Austerity and the Decline of the Collective

(Notes for Second Annual Arnold Amber Memorial Lecture, Toronto, May 29, 2019)

I am honoured to be celebrating the life and values of Arnold Amber. Celebrating social justice and human rights and a life of activism has never seemed more important. Thank you to Arnold’s family and to all for coming out. And I should probably also thank the NBA for scheduling game 1 of the finals for tomorrow rather than today.

Let me begin by going straight to my conclusions. I do this so that if you doze off during my presentation, as people so often do, you will at least know what you missed. So, my five conclusions:

1. Austerity is toxic.
2. It is built on a lie, and on a withered idea of freedom and a hollowed out notion of citizenship.
3. Austerity is self-perpetuating, trapping us, stunting our political imagination.
4. We nevertheless do have alternatives. There are always alternatives. Big change is hard, but given the risks, the stakes, the opportunities, big change is urgent, and bold is exactly what’s needed if we are to meet our challenges and break out of the austerity trap.
5. A new generation of leaders is giving us reason for hope, though clearly there’s no reason for complacency.

WHAT IS AUSTERITY?
By austerity, I simply mean the belief that cutting taxes and government spending is the solution to whatever ails us. Slow growth? Cut taxes and spending. Soaring debt? Cut taxes and spending. Economic insecurity and inequality? Cut taxes and spending.

In one way or another, Canadians have been living with austerity for several decades. Admittedly, we have experienced nothing like what the Greeks or Spanish have gone through. Ours has been an austerity in slow motion, but austerity nonetheless and austerity largely self-imposed.

In Canada, for example, taxes as a percentage of the economy are lower than they have been since the days before medicare and universal pensions. Total government spending as a portion of the economy is below the OECD average. And when it comes to social spending, we are near the bottom. Here in Ontario, following a round of unaffordable tax cuts, cuts to vital services accelerate, even though Ontario’s per capita spending is the lowest of all the provinces.   

And while Canadians not so long ago voted for governments that vowed to end the austerity, the previous decades of tax cuts constrained their options and none were willing to reverse those cuts in significant ways.  Any  tax increase for some was typically joined by an even more costly tax cut for others. And, now, for many, austerity at full throttle seems to be making a comeback.  

WHY TOXIC?
Just a few years back, several hundred mental health professionals wrote an open letter, published in the Guardian, worrying that they were confronting a new set of mental health problems. More and more of their clients were apparently suffering massive anxiety about whether they could hope to secure opportunities for their kids, about how they would get by for more than a week or two if they lost their jobs, or how they would get by from day to day on their meagre pay in jobs with no benefits and few prospects. They felt alone, abandoned, without worth and without hope. What a powerful articulation of how austerity hits first and hardest those with the least power, those most dependent on public services if they and their kids are to have a fighting chance.

It’s no news that tax cuts benefit most the rich and the service cuts that inevitably follow hurt most the poor. How can it be that in a country as rich as ours, in a city as rich as Toronto, we still have thousands of homeless people, young and old, veterans and families with children, some of whom, year after year, die needlessly on our streets?   How is it that in a country as rich as ours some indigenous communities are still without potable water and indigenous children and youth are still getting short-changed? How is it that in a country as rich as ours we seem content that students, graduating with record breaking debt, are entering a labour market increasingly offering precarious work with few benefits or prospects? How is it that we seem now to accept that our kids won’t have it as good as we do?

Austerity exacerbates inequality, weakening our mechanisms of redistribution so, for example, today about two thirds of unemployed Canadians have no access to employment insurance – and the numbers are even worse for a city like Toronto – and welfare rates and disability benefits provide no room to breathe, trapping people in poverty and dependency.

THE AUSTERITY TRAP
Perhaps the most insidious but least discussed impact of austerity, however, is cultural or social psychological. Austerity has significantly shaped our political culture, our sense of what and whom government is for.

Simply, when Government is not there for people, when it seems to serve the powerful few, not the many, why vote, why pay taxes? If the game is rigged, why pay, why play?

I imagine the Torontonian stuck in traffic gridlock, after a hard day, trying to get home to family, muttering what’s government for, what am I paying taxes for. When more taxes are exactly what we need to build the free and clean public transit Toronto needs. I can imagine a young family desperately looking for affordable daycare for their kids, muttering what’s government for and thinking we can’t afford both higher taxes and the costs of care. When more taxes is exactly what we need to build universal high quality childcare across Canada. I imagine an older Canadian worried about wait times and the out of pocket costs for the medicine and care she needs, angry at government and resentful of the taxes she pays. When more public investment is exactly what we need to make healthcare not only better but more affordable for individuals and sustainable for future generations, just what we need to integrate pharmacare and dental care and mental health services into our public health system.

