Memo to Deficit Hawks: Let’s Get the Facts Right
Wednesday, 06/9/2010 - 10:53 am by Henry Liu
Think the deficit hawks have it all right about ‘entitlements’, spending cuts and the debt crisis? Think again.
A Panic Wave of Demand for Fiscal Austerity
The sovereign debt crisis in Greece has sparked a panic wave of radical policy demands for fiscal discipline throughout the European Union from a perverse coalition of neoliberal public finance ideologues and anti-government conservatives. Proponents of fiscal discipline argue that the EMU and its common currency, the euro, would not be sustainable without the drastic restructuring of public finance in all eurozone member states through a combination of tax increases and deficit reduction through fiscal austerity. But creditors, mostly transnational banks, will be protected from having to accept “haircuts” on their holdings of sovereign debt.
Fiscal deficits across the eurozone are to be reduced by cutting public sector wages and social benefit and subsidy expenditures so that transnational bank creditors will be paid in full while turning a blind eye to blatant tax evasion and avoidance by the rich with non-wage income that contribute to loss of government revenue and fiscal deficits. The dysfunctional disparity of income and polarization of wealth between the wage-earning masses and the financial elite with income from profit and capital gain, are the main causes of overcapacity in the economy. In past decades, the neoliberal response to overcapacity was to shy away from the obvious solution of raising wages, turning instead to flooding the economy with huge mountains of consumer and corporate debt that eventually resulted in a tsunami of borrower defaults that turned into a global credit crisis. Yet repeating the same response to the current crisis will lead only to another global crisis down the road.
And it goes on like this. It's worth reading the whole thing as yet another reminder, straightforwardly told, of what is really going on, all over the world, as the banksters consolidate their holdings on the backs of the poor, working, and middle classes.
It is the very definition of "Shock Doctrine/Disaster Capitalism" and we are well into it. The question is, how can we get out of it?