0 Austerity feeds the rich.
- by Adrian Mark Dore
At the dawn of the Dark Age, when Thatcherism and Reaganomics were introduced, a new form of feudalism emerged. It established a new ruling class - the mega-rich, who preside over us today.
The distinguishing feature of this new era is that nothing appears to be what it is. It's all a massive lie. We are fed a continuous stream of bullshit, so the ruling class may continue to extract inordinate wealth from the rest of us while leaving us feeling that everything is just fine when it's not.
Misleading claims are made that we live in a democracy, are much better off than our forefathers, and that our planet is not dying. Sadly, we believe them, allowing them to continue their thieving practices as the feudal masters of yesteryear did. The only way this tiny minority can control the rest of us, other than by force, is to lie and mislead us.
The extent to which we are lied to and misled is breathtaking. It covers virtually every facet of life. In this article, I raise one aspect - Austerity, or Spending Cuts. It's pertinent because government deficits have soared after the COVID pandemic and cost-of-living crisis. What will follow is a lie similar to this.
"As prudent keepers of the public purse, we are left with no realistic alternative other than to look at making deep cuts to government spending."
This is a monstrous lie, but to get away with it, they make it sound reasonable by comparing government and household budgets. They have us believe that governments and individuals face similar budgetary restraints. This is simply untrue. As individuals, our incomes are fixed. To keep out of trouble, our only option is to cut costs. They imply that governments are in the same boat. Therefore, cutting costs is fair, reasonable, and the only realistic option. However, this analogy is incorrect because a government’s income is not fixed like an individual’s. Their options for addressing a deficit are far greater. Cost-cutting is only one of many options. Much better options are open to them, assuming they are working in our interests. As they are not, they will follow a cost-cutting exercise despite its adverse effects on us all, which I explain below, but first…
How does cost-cutting benefit the rich?
Cost cutting reduces the size of government. That is precisely what the rich want. They want a government with a small tax base. Less tax for them to pay. A small government also leads to fewer regulations and poorer government oversight. This provides greater opportunity to avoid or evade tax as small governments are less efficient at tax collection. The same applies to all departments. They are less efficient at their assigned duties. Thus, opportunities abound, which the morally defunct exploit. They also encourage governments to privatise public services to "help reduce expenditure." These ventures provide rich pickings. So, the more the government cuts costs, the wealthier the rich become. The stronger their political power. Their stranglehold on us increases. We become poorer and weaker.
How does cost-cutting harm the majority?
A small government means they offer fewer services or services of a poorer standard to the majority. These services span all aspects of life. When these services are cut, or the quality declines, the quality-of-life for the majority fall. See my article "Quality-of-life in freefall. The measure the rich don't want you to see" for more details. The less the state supports and provides for its citizens, the greater the cost to its citizens. They either have to provide the service themselves or forgo it. Either way, it's a cost to them. This lowers their quality-of-life.
As mentioned earlier, a small government means less government oversight and control. This situation is taken advantage of and involves a plethora of activities, from tax evasion (by the wealthy) worsening working conditions, and harmful environmental practices. It means fewer and less effective protections afforded us and the environment from the avarice of a few.
Cost cutting reduces our investment in the "commons." The "commons" represent our infrastructure and institutions, which we share and rely upon to live our lives. The greater the investment in the "commons", the stronger our economy. Investment in "commons" is what distinguishes developed and developing nations. Developing nations' investment in "commons" is not as substantial. Things we may take for granted, like reliable power supply, communications, road and rail infrastructure, and a functioning judiciary and policing service, may not exist in some developing countries. Businesses benefit from the "commons" but are reluctant to maintain and build it, despite its importance to our economy.
There is a simple fact that I'm sure few will deny. Economies are stronger when middle /lower income groups are strong. Cost cutting, as explained above, weakens them. So, by making them poorer and reducing our investment in "common" assets, we are harming the economy's medium to long-term prospects. The rich are shooting themselves in the foot through government cost-cutting.
If cost-cutting is not the best solution…
How does the government reduce its deficit?
Assuming we had a truly democratic government dedicated to looking after the majority's interests, then cost-cutting should be its least favoured option. It should look at options for increasing its revenues, which it can do through the following.
Increase revenues through increasing corporate and high-end tax rates. Applying special taxes to all rental incomes and imposing import duties on certain goods to raise funds to stimulate local manufacturing.
Stimulate growth by investing directly in the economy through infrastructure projects, key strategic businesses, and R&D (Research & Development) projects. Second, invest in social support. Money invested in social support is recycled back into the economy quickly, thus providing what is commonly referred to as an "economic stabiliser." The more spent on social support, the more stable the economy becomes. That's why a BUI (Basic Universal Income) would result in a stable economy, as the economy would be guaranteed a minimum monetary flow irrespective of other factors. Third, encourage and support the return of manufacturing to create a larger, more productive economy.
Despite cost-cutting being the least attractive option, our plutocratic government will continue to serve their masters. They will ignore the needs of the majority because their masters will lose over the short to medium term.
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