Austerity has undermined our trust in one another, in government, in the future. According to researchers such as Bo Rothstein, not so long ago Canada was tucked in just behind the Scandinavian countries and the Netherlands on measures of trust. Not today. We have seen a four decades long and steep decline in trust in Canada. Not so long ago John Meisel described Canada as a public enterprise society, and social scientists explained that what distinguished us from our neighbour was a commitment to the common good, to “community”, to cooperation over competition. Comedians poked fun at our apparent comfort with government. Today? Not so much. It’s a good thing of course that we are not so deferential to authority. Blind trust is dangerous. But some minimum of trust is necessary if we are to achieve what we must together.

Most disturbing are the recent research findings on public commitment to democracy.  Mounck and Foa, for example, have been tracking public attitudes on democracy for years, long assuming, like most of their colleagues, that the arc of history bends to democracy and justice, what they called democratic consolidation. There was no stopping the democratic impulse, or so they thought. Their data tell a different story. Instead they have found declining commitment to democracy especially in rich countries such as ours. Now they  worry about democracy’s decline, deconsolidation. How things have changed.  Just about every day another book or article announces democracy’s demise.  It’s probably well to remember that history doesn’t bend arcs. People do. And in important ways we seem to be bending backwards. How did we get here?

HOW DID WE GET HERE?
Clearly there is no official starting date for the beginning of the neoliberal counterrevolution, the parent of austerity, no signal event that marks the turning of the tables. Generally critics like to start with the ascendancy of Ronald Reagan in the U.S. and Margaret Thatcher in the U.K.  But I’d like to take us earlier than that, to the heyday of the Trilateral Commission, a nongovernment organization, founded in the 197Os by the same sort of folk who now attend Davos. Ostensibly their purpose was to promote cooperation among North America, Japan and Western Europe. But like Davos, the Commission provided a valuable window into what was preoccupying the rich and powerful.

It’s well to remember that the 1960s and 1970s was a time of expanding democracy, both political and economic. Unions had gained a foothold to assert workers’ rights. Social movements were pressing for gender equality, individual rights and freedoms, and the expansion of the welfare state to include those who were being left behind. These were heady days.

And this was exactly what those in the Commission were worried about.

In 1975 they published The Crisis of Democracy that set out what they perceived to be the greatest risk to western democracies. This is not a report that we would likely see today only because they said out loud what is generally only whispered. The problem preoccupying them?  “An excess of democracy.” That is an actual quote. That’s what they wrote. Too much democracy.

People were getting too much power, regular people, working people, poor people, people of colour, people who had been excluded from the gains of the welfare state. All hell was breaking loose or so it seemed to the Commissioners. If democracy is always a wrestling match to determine who shapes the future, the powerful few or the many, the powerful few seemed to be losing ground. What, they asked, would be the consequence if “the many” were in charge. Expectations would go through the roof, they said. And how would we pay or more important who would pay?

Underpinning all this anti-democratic sentiment, it seems, is the conflation of wealth with worth, and we see this still in talk about job creators, about makers and takers, strivers and shirkers. It was then and is now largely about a fear of the collective, about who should be in charge

The Commission’s “solutions” set the agenda for the next four decades. More private, less public. More individual, less collective. More market, less democracy. The goal they said, and yes they actually wrote this too, was to lower public expectations and increase public apathy.

In a sense, Thatcher said it all with her notorious, “there is no society, just individuals and their families”. She was offering just this kind of bargain basement citizenship, where we owe nothing to strangers and we should expect nothing in return. What a shriveled notion of freedom. What a hollowed out idea of citizenship.  A licence for selfishness and greed and a recipe for insecurity and loneliness.

So that was more or less the political and ideological frame that guided Thatcher and Reagan and sooner or later Canada as well even if more slowly and reluctantly. But how to sell this to citizens who had come to value democracy and who were strongly attached to their public services?

LIES AND MISDIRECTION
Austerity was pretty much sold on lies and misdirection. The political trick, start with taxes. Nobody has ever much loved paying taxes. Who likes paying the bills? And after all, taxes are how we pay the bill for those things we have decided to do together because we could not do them as well or at all alone. Five hundred years ago Machiavelli warned the Prince not to be too generous lest he be forced sooner or later to raise taxes. Taxes were unpopular then and not much has changed. So start with cutting the taxes that people don’t like rather than with cutting the services they do like.

