There's a new scarlet letter in town. Actually, it's the same letter -- "A" -- but it stands for a different word that's increasingly regarded as shameful: Austerity. The darling idea of 2010 and 2011 has become the pariah concept of 2012. One of the defining features of conventional wisdom is the way it perpetuates itself. Once a certain narrative or idea takes hold in the political and media establishments, it becomes almost impossible to shake. So when the conventional wisdom does change, it's worth noting.
And the evidence of profound change is all around. In May, anti-austerity sentiment helped François Hollande topple French president Nicolas Sarkozy, one of the architects of the austerity measures that have caused waves of protest across Europe, especially in Greece.
One day after the French election, according to the AP, "the conversation in Europe was already different Monday: Austerity had become a dirty word." And incoming President Hollande proclaimed that "austerity can no longer be inevitable."
More evidence of the change in conventional wisdom was seen in the language the AP chose to report the reasons for the outcome in France: "Austerity was intended to address these jitters by reducing their government's borrowing needs, but there has been a negative side effect: As economic output shrinks, the debt burden actually looks worse."
The same week as the French election, a number of local Italian politicians running against the austerity policies of Prime Minister Mario Monti were also victorious. But the even bigger news was in Greece, where the two main parties, the center-left PASOK and the center-right New Democracy, were dealt big defeats at the hands of anti-austerity forces pushing back against the EU austerity deal signed by Greek leaders in February.
"A rising chorus of opposition to Berlin's austerity policies" is how Reuters reported the elections in Greece and France, while the New York Times wrote that "as growth has slowed, an anti-austerity backlash has swept Europe."
In Greece, after New Democracy failed to form a coalition government, the job fell to the upstart second place finisher and austerity critic Alexis Tsipras, leader of SYRIZA, the Coalition of the Radical Left. Though he, too, failed to form a coalition -- forcing another round of elections on June 17 -- Tsipras increasingly represents the voice of the people.
The conventional wisdom is even changing in Germany. A week after the Greek election, austerity champion Angela Merkel's party performed poorly in Germany's most populous state, North Rhine-Westphalia.
A few days after the German elections, a G8 summit was held at Camp David in which the language of growth took precedence over the language of austerity. "Our imperative is to promote growth and jobs," began the statement the leaders issued, while President Obama proclaimed: "There's now an emerging consensus that more must be done to promote growth and job creation right now."
The Guardian noted that austerity proponent Germany was "isolated" at the meeting, and a New York Times editorial was even harsher:
Her one-size-fits-all austerity program has been a failure, pushing heavily indebted countries deeper into recession, making it even harder for them to pay off their debts. It is putting the already-weak recovery in the United States at risk and is fueling instability and extremism in Europe.
Just days later, and perhaps most shockingly, the change in the conventional wisdom about austerity even seemed to have penetrated -- gasp -- the Republican Party. In an interview with Time's Mark Halperin, Mitt Romney was asked whether, if elected, he'd make big budget cuts right away. His reply:
Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5 percent. That is by definition throwing us into recession or depression. So I'm not going to do that, of course... I don't want to have us go into a recession in order to balance the budget.
This echoed his comments back in February, when he made the common sense observation that "if you just cut, if all you're thinking about doing is cutting spending, as you cut spending you'll slow down the economy."
And even if Republicans don't come around on actual policy shifts, they seem to be getting the message that the public is turning against austerity. This can be seen, to great comic effect, in new rhetoric from the GOP's demigod architect of austerity, Paul Ryan. Appearing on Meet the Press, he hilariously declared that "the whole premise of our budget is to pre-empt austerity." That's right, the new line the GOP is running up the flagpole is that we can "pre-empt austerity" with... austerity. In the same way we can "pre-empt" osteoporosis by jumping in front of a bus.
The anti-austerity backlash even made it to the Cannes Film Festival, where bronze-medal winner Ken Loach used his speech to fuel the course-correction. "The characters in the film have no work, and the world tells them they have no worth," he said. "We are reminded of the situation in Europe where people are told they have to stay out of work, and stay of no value. So we are in solidarity with those against austerity -- another world is possible."
