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	The Trouble with Austerity by Alex Himelfar, Seumas Milne Toronto Star, Guardian News   July 2013   How Canada''s Harper Government helped push World toward Austerity, by Linda McQuaig. (The Toronto Star)   In June 2010, the transformation of the city’s downtown core into a pseudo war zone seemed like the worst aspect of the Harper government’s handling of the G20 summit in Toronto   But perhaps just as insidious was Stephen Harper’s personal role at that summit in pushing the developed world to abandon stimulus spending and veer sharply toward austerity.   That embrace of austerity has led to deep government spending cuts, with devastating consequences, particularly in some southern European nations. Canadians have suffered, too.   Harper likes to boast that he’s shepherded the Canadian economy to a full recovery from the 2008 crash — even though 1.4 million Canadians remain unemployed. Our employment rate is stuck at 61.9 per cent, down from 63.8 per cent just before the crash, notes Jim Stanford, economist for the Canadian Auto Workers.   This explains Canada’s poor ranking in a recent OECD Employment Outlook report, where Canada ranks 20th out of 34 nations.   Similarly, Canada’s Parliamentary Budget Office estimated last fall that Ottawa’s spending reductions will cost Canada approximately 125,000 jobs in 2016 . (Reports like that angered the Harper government, which last spring ended Parliamentary Budget Officer Kevin Page’s impressive stint in the watchdog job.)   The embrace of austerity at the 2010 Toronto summit was a dramatic reversal of the stimulus spending that the world’s rich nations had quite effectively adopted to counter the devastating 2008 financial crash — in line with the lessons taught by the great 20th century British economist John Maynard Keynes.   Keynes argued that, when businesses are unwilling to invest during a major downturn, the only solution is for governments to invest, and on a massive scale. This insight sharply contradicted the dogma of austerity that prevailed after the 1929 crash, prolonging the 1930s Depression. Although fiercely resisted, Keynes’ insight was eventually accepted.   But right-wing economists, including Stephen Harper, have long bristled at Keynesianism — with its important role for government — and opposed its revival after the 2008 crash. (The minority Harper government only introduced a stimulus package in Canada because the opposition threatened to topple it otherwise.)   By early 2010, Keynesianism was losing ground on the international scene. But it was the G20 summit in Toronto later that year which “above all” resulted in the world’s rich nations changing course and embracing austerity, according to a recent article by British financial journalist Martin Wolf in the New York Review of Books.   Harper played a key role in that lamentable change of direction. At his urging, the G20 nations agreed to commit themselves to halve their deficits by 2013 — a draconian approach that returned the developed world to obsessing about deficits and ignoring unemployment.   (Ironically, the high unemployment produced by austerity reduces tax revenues and increases social spending, making deficit-reduction difficult. Much to its embarrassment, the Harper government has had to revise its deficit estimates upward. So far this year, Canada’s deficit is rising, not falling.)   But the fixation on deficits, which has dominated public discourse for much of the last 30 years, has helped divert attention from the fact that austerity is part of a larger agenda (including tax cuts and privatization) that’s redistributed money toward the top.   While members of the public are guilted into believing they’re living beyond their means and must tighten their belts, they’ve been distracted from noticing the transfer of income and wealth to the rich.   Thaddeus Hwong, a professor of tax policy at York University, has calculated just how much inequality has increased in Canada.   Using the model developed by University of California professor Emmanel Sáez, one of the world’s leading experts in income inequality, Hwong found that between 1982 and 2010, the top-earning 1 per cent of Canadians captured fully 60.3 per cent of all the income growth in Canada.   That was even more dramatic than the U.S., where the top 1 per cent captured 59.6 per cent of income growth in the same period. This highlights that, while inequality is more extreme in the U.S., it is growing faster in Canada.   But with all those deficits to obsess about, who’s noticing the rich, slightly offstage, quietly getting richer.   The Trouble with Austerity, by Alex Himelfar. (Toronto Star)   Governments here and elsewhere are increasingly preoccupied with cutting even as evidence piles up of its harmful consequences on people and the economy. Austerity is not even delivering the balanced budgets its advocates promise. Even the International Monetary Fund is now preaching balance rather than a single-minded focus on cuts. Yet austerity’s adherents hold fast, deny the evidence or double down. Why is that?   