People treat austerity as a choice, but really it’s a consequence.
The west isn’t the global colonizer it used to be, and so it can’t just take all the materials from everywhere else and get rich on the backs of someone else, or levy a technological advantage so extreme it just crushes everyone else.
That’s good for the soul of the society in the long run, and it’s also helped lead to the largest quality of life improvement for the most people in the history of the world. However, it also means that western countries don’t get to have the same quality of life as they did when they were taking advantage of everyone else. Austerity is inevitable when there just isn’t as much material wealth to go around since nations must build wealth internally and in cooperation with the world rather than extracting wealth from conquered territories.
The only question becomes, “When?”
If you just keep taking out debt you never intend to pay back as western societies have done for the past 20 years, you’re not austere today, but you will have to be austere tomorrow (or worse, your kids will because you’ll be dead and they’ll be paying for your largesse). It sucks, but you’ll always have to eventually face austerity when reality is you’re not going back to Pax Britannia.
So given that there will always be a time that austerity must be implemented to establish a sustainable government. If you become sustainable today it’s going to hurt, but if you wait until tomorrow the not only will it hurt, it will hurt more because you’ll also have to carry the burden of all the times you weren’t sustainable as well.
Imagine for a second that you’re a contract killer, and you make a lot of money doing that, and you have a very nice life for yourself. Your family lives in a mansion, eats the best food, gets the best schooling and medical care. Then one day you wake up and realize what you’re doing is evil and you need to stop doing it. You get a nice, respectable job that of course makes much less money. The reality is you have 2 choices: You can pretend you’re still a contract killer and go deeply into debt to maintain the quality of life for your family, or you can realize that you’re respectable now and the consequence of that just decision was that your family isn’t going to have the quality of life they once had. You can make moral arguments all you like that your family deserves the lifestyle you used to have, that your kids are going to be harmed, but unless you want to go back to your previous evil lifestyle (and let’s be honest, that probably isn’t possible anymore, and that’s a good thing) you really just need to sell the mansion and find something in your price range, start shopping at tesco like everyone else, send away the top tier teachers and doctors and send the kids into the same schools and hospitals as everyone else. That’s what actually needs to be done.
Nice little story but doesn’t describe how wealth inequality is on the rise and the rich are still getting richer.
Also things like global tax avoidance needs to be treated. Registering in the kaymen island all your profits made in the UK through “licensing” schemes for example means they are not paying their way for the infrastructure they use.
It exactly explains why the rich are getting richer.
Another effect of spending this debt is you extract wealth from the poor and middle class and printing mass amounts of money to make line go up and borrowing money they shouldn’t be and spending it on useless crap and tax cuts instead of public goods, and that money ends up inflating asset values which ensures the people holding those assets get richer and the people left behind get poorer. Meanwhile, many of those dollars go directly into the pockets of the rich because they’re connected to government.
Not to mention, those assets and artificially low interest rates become a great little tax shelter for the super rich – instead of selling assets they just take out debt backed by their assets, and when they receive the money it’s tax free because it’s a loan and you obviously can’t be charged income tax on a loan. Even better, then they can use their new tax free money to buy more assets and get richer, and if things are about to dump, they can get out early thanks to their top shelf analysts and let mom and pop hold the bag.
The amounts of money being borrowed are unimaginable. England ended slavery within its own borders and in its colonies at a cost of modern day 2 billion pounds. The budget deficit for last year alone was 70 times that. Where does it end up? Well, that wealth gap sure did grow, to an insane extent just in the last while. Maybe we should look there first?