The big lie? That tax cuts are free. That there are only good consequences from cutting taxes. That everybody wins. That even cutting taxes for the rich will yield benefits that will trickle down to the rest. That the cuts would so fuel economic growth that they would pay for themselves. That tax cuts are the last free lunch. Of course in the history of the world, of the universe, tax cuts have not, do not, will not pay for themselves. Not surprisingly, Reagan left behind massive deficits.

So the lie shifted a bit. Tax cuts would supposedly be paid for by efficiencies, by eliminating waste and corruption. Drain the swamp. End the gravy train.

Let me be clear. Reducing waste and eliminating corruption are worthy and important goals. Waste and misspending steal resources from underfunded programs and drain our already shallow pool of trust. I have never known a politician who argued for more waste and corruption and of course we should hold governments to account for how well they manage public resources.

But independent researchers and public budget offices over and over and over again have shown that there’s never enough gravy to cover the tax cuts, that the scandalized headlines and annual Fraser reports have no doubt led us to exaggerate just how much waste there is. And let me add that no organization, public, private or in-between, is ever perfectly efficient. They are all run by perfectly imperfect humans so mistakes happen (we might even learn from them). So there will always be some so-called scandal for the critics to exploit. And finally what’s wasteful to you may not be wasteful to me. Sometimes what’s at issue is simply conflicts of values. In a pluralistic democracy we don’t get to personalize government the way we do our smart phone. Inevitably we will pay for some stuff we don’t much like.

And many of these efficiencies have proved awfully costly. Privatization has often meant worse service at higher cost with less democratic accountability. Cutting red tape has often meant less protection for citizens, for workers, for the environment, creating great suffering – think oil spills, contaminated water, or the great financial meltdown – but also at great public costs. How often efficiencies are a way of privatizing gain and socializing pain.  

In any case, let’s be clear. Right wing governments embrace deficits.  They need them to justify cuts to vital services, cuts that they couldn’t sell otherwise. They create them through their tax cuts, occasionally aided by accounting tricks. At the same time they describe these self-induced deficits as poisonous. There are, we are told,  both moral and economic imperatives for eliminating deficits and balancing budgets. Otherwise the sky will fall. Spoiler alert. It won’t. We are told that governments are like households and must live within their means, an analogy that would be more apt if households like governments could print money. Households can’t. Governments do.  Austerity isn’t simply the consequence of tax cuts, it may often be their purpose.

This notion that the smaller the government the better, that the biggest issue we confront is the size of government is a bizarre distraction. I have never known a progressive politician, any politician, to argue that we should make government huge, as big as possible, or taxes as high as possible. That it’s all about size. Clearly government should be only big enough to serve the public good and no bigger, and taxes high enough to pay for that and no higher. And deficits within reason, no problem. Size of government is a conjuror’s trick, distracting us from the real problems. Don’t look there, look here. Climate change? No, size of government. Eroding democracy? No, size of government. Economic insecurity, inequality? No, size of government. The right has been awfully successful in equating government with waste and corruption, in redefining taxes as a burden or a punishment disconnected from the benefits they bring, and distracting us from the real problems we can only hope to solve together.  It is our democratic decisions about the common good that should shape the size of government. 

But instead we find ourselves in the austerity trap. There is no alternative, Thatcher told us, and, it seems, we believed her. A number of polls have shown that Canadians want the same things we wanted in the 196Os and 197Os. Access to high quality healthcare and education, safe and livable communities, a clean environment, a fair shake, a secure retirement, opportunities for our kids, help for people who need it. What has changed is that we are less sure that this is possible, whether governments are up to the challenge, and how in the world could we afford all this. After decades of tax cuts our window of possibility has severely narrowed.

Now, I don’t want to exaggerate the discontent in Canada. In fact we may not have as much discontent as we need. Many, especially in my generation, have done quite well, are in pretty good shape to manage change and help our own kids. We grew up in a time of active government and expanding opportunities, when almost anything seemed possible. Now, many seem content to manage decline just so long as it doesn’t come too quickly.

But at the same time increasing numbers of Canadians are fed up. Many are turning away from party politics. Others are turning to antigovernment solutions. Complacency, despair, resentment seem to have shaped our political choices. Many don’t vote at all. And for those who do the political choice on offer seems to be between complacency and tinkering on the one hand and resentment and dismantling on the other. And with our first past the post electoral system our politics tends to lurch between governments that cut and governments that partially restore followed by deeper cuts again and so it goes. Stuck. Going in circles.

Even more troubling is that just about everywhere in the world we see people turning to authoritarian alternatives, strongmen, yes usually men, who promise to bring government and its bureaucrats to heel and to stand up for us and people like us. Austerity did not of course create racism, religious bigotry and xenophobia. But to the extent that it presents us with a zero sum world where competition trumps cooperation and where there are always winners and losers, it has provided fertile ground for tribalism and the demagogues who would exploit it.