Of course, a few at the top benefit from austerity, at least in the short term and, though few, they exert considerable influence. And some pundits are so invested in this agenda that they would have to swallow themselves to alter course. But the imperviousness to evidence is about more than that.   What makes a theory “scientific” is that it’s falsifiable — if contrary evidence is found, the theory is modified or thrown out. But austerity fetishism is not economics; it is simply the latest expression of free market orthodoxy and, as ideology, impervious to evidence, never wrong. The belief that less government is the solution to pretty much any problem doesn’t lose a beat when the contrary evidence comes in. Just check out the responses of the free marketeers to the evidence.   First is denial. That was how our federal government reacted to the early signs of the 2008 meltdown. And now it constantly reminds us how well we are doing, grabbing any glimmer of good news and ignoring the rest, comparing us to those in deepest trouble rather than the few who are prospering by taking a different course.   Politically, this often works. None of us likes bad news and we often punish the politicians who bring it. Those who remind us of rising inequality, stagnant incomes, increased child poverty are painted as gloomy naysayers. Why, it is asked, do they hate Canada? But sooner or later the bad news is just too bad to ignore and denial no longer sells.   Here is where adherents will often double down. If austerity isn’t working, what we need is more austerity. We are never in a situation with no government or zero taxes so austerians can always make the case that they just haven’t cut enough. That seems to be the argument from Ontario Conservatives and Tories in the U.K. In Canada, austerity has been implemented in slow motion, in increments, so we are ripe for this argument: our federal government, denying that previous budgets were “truly” austere, is now hinting that its next budget will cut even deeper.   There are, of course, political limits to cutting. That’s playing out dramatically in the streets of southern Europe. But here, too, the consequences of cuts are increasingly visible, first for the most vulnerable: aboriginal communities struggling to meet basic needs, higher tuitions and student debt, refugees who cannot get needed medicine, more unemployed Canadians thrown onto inadequate welfare because they cannot access insurance. Some consequences will play out more slowly: weaker environmental regulations, cuts to education and science, neglect of crumbling infrastructure, eroding public services will all make our economy less competitive, less fair, less sustainable.   The deeper the cuts, the more public services erode, the more inequality and poverty grow, the greater the risks of social disruption and the higher the political costs. Then what?   The final refuge is to argue that all the right things have been done and now it’s up to the market. These arguments are already on the business pages of our media: when the governor of the Bank of Canada urged business to put some of the cash they were sitting on back into the economy, the austerians reacted with force. Don’t worry about “dead money,” they said. Don’t worry about the failure of the corporate sector to turn its profits — and tax cuts — into job-creating investments. Sounding eerily like old Communists clinging to the notion of inevitable revolution, their argument was pure ideology — “it’s only a matter of time,” surely market forces, as the laws of economics require, will kick in. If there are inexorable laws of economics that yield jobs and growth from cuts to taxes and government, it seems somebody forgot to tell business.   So misguided ideas persist. Critics are painted as negative purveyors of doom, tax-and-spenders, or worse. Let’s be clear, no one is arguing for imprudence or waste. Budgets should be balanced over time and debt should come down in good times. But we need to understand how we got here and we ought to stop repeating what just doesn’t work.   What got us here was a combination of recession — temporarily higher spending and lost revenue — and more than a decade of unaffordable tax cuts. Before the recession and the latest tax cuts, we were running surpluses. Spending obviously wasn’t the big problem and our government debt-to-GDP is pretty reasonable and interest rates are low. Why then the obsession with cutting? And where are the alternatives?   * Alex Himelfarb is the director of the Glendon School of International and Public Affairs.   Feb 2013   Think there"s No Alternative? Latin America has a Few, by Seumas Milne. (Guardian)   Ever since the crash of 2008 exposed the failures of the neoliberal economic model, we"ve been told there are no viable alternatives. As Europe sinks deeper into austerity, governing parties of whatever stripe are routinely rejected by disillusioned voters – only to be replaced by others delivering more welfare cuts, privatisation and inequality.   So what should we make of a part of the world where governments have resolutely turned their back on that model, slashed poverty and inequality, taken back industries and resources from corporate control, massively expanded public services and democratic participation – and keep getting re-elected in fiercely contested elections?   