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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

‘Deficit mania’ now rules « Previous | |Next »
September 21, 2010

The current arguments for ‘balanced budgets’ and seeing national economies as if they were household economies in our neo-liberal market order represents a return to the pre-Keynesian economic thinking of the 1930s.

John Buell in Beyond Budgetary Fundamentalism at The Contemporary Condition says that the deficit mania in the US has deep roots. A core within the business community, especially financial services, never accepted the New Deal. Social Security has always been especially offensive. It is a universal program that worked and became very popular. It constitutes the major reason poverty rates among the elderly declined dramatically. He adds that had George W. Bush privatized Social Security, the recession in the US would likely have become Great Depression II.

Unable to go after the program directly, conservatives attacked Social Security through fallacious arguments that the program, which its bipartisan trustees certify as fully funded through 2044, is a fiscal time bomb. As Baker points out, the real fiscal time bombs are exploding private sector dominated health costs, the bank bailouts, and war costs of a trillion and counting. Concern about deficits has never prevented the business press or our Senators from supporting these corporate behemoths.

The anti deficit mania has tangled roots both in immediate monetary interests and in the broader political culture. It has surprising support among some working class citizens, who stand to lose financially from its implementation. He suggests the reason for this support is that many of the white working class, confused and ever more insecure in the face of job loss and fierce cultural conflict, retreated to older conventions of self-reliance.

Whatever the cultural roots government deficits have become the main focus of economic debate across western democracies. ‘Deficit mania’ and ‘balanced budgets’ now rules. At a moment when massive market failure makes a stronger role for government, in regulation, investment and redistribution necessary, the neo-liberal counter-attack demands that the state should retreat, or rather should deploy its power mainly to attack the public sector of the economy.

This is about power and from this perspective would appear that Gillard Labor made a Faustian pact with the financial sector whereby the latter was encouraged to become the leading edge of the economy, while providing tax revenues to support public investment and welfare. Quarry Australia is not a wholly sustainable economic model even though Australia'’s competitive advantage in this sector is a fact of economic life that will not go away.

| Posted by Gary Sauer-Thompson at 11:41 PM | | Comments (5)
Comments

Comments

I think there has been a growing disconnect between most citizens and the political class for decades. It's reached the stage now where members of the political class - politicians, senior bureaucrats, and their media enablers - are widely regarded as an alien species. Resentment of government spending and paying taxes is tied to the idea that the political class is somehow making a killing from the process (which is not entirely unfounded of course). It's irrational to oppose deficits per se, but it's not irrational to be hostile to the way the political class behaves. I believe many people simply conflate the two issues. It also explains why so many people are convinced all government agencies are riddled with inefficiency, incompetence and corruption, which of course is only true of some of them.

Ken,
yes the hostility you mention is more than an example of ressentiment (in Nietzsche’s sense) at their displacement.

The agonistic right wing economic populism is linked to hostility to the state and to entrenched elites. It invokes a “producer’s republic” to attack both a state parasitic on “productive” labor, and the undeserving (“unproductive”) poor supported by it.

It is interesting to compare Govt. and private debt in this context. The most recent comparison I can quickly find is at StubbornMule here:

http://www.stubbornmule.net/2010/03/where-is-debt-headed-now/

Govt. debt is totally overshadowed by private debt.

It's like the Labour movement never happened, only this time there's nothing to be optimistic about.

The two strands or pillars of Labor's electoral base --the progressive voters and the traditional working class---are leaving the ALP. The numbers say it--losing 14 seats, suffering a 5.4% loss in the primary vote and ending up with 38% of the primary vote.

Is it still a progressive party? Does it want to be progressive party? Its lack of policies under the NSW hard men suggest that it doesn't.