No wonder the world seems upside down or at least out of joint to so many. To paraphrase Antonio Gramsci, we are in an in-between time, an interregnum; the old world is dying, the new world is not yet born. It is, he warned, a time of morbid symptoms.

TIME FOR SOMETHING DIFFERENT

Surely it’s time for something different. Just think of the challenges before us. Climate change poses an existential threat, life and death for some, life altering for all. And we are feeling the consequences now, consequences that fall most heavily on the poorest. The rate of nature loss is accelerating at a dangerous pace. These twin environmental challenges – climate change and nature loss – will call on fundamental changes in how we live, produce, consume.

Insecurity and inequality in all its forms continue to grow, undermining solidarity, democracy and trust. And to turn things around will mean fundamental change in the balance between public and private and in the rules of the game.

And yes there are alternatives. There are always alternatives. A good rule of thumb is that whenever a politician tells you there are no alternatives be assured not only do they exist but you’d probably prefer them if they were on offer. We need choices beyond complacency and resentment, bold alternatives that offer a different story about our relationships to one another, nature and the state.

We need to stop asking what’s good for the economy as if it were some independent thing, as if it weren’t embedded in society and nature. We have to stop treating so-called fiscal health as more important than human health or the health of the planet. Rather we have to start asking what kind of economy do we need to serve human well being in harmony with the natural world.

Of course big change is hard. Inertia and vested interests mean inevitable and powerful opposition. That’s why change almost always starts in civil society, outside of political institutions or at the margins of politics.

Thankfully here in Canada, in the U.S., in the U.K., and in Europe there are young leaders developing just such bold alternatives, some version of a Green New Deal, or whatever you want to call it, a manifesto and blueprint to help us imagine a better future and to mobilize our resources to achieve it. Leaders who understand the urgency and the obstacles. Who start with what’s necessary rather than what’s politically easy.  Who understand that increments won’t get us where we have to go; that we must pursue social justice and environmental justice together; that unions and those directly affected must be part of the solution in a just transition; that there are opportunities here, not just costs, opportunities to create the jobs of the future, opportunities for a better more just life; that all this must be achieved democratically, bringing environmentalists, indigenous communities, unions, poverty groups, human rights advocates, and those most directly affected together under one umbrella; that we need more democracy, not less, in our politics and in the workplace.

Young people are walking out of school and taking to the streets to tell us enough of half measures and timid targets, targets we nonetheless keep missing. We ought to be listening, joining on, holding the door open for these young activists.

The naysayers will remind us that we are a northern country with cold winters, a federation with diverse interests, an oil producing country and so will warn us to go slow, not to upset too many apple carts, not to rock too many boats. And of course they are right that big change is hard. But the young protestors and the green new deal architects get it. Just about nobody wins if we fail to rise to the challenge. Just about nobody.

Given the stakes, given the risks, given the opportunities, bold just may be the new pragmatic.

Comments
33 Responses to “Austerity and the Decline of the Collective”
  1. Toby Stewart says:

    Thank you Alex — for this articulate, logical analysis — and for your five conclusions. This kind of information and counter argument to ‘austerity’ needs to be repeated and circulated in all of our national, provincial, regional and municipal arenas…. and each of us can a should be doing this in an ongoing way with whomever we can reach.
    Oh for the days when we all helped BUILD our country and its social support infrastructure — instead of the present de-CON-struction mindlessness by knee-jerk CONservatives labelling themselves by any other names.

  2. Mark Hammer says:

    Welcome back.

    One of the things I rarely see in those waving the flag for austerity is any hint of regret. I’m a pretty frugal individual, and disinclined to luxury of most sorts. Unless I can not technically do so, I try to make all purchases, big and small, in cash, preferring to always have the sense that I’m spending *real* money that can run out, and not imaginary money. So the idea of not spending more than one can afford, and saving up for things, holds great appeal to me. But for me that is also accompanied by the notion of “if only”. IF I had the money for X, I would purchase it, but since I don’t, I can’t. However, I *can* save up for it. There’s always hope.

    When austerity measures are introduced or discussed, though, no one ever seems to say “We regret that the budget does not permit this expenditure, and we certainly *wish” that we could afford such-and-such. And if we can manage to economize effectively, and can once again have the funds, we would love to spend on X again, because we know how important and useful it can be.” Rather, the sense one often gets is resentment and dismissal of whatever is to be cut, as if it never really mattered or was in the public interest in thew first place, and should never be a budget line item ever again. It’s not “Sorry kids, we can’t afford to go to Disneyland this year. Maybe next summer.”. It’s “Whaddya want or need a vacation for? They’re stupid and pointless.”

