David Leonhardt’s fairytale of austerity
David Leonhardt, the Washington bureau chief of the New York Times, gives us his worldly insights today in an article entitled “The Gridlock Where Debt Meets Politics”. This is a sadly typical piece for Leonhardt, its essential argument being that the public needs to wake up and get used to the idea of austerity. We’ve grown so accustomed to this fairytale we often lose sight of how absurd it really is. Human society has never been as productive as today and it’s technology is advancing in tremendous quantum leaps with ever more powerful automation and robotics. Our standard of living should be extraordinary and papers throughout the world should be heralding the dawn of a new age of massive and ever rising prosperity. Not so, according to Leonhardt.
The fact is that most of the industrialized world — Europe, the United States, Japan, too — is in a difficult economic bind…. Most voters in these places have yet to come to grips with the notion that they have promised themselves benefits that, at current tax rates, they cannot afford. Their economies have been growing too slowly, for too long, to pay for the coming bulge of retirees.
But what can it possibly mean to say these nations can’t afford “benefits”, i.e. widespread prosperity, when there’s huge numbers of unemployed everywhere desperately seeking work? Leonhardt’s tale is objectively nonsense and becomes understandable only within the very warped logic of financial capitalism. Business finds insufficient “profitable” opportunities and therefore doesn’t invest its massively concentrated hoards and society therefore ends up with great un(der) employment and slow “growth”. But the people are still there ready to work, and technology has never been more powerful. The use of the word “afford” gives us insight into what’s really going on. Society, you see, must purchase “benefits” from those who own them and it can “afford” to do so only to the extent it offers a “profitable” return. The earth is a great casino for the owners, nothing more, and human society will be allowed to fall to the dark ages if the species becomes no longer profitable.
Leonhardt continues weaving the same sorry tale: “On the most basic level, affluent countries are facing sharply increasing claims on their resources even as those resources are growing less quickly than they once were… the slowing growth of available resources comes from a slowdown of economic expansion over the last generation.” We have nothing but misery ahead, he continues, and it’s so bad, we may not even be able to care very well for our parents.
“The combination has left Europe and the United States with frustrated populations that still have more sacrifices ahead. “These are very difficult moral issues,” said Benjamin Friedman, an economic historian at Harvard. “We are really talking about the level at which we support the elderly retired population.”
In one short paragraph, Leonhardt almost touches reality when he notes “the United States and Europe still have more than enough resources to solve their problems” but this would seem to contradict his earlier resource limitation argument and he quickly reverts to form and instructs us on the bitter medicine we must accept. “Longer term, the trap is created by resistance to the higher taxes and reduced benefits necessary to return countries to financial stability. The resistance is understandable, given how weak income growth has been in the past decade, but it is not sustainable.”
The central problem is that human technology and productive power is owned by a miniscule number of very wealthy individuals and shared with greater society only to the extent it’s “profitable”. Leonhardt is actually right in a very narrow sense about resource limitations. But it’s not because we lack resources, it’s that they’re tightly hoarded. To propose societies reduce living standards at a time of such technological prowess should be seen as outrageous and a direct admission that capitalism isn’t conducive to widespread prosperity. Leonhardt speaks on behalf of the powerful and against the interests of almost everyone. He should be both ridiculed and condemned.