So how did this change come about? How does conventional wisdom change? While there are no hard and fast rules, two factors are most often responsible: public pressure and leadership. The change, when it comes to the thinking on austerity, has come from a combination of both: one pushing up from below, the other pressing down from above. Alexis Tsipras, who might be the next prime minister of Greece, has definitely been pressing down from above. "Our goal," he said of the architects of the EU austerity agreement, "isn't to blackmail or to terrorize, our goal is to shake them." And because conventional wisdom get so ingrained, that's often what's required -- to shake the system into a new way of thinking.
Of course, the most powerful weapon against wrong-headed conventional wisdom is the truth. After revisions to April's economic numbers in Britain showed a decline, the headline in the Financial Times was "Data deal blow to austerity plans." Data -- in other words, facts -- which are steadily showing that the idea of cutting our way to economic growth is a destructive fantasy.
Another factor in the austerity turnaround is the new media environment, in which there are fewer conventional-wisdom-bound gatekeepers. Social media allow the truth to be amplified. They connect and fortify the truth-tellers and provide them with an arsenal of tools with which they can slowly but relentlessly chip, chip, chip away at the wall of conventional wisdom. The Occupy movement, which has been fueled by social media, has also forced a wider debate on the issue into the national -- actually, international -- conversation.
None of this means that we should break out the Keynesian champagne any time soon. But it's clear the forces of austerity are in retreat. And that's a very good thing.
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Matt Carr: Spain's Banks and the Con-Trick of the Century
My husband and I recently moved across the world to a small village in Austria ( 300 people ) which suprisingly is connected to the world with highspeed internet. In this small " bowl " of village life, I can see the argument against total austerity. That would close the one shop in the village, which would affect all of us ! As there are no huge temptations to shop, a healthy balanced bugdet can be achieved while still spending money. Biggi -www.simplyburgenland.blogspot.com
While the USA etc would have been responsible earlier for exploiting with which intention only the WTO started the Free trade policy since the west with their advanced technology dreamt of capturing world markets beating competitors.But China etc with its low sometimes enforced and manipulated manufacturing costs beat the west to exploit the Free trade and became the major exporting country SUBVERTING western industries with low manufacturing costs binding western corporates into Chinese operations to maximize profits.The result was massive unemployment in the west basically the precursor of the CURRENT economic CRISIS.Among the EU countries Germany which now has a trade surplus is least affected by the EU debt problem in itself and unmistakably proves that trade deficits are the root cause of the economic crisis.All this is going to boomerang upon China etc when the western economies fail in a year or two and half the Chinese exports which are to these countries lose out leading to economic&social crisis in China.The early 1990s scenario in indonesia,Mexico,erstwhile USSR,EEC offers a precedent of the likely outcome
THIS AIM TO GRAB GLOBAL SUPREMACY THAT CHINA EMBARKS ON CYBER ATTACKS(SCREENSHOT EVIDENCE IN FACEBOOK PHOTOS&NOTES)BUT ULTIMATELY THEIR GDPism WILL BE BOOMERANGING
It's all just an elaborate con and has been all the while. You can't beat a con merely by pointing out that it's a con. The people running it KNOW it's a con.
There's the link to the chart of what's actually considered "austerity" in EU.
Frankly, Germany is doing the right thing. It SHOULD be watching out for it's own citizens, which it is doing.
Default is a painful option but it is necessary. A planned default can be easily done starting with a process of selective default on specific creditors. Default is there for a reason and it has worked many, many times: in Russia, Argentina, Iceland and elsewhere. It is time for Greece and Spain to ignore Angela Merkel and exercise their sovereignty. Time to find their balls.
The forces that pushed for austerity still have huge bank accounts on their side to buy the airwaves with. There's bunches of folks who aren't hurting, even now, and don't really care if you are. There's bunches of folks who are single issue voters, to whom nothing else really matters. They'd vote for the devil if he promised to deliver on abortion, gun rights, the environment, or whatever.
AND then there is this sad truth to consider:.. "public opinion" is usually swayed more by emotional appeals to their ingrained prejudices and fears, than by boring facts. Older folks here may remember this ad from the 1964 race...
http://www.youtube.com/watch?v=dDTBnsqxZ3k
A pair of little reported Time Bombs threaten to end billions of human lives.