That is what has been happening in Latin America for a decade. The latest political leader to underline the trend is the radical economist Rafael Correa, re-elected as president of Ecuador at the weekend with an increased 57% share of the vote, while Correa"s party won an outright majority in parliament.   But Ecuador is now part of a well-established pattern. Last October the much reviled but hugely popular Hugo Chávez, who returned home on Monday after two months of cancer treatment in Cuba, was re-elected president of Venezuela with 55% of the vote after 14 years in power in a ballot far more fraud-proof than those in Britain or the US. That followed the re-election of Bolivia"s Evo Morales, Latin America"s first indigenous president, in 2009; the election of Lula"s nominated successor Dilma Rousseff in Brazil in 2010; and of Cristina Fernandez in Argentina in 2011.   Many of the things... that conventional "free market" orthodoxy insists will lead to ruin... have instead delivered rapid growth and social progress.   Despite their differences, it"s not hard to see why. Latin America was the first to experience the disastrous impact of neoliberal dogma and the first to revolt against it. Correa was originally elected in the wake of an economic collapse so devastating that one in 10 left the country. Since then his "citizen"s revolution" has cut poverty by nearly a third and extreme poverty by 45%. Unemployment has been slashed, while social security, free health and education have been rapidly expanded – including free higher education, now a constitutional right – while outsourcing has been outlawed.   And that has been achieved not only by using Ecuador"s limited oil wealth to benefit the majority, but by making corporations and the well-off pay their taxes (receipts have almost tripled in six years), raising public investment to 15% of national income, extending public ownership, tough renegotiation of oil contracts and re-regulating the banking system to support development.   Many of the things, in fact, that conventional "free market" orthodoxy insists will lead to ruin, but have instead delivered rapid growth and social progress. Correa"s government has expanded gay, disability and indigenous rights and adopted some of the most radical environmental policies in the world.   But what is happening in Ecuador is only part of a progressive tide that has swept Latin America, as social democratic and radical socialist governments have attacked social and racial inequality, and have begun to create genuine regional integration and independence for the first time in 500 years. And given what"s already been delivered to the majority, it"s hardly surprising they keep getting re-elected.   It says more about the western media (and their elite Latin American counterparts) than governments such as Ecuador"s and Venezuela"s that they are routinely portrayed as dictatorial. Part of that canard is about US hostility. In the case of Ecuador, it"s also been fuelled by fury at Correa"s decision to give asylum to WikiLeaks founder Julian Assange, who faces sexual assault allegations in Sweden, over the threat of onward extradition to the US. In reality, the real anti-democratic menace comes from the US allies, who launched abortive coups against both Chávez and Correa – and successful ones in Honduras in 2009 and Paraguay last year.   Of course, Latin America"s left-leaning governments have no shortage of failings, from corruption to crime. In Ecuador and elsewhere, tensions between the demands of development, the environment and indigenous rights have sharpened. And none of these experiences yet offer any kind of ready-made social or economic alternative model.   There is also a question whether the momentum of continental change will be maintained now that Chávez, who spearheaded it, is expected to stand down in the next few weeks. His anointed successor, the former trade unionist Nicolás Maduro, is in a strong position to win new elections. But neither he nor the charismatic Correa is likely to be able to match Chávez"s catalytic regional role.   Latin America"s transformation is nevertheless deeply rooted and popular, while a discredited right has little to offer. For the rest of the world, it makes a nonsense of the idea that five years into the crisis nothing can be done but more of the same. True, these are economies and societies at a very different stage of development, and their experiences can"t simply be replicated elsewhere. But they have certainly shown there are multiple alternatives to neoliberal– which win elections, too.
