Insights vividly revealed that our duly elected leaders and the governments they lead cannot, when push comes to shove, adequately safeguard the health and wellbeing of average working people. Democracy cannot work particularly well – or endure particularly long – when those we elect cannot protect us from the wealthy and powerful who loom large so high
above us. Fascism, by contrast, feasts on such moments. CT Sam Pizzigati co-edits Inequality. org. His recent books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.
Linda McQuaig
Let’s not fall into the austerity trap
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lowly, cautiously, the deficit hawks are daring to come out of the shadows. These are the well-heeled folks, from conservative think-tanks and political circles, who for decades have successfully pushed governments to impose austerity and social spending cuts on the rest of us, in the name of keeping government deficits small. With Canada reeling from the devastating economic shutdown caused by the coronavirus, these usually cocky deficit hawks haven’t yet mustered the nerve to come out fully against what is proving to be popular with the public – a dramatic ramping up of Ottawa’s spending to shield Canadians from financial despair. But, led by former Conservative prime minister Stephen Harper, the deficit-slaying crowd
is starting to re-emerge, determined that the pandemic doesn’t become the transformative event that could spell the end of the deeply unequal, corporate-dominated economic world they’ve constructed in recent decades. After five years of near-silence following his 2015 electoral defeat, Harper took to the Wall Street Journal to proclaim the increased spending “economically ruinous” and to warn that if governments “fail to practice mild austerity proactively, a brutal kind will be thrust upon them”. This is the same language deficit hawks used in the 1990s to frighten Canadians into believing that, unless we drastically cut government spending, we’d hit the “debt wall” – the perilous point where international investors would no longer lend us money.
Harper insisted in his op-ed that Canada “came close” to defaulting on its debt – hitting the debt wall – in the 90s. It’s a scary tale, but not even remotely true. In fact, even as the carefully stoked deficit hysteria reached a fever-pitch in the mid-90s, Canada retained the very top credit rating – Triple A (Aaa) – indicating that the prestigious Wall Street ratings agencies ranked it one of the safest places in the world to invest. Below were many countries with credit ratings stretching down to Baa3, and then below them, countries ranked “high-risk”. Lower still were dozens of African nations that didn’t even get a credit rating; international markets had cut them off long ago. Now that’s the debt wall, but Canada has never been anywhere near it. The deficit hawks knew this. Yet they still railed against Canada’s debt, generating sufficient fear that Canadians accepted the brutal social spending cuts delivered by Liberal finance minister Paul Martin in 1995. Since then, the doctrine of small government has prevailed, virtually unchallenged in public debate. Until now. The deficit hawks are hoping to revive the hysteria they created in the 90s. But let’s not be duped again. This time, let’s pay attention to a true debt story – the story of how we ran up a gigantic debt fighting World War II and we weren’t intimidated by it after the war. While our debt today is about 35 percent of GDP, by the end of ColdType | June 2020 | www.coldtype.net
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