greek.

But austerity cannot operate in a vacuum and needs to be counterbalanced by expenditure – whatever the deficit doldrums might be. From this perspective, Obama has done as much as he can do in the middle of America’s divided government system. The American economy has created over 3.1 million jobs since 2009. If the state and federal governments had not lain off teachers and other works, the current unemployment rate would have been less than 8% – almost guaranteeing Obama’s reelection. Of course, the conservatives do not want Obama to be reelected. Of course the socialists in France threaten the status quo in Europe. Nonetheless, it is a simple argument, really: Austerity belongs to the minority [the rich, the few, the proud and the 1%] while public expenditure is for the masses. The rich would rather that debt gets paid down. Of course, if you look into who holds most of their respective country’s debt, it is the rich themselves. They, like many shareholders in a company that is struggling, want to be paid first – despite what that company’s customers may want.

What France’s new leader brings is not only the potential to look into how people really feel about austerity, but also an example of how to do a proper balance between taxing the rich and redistributing wealth. Short of cutting off the news from France, the Americans can learn as much as they can about the truth behind socialists and European welfare states. President Obama might even learn how to negotiate with extremists and hardliners. And although they are really good at immigration, a lesson can be garnered from the British: Do not go into austerity or else you will head right back into recession.

Dennis Matanda
Editor – editor@thehabarinetwork.com