	More than half of Australians surveyed think the government is run by big business by Centre for Policy Development & agencies Australia   A new study released by the Centre for Policy Development says the public sector suffers the plight of the anorexic.   "No matter how thin it gets there are voices saying it"s too fat," the report says. "Every Australian needs to understand what politicians mean when they talk about the "efficiency" of government.   "This is our money, being spent on us and the things that matter to us. It makes sense to demand that it be spent well."   The report by research director Christopher Stone, questions whether Australia really wants a size zero government. He examines the "muddled thinking" that can lead to "false economies", decisions made in the name of efficiency that end up costing more than they save.   "The word "efficiency" is often misused to mean "cuts", and some cuts to public services can end up costing us much more than they save," he says. "When it comes to privatisation or outsourcing, too many of our politicians have tunnel vision. They can only see the private sector as efficient and are blind to when it fails. Our public services do a lot for us, they need to be effective and fair, but we won"t achieve that by endless cuts or blind faith in market solutions.   "Too often, debates on the efficiency of government are conducted by a handful of expert economists in obscure language that excludes the general public, or they are skewed by politicians who want to promise more while taxing less, or who don"t have an eye on the long-term impact of spending cuts." http://cpd.org.au/2013/04/decoding-efficiency/   http://cpd.org.au/2013/02/whatever-happened-to-the-big-society/   Feb 2013   The war on entitlements. (Australia Institute)   “They are barely bigger than a toilet cubicle. Yet these depressingly cramped spaces serve as a kitchen, living room, dining room, bedroom, pantry and everything in between for their cooped-up inhabitants.   Those unfortunate enough to live in these urban slums range from the elderly and unemployed to low-income families and singletons. Their location? Hong Kong. One of the richest cities in the world.” - Simon Tomlinson, The Daily Mail, 22 February 2013.   In London last year the Australian Shadow Treasurer Joe Hockey delivered a speech titled, ‘The end of the age of entitlement’, in which he praised the economic model of Hong Kong, stating “the sense of government entitlement …is low” and “although there is still poverty, the family unit is very much intact and social welfare is largely unknown.”   The reality is of course very different to Mr Hockey’s ideal; demonstrating it is unlikely that he met many of the 1.2 million Hong Kong residents who live in poverty.   According to CNN many are living in ‘coffin homes’; tiny tenements in which living spaces are no bigger than a twin-sized bed. Simon Tomlinson’s Daily Mail article quoted above was accompanied by birds-eye images of these ‘apartments’, which were taken by the Hong Kong-based Society for Community Organisation in a bid to document the plight of the city’s most underprivileged people.   Oxfam says one in six poor families in Hong Kong is caught in a hunger trap having to scavenge for food with 72 per cent of poor children eating leftover foods.   In an interview with the Australian Financial Review published on 17 January this year Mr Hockey confirmed that reducing entitlements “will be a theme for me and it sits very comfortably within the Coalition’s theme. That is commitment to live within our means.”   While few would disagree that living within ones means is a sensible aspiration, it seems incongruous for Mr Hockey not to mention the ‘age of entitlement’ that was constructed for middle-high income earners under the previous Howard government of which he was a part.   Taxpayers now contribute $30 billion per year to the so-called "self-funded" retirement of those with super yet the political debate more typically focuses on the ‘unaffordability’ of the age pension or unemployment benefits. And while millions of Australians think they benefit from this largesse, the fact is 30 per cent of the benefits go to the wealthiest 10 per cent.   Surely if we are going to discuss entitlement we should start with those who have the most, not those who have the least?   Fairness goes beyond economic equality, writes Greg Jericho. (ABC Online)   In Queensland last week, we saw what happens when politicians believe economists are gods. The Queensland Government, which has subcontracted its values to former Howard Government treasurer Peter Costello, released the Final Report of the Queensland Commission of Audit.   The full report has been kept secret; instead, we have the 28-page summary. The report"s notional aim is "to restore Queensland"s financial strength and regain its AAA credit rating", but its real purpose is clearly more about values than budgets.   The crux of the report is laid out on page 11 which outlines the role of government. It states that the Queensland Government should "provide core services such as policing, public safety, emergency and justice services, which have a strong public good element".   Everything else - including education, health, prisons, housing, community services and public transport - should be encouraged to be done by the private sector.   The document rarely goes beyond talk of efficiency and productivity when describing the service delivery of systems such as health and education. And mostly its recommendations are to sell assets or to use fewer staff.   