Austerity is no Surprise

This extract comes from The Confiscation of Economic Prosperity.  It serves as a reminder that this crazy demand for austerity should not come as a surprise.

Besides, the problem is not the size of the deficit but the policy changes that the right wing can engineer by stoking fears about the disaster that deficits can create.  The idea is that with the government facing seemingly unmanageable deficits, the public will be stampeded into a wholesale slashing of government spending.

As a result, regulatory policies that inconvenience the corporate sector as well as social programs that might benefit ordinary people will disappear.  The right wing gleefully refers to this situation as the starve-the-beast strategy — by depriving the government of adequate revenue, its regulatory powers will necessarily shrink.

Traditionally, Republicans represented themselves as the party of fiscal sobriety, insisting that balanced budgets were essential to solid economic performance.  In the 1980s, a new strategy began to emerge.  Conservatives began to welcome huge deficits.

For example, in 2001, President George W. Bush expressed his support for this tactic, reporting that the government’s fast-dwindling surplus (created by his own tax cuts) was “incredibly positive news” because it will create “a fiscal straitjacket for Congress” (Sanger 2001).  Similarly, California Governor Arnold Schwarzenegger said that he wanted to use his budget plan to “starve the public sector” without raising taxes, “because we don’t want to feed the monster” (Delsohn 2005).

Nobody has been more adamant about pursuing this strategy than our old friend, Grover Norquist, who told an interviewer:  “I don’t want to abolish government.  I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub” (Norquist 2001).  Conservative economists, such as Milton Friedman, agree, although in less colorful terms.  They applaud growing federal budget deficits created by tax cuts, which will eventually create pressure to cut social programs and regulation (Friedman 1988; 2003).

In reality, all except a handful of principled libertarians have no interest whatsoever in thoroughly starving the beast.  To the extent that government subsidizes and protects business, conservative class warriors welcome the governments’ engagement with open arms.  Only when the government lends support to the poor and disadvantaged does the right wing regard state spending as an abomination.

6 comments so far

  1. Jurriaan Bendien on

    Well said – but really you ought to talk to Brad de Long about this, since he raised the question of why a government would, in a time of slump, do anything so counterinuitive as to pursue austerity policies.

    I suspect though it is not simply a matter of an anti-state philosophical attitude, but also of the experience that state expenditure, if unchecked, has the natural tendency to grow regardless of revenue constraints.

    BTW the Federal Govt is the largest business in the world, but it is also a business which doesn’t even break even.

  2. javier hernandez-miyares on

    they have gone beyond eliminating programs for the poor and disadvantaged, and now they are attacking the public sector infrastructure and spending. they wish to destroy modernity.

  3. A.F Walking on

    Hey Prof!

    I like your post today because, as ever, it’s provocative stuff.

    Frankly though, I can’t see it as anything other than more partisan bullshit.

    Given the accepted paradigm, “the conservative right” are perfectly rational to come to the ‘austere’ conclusions they come to. Many who are far to poor to be jumping on this belt tightening exercise will support it, and not just because of the echo-chamber of talk radio – but because “it makes sense” to them.

    If we are broke, which Prof we are, then the one way of looking at it says we ought to stop. It’s a sensible (if decade or two too late call) for fiscal and monetary responsibility.

    But that’s all assuming we continue to maintain that the current system and paradigm are relevant.

    I’d like to suggest that it is not, nor is bitching about something that is irrelevant (nor is bitching about other peoples reactionary response to something that is irrelevant)…

    It’s time to embrace and expand, fuck the divisions and separations. All that is real is now, all that lies before us is of our choosing.

    Again, thanks for the post. Thanks for caring enough to think, to post, to get out of bed in the morning,

    love, A Freeman, Walking.

  4. mark hansen on

    “a freeman, walking” must be ashamed to give his real name.
    if i wrote like that i know i would be.

    yes, the philosophy of socialism for the rich and “bon chance” to everyone else is definitely something of which to be ashamed.

  5. mperelman on

    I enjoy A. Freeman Walking. I don’t agree with most libertarians, but I also see Marx as the ultimate libertarian –- although not the kind of libertarian adherent of market relationships.

    I do see the right wing extremists as vicious, selfish people who will do anything to squeeze some more profits out of the public, both as workers and consumers.

    I don’t understand how they can get away with it.

  6. rich on

    Our political system, the means of communication and distribution of information is “broke”, not the U.S. government, our founding fathers institutionalized the fact.

    The elite class of politicians could care less about profits, they are not capitalists, they simply wish to remain a political going concern.

    Private property was the end of hospitality, Lewis Henry Morgan provides a clear account of such a reality.

    Selfishness is incoherent in the capitalist social order, it is the status quo.

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