Monday, 29 June 2015

The Economics and Politics of Austerity in the Wake of the Global Financial Crisis

I am being interviewed on Radio National on Tuesday July 7 at 8.45pm NZ time. (It can be streamed live at The topic is: The Economics and Politics of Austerity in the Wake of the Global Financial Crisis. The discussion will focus on the continuing implementation of austerity by governments around the world (with particular reference to the US, Greece, Britain and New Zealand) in the wake of the Global Financial Crisis.

With the world’s dominant policy-making elites committed to programmes of austerity lasting for the next 10-20 years, the questions arise:
1) What is fiscal austerity and why it is considered necessary by the governments of the advanced capitalist societies?
2) Who are the main losers from austerity? Given that the bulk of the debt as come from bailing out failing banks and other financial institutions why is the resulting public debt not being paid for with capital focused taxes like a financial transactions tax and a capital gains tax?
3) Are these programmes of austerity likely to be politically sustainable over such a long period of time?
Ultimately, this depends on the scale and effectiveness of the resistance to austerity. So the fourth question is:
4) What are the prospects for resistance to austerity?

A major point of reference would be David McNally’s book - Global Slump: The Economics and Politics of Crisis and Resistance - where, among other things, he argues that:
“the bad debt that triggered the crisis in 2008 never went away - it was simply shifted on to governments. Private debt became public debt. And as the dimensions of that metamorphosis became apparent in early 2010, the bank crisis morphed into a sovereign debt crisis. Put differently, the economic crisis of 2008-9 did not really end. It simply changed form. It mutated. With that mutation, the focus of ruling classes shifted toward a war against public services. Concerned to rein in government debts, they announced an age of austerity- of huge cuts to pensions, education budgets, social welfare programmes, public sector wages, and jobs. In so doing, they effectively declared that working class people and the poor will pay the cost of the global bank bailout. These payments may well last a generation - producing higher rates of poverty, more disease and ill health, even more under-resourced schools, and greater hardship in old age.” p.4.