Just got off Skype with my German friend Volker. During our almost-weekly phone calls (free via Skype!), we discuss all sorts of things, and today, we talked about the European debt crisis, among other things.
I asked how things were going in Europe, after getting the story from our U.S. media that things are all fine now that the Greek and Italian governments are being run by sensible men who will bring order and austerity to their respective countries. Volker said that indeed, the riots have calmed down, and in Italy, there seems to be some relief at the ouster of Berlisconi. A couple other things he said got me thinking.
Volker thinks that there is some truth to the idea that the debt crisis in Europe was contrived. Greek and Italian debt have been climbing for decades, he said. Nothing about those countries has changed much in the last year or two, but all of a sudden, credit ratings are plunging, and debt repayments are getting more expensive, leading to speculation of defaults and the breakdown of the Eurozone, and subsequent global economic meltdown. Sounds like Naomi Klein’s Shock Doctrine at work. However it happened, whatever the cause, the results of Europe’s debt crisis appear to be austerity for the masses, and big profits for the 1%.
Sound familiar? Here in the good ‘ol U.S., we had the same kind of crisis earlier this year, when Congress voted to accept a deal worked out between its leaders and the White House that supposedly prevented a default on our debt. This was after a downgrading of our credit rating, and speculation that a deal would be the only thing to save us from the specter of default. That deal’s fruit is coming is bear this week, as the Congressional Supercommittee makes it recommendations to trim the federal deficit and debt by trillions over the coming decade.
Super-austerity! Here in America, everything is super-sized.
Even in the Upper Left Edge, we are not immune to the super-squeeze. Voters in several states pushed back the siege against the public sector a little earlier this month, but in Oregon and Washington, the siege is going strong. Particularly wrenching this week was the fallout from last week’s sacking of 15 of Clatsop Community College’s (CCC) 39 full-time professors in the face of a million-dollar deficit in the college’s budget for this school year. This comes on top of a similar amount of cuts to administration and staff last year at the college, and similar-sized cuts to the K-12 school districts in the area the last 3 years.
The squeeze is not expected to let up in the coming years, even in the unlikely event of an economic upsurge. School districts, colleges, cities, counties, libraries, and other government services are digging in for the long haul, accepting the fate of state and local government to the whims of the greater private economy. Even with the passage of a tax on millionaires and corporations last year, Oregon’s finances appear to be in a mess that isn’t going to go away any time soon. At CCC, the administration has been reduced to begging outside organizations for money to try to reduce the hemorrhaging.
What about borrowing? Well, this was the other thing Volker told me this morning that was really interesting. In Germany, all levels of government can borrow, and they do. Volker described our system, where state and local governments and their institutions must balance their budgets, as the “holy grail” of fiscal policy in Germany, and Europe in general.
So, our conclusion? Austerity – either enforced by balanced budgets as in the U.S., or by Eurozone administrators – is not the only or the best way to solve the problems caused by our very complex economic system.
What if our local college was allowed to borrow money to continue its educational (and economic) mission? Seems reasonable, since not only the federal government, but private individuals and businesses are allowed to borrow money to continue their activities as they see fit. Would the college, and other state and local institutions, abuse that right, and borrow unreasonable amounts of money, and then renege on their loans, like Greece?
Perhaps the current populist uprising around the world will force governments to make rules that allow the public sector to expand or contract to meet the needs of their populations at any particular instant. It’s clear that austerity measures, if not applied equally to all, will eventually lead to mass unrest, as the 99% realize their power in numbers.
I think so too. Financiers want to raid public assets rather than admit they’ve engaged in piss-poor private speculation.
Seems to me that much of our current economic challenge stems from bad bets made by big lenders who — rather than focus on caring for existing public needs — fixated on amassing profits from private wants.
What’s needed, I think, is a re-balancing of financial focus on our core needs.
Re-balance of financial focus on core needs? Like?
Basic human services. The foundation for life, liberty, and the pursuit of happiness. Health. Public safety. Education. Clean air and water. Unadulterated views of Creation. To name a few.
Thanks for elaborating, Watt. I do have an issue with public safety. I think the prison-industrial complex has gotten out of hand, and gets a little too much money from us taxpayers to do the job.