The first is the Fuel Ponds at Fukushima. A highly probable, near-term, earthquake can release enough radioactivity to endanger most of us in the Northern hemisphere.
The second is a little recognized, but surprisingly very possible, solar storm emission. It can bring down power grids for months. Nuclear plants would become meltdown candidates. That could end human life almost everywhere on the planet.
Both might be stopped by President Obama launching a massive initiative - the economic equivalent of fighting a life threatening war. It can reboot the economy and generate large numbers of jobs.
See www.aesopinstitute.org for a few details - and possible paths to prevent the worst from happening.
On the same site, see also:
A New, New Deal, which would use proven financial techniques to bring large amounts of private capital into use in ways that expand the economy and create jobs.
Second Incomes for All. A way to supplement job income and provide a major new source of purchasing power.
These two ideas originated with the late Louis Kelso, inventor of the Employee Stock Ownership Plan, used by 11,000 firms.
Finally, a Human Investment Tax Credit Program is designed to provide 6 million jobs and help 4 million small firms. The 1977 Jobs Tax Credit created 2 million jobs the next year.
Did the GOP PResidential nominee just say the SAME thing Obama has been doing and saying and being attacked for by the ' Baggers ??????????
Republicans and Austerity: Cutting off Your Nose to Spite Your Face.
The deregulation of the 'market' also permitted the growth of Global Giant Corporations that merged/acquired and gobbled up all the competition so that only a handful of Global Giants now control almost all the goods/services; the money and politics. And they want more of it!
The idea that government has interfered with 'job creation' is nonsense. These Global Giants have chosen to with hold their vast trillions of $ as a way to force the Conservative model to further deconstruct 'the State'.
Draw a circle. Banks offer credit + interest (hidden)tax. Leverage Debt by selling it to investors and gain interest on the dividends there of. Who wins? Banks. Your credit card or the nations or all people that engage in this enterprise are debtors creating more wealth to the loaner who by the way just prints more and more money with no skin in the game because he is leveraged by the interest on your debt and the bonds and the dividen returns and of course the (hidden) tax interest on all of it.
The Market. the ploys used to get you and me to see what they want us to see is that stuff all of it they want you to buy and go into debt to get it now and pay later and later and later with interest perpetually.
There are no sustainable real drivers in Europe or United States to maintain the gross amount of money being made in the markets. The things that make the most money are so flimsy and fragile in the market that like the .com period are here to day and gone tomorrow as grass on a hot summer day. Poof. Quick rise and boom then bust. We all enjoyed the ride and few of us ever realized that there is a down side to this. Unless the consumers decide to wake up and stop playing into it and demand change and stabilty we can only stay on that train till it wrecks. The consumer will have to make the call on this one.
Our economy is set to crash and the world with it. This is not sustainable under any situation. We all have to get off the fast but broken tract or crash.
1) Build millions of miles of bike and horse paths
2) Replant diversified forests, grasslands and hedgerows
3) Tear down derelict buildings and parking lots and plant urban farms
4) Retrofit all buildings
5) Build light rail and trollies
6) Clean up every creek, stream, river, lake, beach
7) Put solar hot water and micro wind on all buildings
8) Develop clean energy
9) Put water catchment on all buildings
10) Modernize water, sewage systems
11) Put all power lines under ground
Where do we get the money to pay for these jobs? The same place we got it to pave the road to our homes, put indoor plumbing and outgoing sewage, bringing us all electricity and phone lines, building neighborhood schools, libraries, post office, police/fire station. What made us a 'developed' country is that we created an 'equally accessed' infrastructure.
Social media makes it nearly impossible to consistently keep people down. People have access to more information than just what their local government, or locally controlled media, (or local religious group) want them to see. More access to facts means more freedom to choose.
More empathy for other people. More solidarity between vastly divergent groups.
It will take a long time to fix the problems that exist, but it is possible.
The problem is that, especially in the US, things have to get worse, before people wake up. The Party that says they are for fiscal responsibility is also the party wanting to give the wealthy a free ride while stripping all protections from everybody else. The wealthy get to corrupt elections, legally, and enough people are brainwashed into thinking Obama is the cause.
Hopefully we don't relive something like the french revolution. Though in some areas, if things get much worse, I can just imagine a "let them eat cake" type of scenario.