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Slouching Towards Austerity

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It's a term sweeping the developed world "austerity." It's not the way the 21st Century was supposed begin, at least not for Western countries who, since the end of World War II have enjoyed one hell of run.

With virtually no competition for markets, natural resources or energy, western countries, led by the US, experienced extraordinary growth, accompanied by historic levels of individual affluence and societal protections. All this became viewed as part and parcel of the West's new version of manifest destiny and, among citizens, a birthright.

But then former Third World/Developing nations, like China and India, stopped propping up the West with cheap resources and began demanding their share of " well " everything. And, they demanded that capitalist nations of the West live up to their own capitalist dogma and " gasp.. compete.

All of which is why the West's one-time Horn of Plenty is now running on empty. The hubris and swagger that once pervaded Western societies has been replaced by something completely unfamiliar mandatory austerity.

Workers in Western Europe are already in the streets protesting cuts in pensions, wages and jobs. Retired workers and the working poor are protesting cuts in Europe's once robust social services. Politicians in those countries beg for understanding, explaining that they can't afford such levels of expenditure any longer. Besides, they plead, all the debt piled up over the past couple of decades has come home to roost, their creditors are not amused and, unless satisfied -- and damn fast they may cut them off.

So, many European countries are broke. Amazingly since the region enjoyed half a century of virtually free protection under the US defense umbrella.


Here in the US we took matters further, much further. We not only over-spent like Europe, but also carried a defense budget burden greater than that of all the nations of the earth combined. Then, just for good measure, we slashed taxes on the rich while outsourcing the last remaining dependable tax base the jobs of withholding-tax paying blue collar workers. And, when the tax revenue plummeted, we made up the difference borrowing ourselves into the same hole Europe has. (When it came to the economics of "What, me worry?" Americans went the whole nine yards.)

Austerity forced by the rules of economic physics works just like those spike strips cops put down to stop runaway cars. When a nation hits an austerity strip it's a short matter of time before everything is screeching along on rims with sparks start flying. That's the stage Europe is in now, sparks are flying. What comes next is, of course, entirely inevitable. It can be postponed for a short while, but eventually the wheels fall off and that's it time to face the music enforced austerity.

Europeans may have a tough time adjusting as their social welfare system restructures into something less generous. But Europeans can at least reach back to the near-past, dusting off coping skills they employed during and immediately after the war. Americans will not be so fortunate. It's been nearly a century since Americans have had to deal with anything that even approached austerity. (Our idea of austerity is settling for a 42" flat-screen TV instead of the 60" we really wanted, or dining at Outback Steakhouse instead of Chateau LeExcessive.)

The American economy has, so far, avoided the spike strips, but only because of bank and Wall Street bailouts and fancy driving by the Federal Reserve scooting down side streets and back alleys. But that run of luck will run out too And when it does it will be interesting to see how all those blue collar voters who fell in love with the Tea Party's "Don't tax the rich and we want smaller government" philosophy react. After all, when the private sector can't/won't hire them, banks won't even return their calls, much lend them a dime, and the government has, on Tea Party orders, gotten out of the social welfare business, what then?

It's an interesting question, and one that we should all begin to ponder so we're ready when it happens. Because sooner or later sparks are going to fly when even these dimwit self-minted "patriots" notice something. As they and their families settle into the serfdom of austerity, those who cheered them on and financed their movement will have suddenly disappeared. When they go looking for their one-time prophets of prosperity, Sarah Palin, Dick Armey et al, they will find. And they will find them doing just fine, thank you very much-- living in excessively non-austere surroundings, behind locked gates, but signing louder than ever the glories of unfettered free enterprise and small government.

That's when, I suspect, Nevada Tea Party darling, Sharon Angle, will get her wish, as all those gun-loving, but now terminally unemployed, folks she stirred up start exercising "their Second-Amendment remedies." ( Though I suspect not exactly as Angle had originally envisioned.)

 

Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a (more...)
 
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Interesting article. However, I have some questio... by lwarman on Friday, Oct 8, 2010 at 2:33:44 PM

 

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