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Thursday, July 13, 2017

Austerity Doesn't Work


W.A. Delgado

Originally published March 16, 2017

When a nation or jurisdiction runs into problems with debt, the pres-
cription usually recommended by the banks, investors, hedge fund
managers and rich lender governments is usually the same: cut costs
by slashing social spending and raise taxes on the poor and middle
class. But these approaches, as has already been demonstrated -- in
Greece, for example -- usually end up tanking the target economy
even further. A society in economic recession or depression isn't go-
ing to get better by making the most vulnerable people suffer, and its
economy won't return to prosperity by leaving working class people
(who usually spend most of their income, putting the money back in-
to the economy) with less money to spend. Austerity doesn't create
employment or growth, and it certainly doesn't create better living
conditions for the bulk of the population. But for the masters of ca-
pital, how average people are doing is just an "externality".  Debts
must be paid, in full and on time, no matter what. The rich can never
suffer, even a bit.  Rather, the poor must always pay the price.

In a world where many governments are "democratic" only in appea-
rance, true democracy continues to erode. Institutions everywhere are
increasingly more beholden to the dictates of the very few and very
privileged, while the wishes of the masses continue to be drowned
out by lofty talk of the rules of the "free market". The orthodoxy of
the inscrutable market must always be obeyed, human beings be
damned. Who cares if people starve, as long as the numbers look
the way they're supposed to look, for the right people?

Recently, Puerto Rico's unelected fiscal control board warned about
the severityof the island's cash flow, and suggested "emergency mea-
sures" be taken. Measures like maybe taxing expensive real estate at
higher rates, or taxing foreign corporations and big box retailers mo-
re? No, of course not. What is needed is to reduce teachers' hours, cut
health services for the sick and slash pensions for the old. So how
will austerity make for a better society? It won't. But it will make
for better financial returns for the masters of capital.

What Puerto Rico really needs in the long term is not austerity, or en-
trepreneurs (another fabled cure for everything). We don't need more
rights and giveaways for the international and local investor classes
or platitudes about "innovation" or personal responsibility. What we
need is true democracy, where the people -- the ones who really keep
society running -- can have a direct say in how the government func-
tions, how its budget is spent, and how (and to whose benefit) the
economic resources of the nation are to be utilized.

W.A. Delgado is a staff writer for the Puerto Rico Monitor.

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