For example, while the report"s aim of giving "greater priority ... to improving student performance outcomes and especially narrowing the achievement gap (by lifting low achievement) in all Queensland schools" is worthwhile, given the report"s objective of increasing the privatisation of schooling, the solution seems more concerned about industrial relations than education. Crucially, the report states that the Government should "avoid restrictive provisions (such as limitations on student-teacher ratios) which impede workforce flexibility at the school level".   Research on the link between student-teacher ratios and performance is mixed, but it looks clear that under the Costello-Newman model, public schools will have significantly larger class sizes than the publicly subsidised "private" schools.   The Costello-Newman set of values is one in which a government"s only purpose is to be efficient in a unit-per-output sense - where providing services to the public is a luxury to be outsourced to a private company.   This value of government was pursued in the UK by David Cameron. But "Big Society" and "small government" has thus far been a miserable failure. Not surprisingly, outsourcing public services is better for companies than for people.   More than half of Australians surveyed by Transparency International thought the government was run by big business.   Australians think political parties, media are most corrupt institutions.   Global Corruption Barometer puts Australia in top 16 nations in terms of how serious a problem people perceive corruption to be.   The Barometer, by the corruption watchdog Transparency International, surveyed more than 100,000 people worldwide about their perceptions of, experiences with, and responses to corruption in their daily life.   “Our results show around the world that people see corruption when there is corruption,” Dr Robin Hodess, group director of advocacy and research for Transparency International told Guardian Australia.   When a survey asked how serious a problem respondents believed corruption was in their own country, the global average was 4.1 on a scale of one to five, where one means “not a problem at all” and five is “a very serious problem”.   Australia’s aggregate was 3.6, which put it in the top 16 of the 107 nations surveyed. More than half of Australians surveyed said corruption had increased over the last two years.   Around the same proportion – 58% – ranked political parties and the media as guilty of being corrupt or “extremely corrupt”, a higher percentage than for all other institutions the survey asked about.   The key institutions respondents were asked to choose from were: political parties, police, judiciary, public officials or civil servants, parliament or legislature, medical and health services, media, religious bodies, and business or private sector, education systems, the military, and NGOs.   On a scale of one to five, five being “extremely corrupt”, the media and political parties scored 3.6 among Australians, up 0.3 on the last survey in 2010/11.   “We see a real problem that links to a lack of transparency, particularly in terms of political funding. There are too few enforced rules around the world,” said Hodess.   “Companies and individuals need to report what they’re contributing. It’s up to parties to open up about what interests are involved in the policy-making process.”   Prof Charles Sampford, author and director of the Griffith University Institute for Ethics, Governance & Law, said there was a risk of corruption “where electioneering requires high levels of expenditure”.   “The risk there is obvious. I’m not at all surprised that a lot of voters would be concerned that the risk had materialised.”   When it came to media, Sampford said the industry had a long history of “barons” being frank about why they like owning media empires: the power.   “It’s a really important power because most media are both part of the market and part of democracy. They have a critical role in democracy and providing information for people to make their reasoned or otherwise choices at elections, but it’s also part of the market,” he said.   “Most of the biggest corruption risks we have is where those two intercept ... The media has the capacity, not to control, but to influence political decision, which means that politicians feel they actually have to anticipate what media owners want and avoid getting them cross.”   It is not just the media that Australians see as having an unsavoury connection with government.   More than half of Australians surveyed thought the government was run by big business. They weren’t alone in their suspicions; 55% of people across the globe believed the same thing about their own government.   Hodess called on G20 nations – who are meeting in Australia next year – to keep corruption on the agenda. She said while most G20 nations had signed the OECD anti-bribery convention, which deals with bribery in international business, there was a lack of prosecutions. “We need them to take action,” she said. Visit the related web page
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