    The one approach is more future oriented, prospective, and hopeful, and the other seems principally concerned with the immediate past and present; encompassing some vague abstract notion of some indeterminate future, but with no particular plans for it or what it’s supposed to fix, just a devaluing of how things are now as its rationale.

    Of course, this is pretty much how we got to the state we are with respect to infrastructure. It’s almost as if such use of public funds is not for the collective “us”, but is conceived of almost like a pricey school ski trip for a teenage child, eliciting a resentful begrudging “Do I have to?” Fine, here’s $50.”, rather than a more hopeful “Here’s something that will help us all”. We don’t save up for it. We don’t plan for it. We just keep avoiding it because we don’t want to spend the money. So, a public sector that makes better use of tax money, and is able to deliver more to more people,; maybe even for less money? Count me in. Don’t go nuts spending extravagantly. But what is the point of smaller government just to be small, and not spending just to not spend? What will it deliver to the people?

    I’d like to see a little more wistful regret on the part of budget cutters. I’d like to know that they see *public value* in the things being cut, even if they acknowledge the current unaffordability, and temporary requirement to do more with less. I’d like to hear from them that they wish they didn’t have to. I’d like to see hope from them that scrimping a bit will permit the return of those programs. I’d like to know that “value for money” doesn’t mean that money replaces our values. I’d like to feel that whatever economizing has to be done is merely a temporary detour, and that we’re still on the same collective road, headed in the same direction. Maybe then the trust would return.

    • himelfarb says:

      Interesting as always. A little regret and a longer view would be great. But an end to the senseless tax cuts that make cruel service cuts inevitable would be better. I too am frugal but I have never deliberately cut my revenues to force myself to be even more frugal. Thanks Mark.

  3. Stephen Garlick says:

    Overall taxation levels might be down but the tax burden has completely shifted since its inception. Corporations used to pay the most and workers the least. Corporations received tax breaks for Research and Development. That R&D made Canada World leaders in Telecommunications and Hydroelectric Generation Technology, for two examples.
    Now our Economy is Consumer driven instead of Manufacturing driven. A Consumer based Economy has many flaws. Those with money have all they need in consumer goods. Those who would consume have no money.
    It started with the fraudulent clams that “money trickles down” and “corporate tax cuts create jobs.” That is an Economic Theory worthy of P.T.Barnum.

    • himelfarb says:

      You are right about the shift to consumption, and from corporate to individual, and yes our tax system is less progressive than it used to be. But taxes our still a great bargain for most of us as we get back more value in services than we pay in taxes. Check out the Himelfarbs’ Tax is Not a Four Letter Word.

  4. Harold Neth says:

    Thank you Alex. Insightful and incisive as always.

  5. Robert White says:

    Former Treasury Secretary & Harvard Professor Larry Summers is wholeheartedly likeminded in that he is saying that much more monetary stimulus is necessary to avoid Secular Stagnation and further social & economic growth. Half of the Macroeconomists today are in agreement with Summers whereas the other half still don’t accept the hypothesis.

    With $22 trillion in deficit and trade wars looming it pretty much looks like Summers is right.

    I agree with your assessment, Alex.

    RW

  6. Dave Hughes says:

    Great article.When you mentioned the Thatcher quote that there was no society, it made me think of a recent book I read called “Indivdutopia” by Joss Sheldon. It extrapolates our current values to an end world without society or even the understanding of society. A chilling look where we could be heading.
    Thaks again for the thought provoking discussion.

  7. the thing is, ‘austerity’ is nothing more than a massive fraud and scam. few people want to talk about this, so I won’t waste a lot of time explaining anything here – but if you are truly interested in sorting this out, it’s all explained here – http://www.rudemacedon.ca/drh/12a-money.html

  8. Hello Alex,
    Thank you for the post. It’s timely as I’m about to deliver a talk on humanizing workplace connection in the context of digital transformation and automation. The notion you cite of privatizing gain and socializing pain applies to how we pursue efficiency in the private sector as well. If business feels no responsibility to upskill and transition the sizeable chunk of people facing the threat of redundancy in their current jobs, who does? We need collective care and purpose now more than ever.

    • himelfarb says:

      Thanks Gretchen. Well said. We too often treat digitization and automation as immutable forces over which we have no control and to which we must simply adapt. It’s time we made some collective decisions about how we might use tech to enrich work and expand leisure and achieve greater social justice.

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