Corrupt Politicians and their Austerity Budgets
The recently elected Liberal government in Quebec came out with a new austerity budget that closely resembles many other such budgets adopted over the past several years in dozens of other places. This time around, it seems that the provincial government is serious about drastically reducing spending across the board, following the usual rhetoric about the need to eliminate annual deficits right away and therefore make it possible for Quebec to eventually pay off its accumulated debt. To reinforce their message, they have promised to pass new legislation this autumn so that they can roll back salaries and freeze hiring for all civil servants, not just for ordinary ministerial employees but also for everyone working indirectly for the government in the health and education para-public sectors, over half a million people all told.
These drastic, unprecedented cuts, as announced, go much further than any of the previous austerity budgets adopted in the past, since Quebec first hopped on the neoliberal bandwagon during the induced recession of the early 1980s. This latest version of fiscal rigor is being vigorously supported by the usual crowd of libertarian economists and media editorialists, all of whom emphasize how dangerous it is to continue borrowing money to help pay for such “over-generous” social programs as public transit and daycare.
Spending middle-class taxpayers money on programs popular among middle-class taxpayers would seem like the right thing to do, given the fact that they pay a much larger percentage of tax than the rich do. But the antisocial fanatics always blame popular programs for causing every budget deficit and every debt burden ever created. They always treat every financial crisis caused in reality by the world’s richest investors as a given, as if it was completely impossible to control any of the incredible excesses of the world’s leading egomaniacs. Only social programs benefiting lesser folk, the non VIPs who do not make enough money to deserve deferential treatment, are singled out as the unique cause of every budget crisis the world has ever known.
It is as if the central banks monetarist interventions of the 1980s never existed, as if the world’s leading vulture capitalists never embarked on their speculative binge of strictly financial investment, as if the IT millennial crisis never took place, as if the 2007-2009 world financial collapse of the “too big to fail” never brought us all to the brink of disaster, as if none of the incredibly stupid decisions still being taken even more recently by the world’s most important financiers, had any impact whatsoever on government debt. According to all the mainstream economists and all the establishment editorialists, every single budget problem that ever surfaced anywhere is always and forever the fault of excessively demanding ordinary people, who insist on maintaining public health care and public education in spite of the “obvious need” that the experts feel for getting rid of that populist rubbish once and for all.
The Quebec government has already implemented the first phase of its legislative onslaught, by requiring current pensioners at the municipal level to contribute once again to previously negotiated pension funds, notably through de-indexing. Municipal unions are being targeted as the major obstacle toward eliminating the huge pension deficit, often on the grounds that younger workers are being made to pay for more numerous older workers. The other major argument for canceling collective agreements is that otherwise millions of people in the private sector who have no company pensions at all, or very inferior ones, would have to pay vastly increased municipal property taxes.
Only a few analysts choose to remember, however, that it was the provincial governments, all across Canada, that decided twenty years ago to collectively transfer a large part of their responsibilities onto municipalities, suggesting that they pay for those greatly increased localized services by “temporarily” ignoring their pension liabilities. However, the provincial governments were themselves merely transferring part of the effect of the federal government’s own previous decision to download many of its responsibilities onto the provinces. And the federal government made that move during the 1990s because of the enormously increased federal debt caused by the monetarism of the 1980s, when the world’s central banks decided to solve the inflationary crisis of the 1970s by quadrupling interest rates. The Canadian government’s accumulated debt, from Confederation in 1867 right through to 1979, about 79 billion $ all told, was then astronomically increased in only fifteen years to over 500 billion $.
The 1970s inflation itself was caused by several different factors, such as the Vietnam War against communism and OPEC’s decision to greatly increase prices of petroleum exports. But a more important contribution to that crisis was the problem caused by the continued use of the US dollar as the world’s reserve currency, even after the USA had fallen way behind its post-war domination of world industrial production. An equally important cause of double-digit inflation during the 1970s was the refusal of many leading financiers, especially in the US, to sufficiently depreciate the monetary value of their by then technologically obsolete industrial investments.
In Canada, today’s federal debt is still almost as large as it was in the 1990s, in spite of all the transfers of responsibility to inferior levels of government, and all the accumulated debt-service charges paid since 1979. This is because of all the other financial boondoggles imposed by the world’s leading financiers since that time, especially the 2007-2009 financial meltdown. In fact, the Quebec government’s escalating assault on its own public sector is just a relatively small part of the entire world-wide transfer of responsibility for debt from the “too big to fail” private financiers who initially caused all those problems, to the ordinary people who always end up paying for financial hyper-profits, one way or the other.
Unfortunately, not much can probably be done to prevent libertarian governments from using ordinary taxpayers money to pay for rich people’s excesses. In the USA, the relatively small Tea Party rump seems to be controlling US politics altogether, to the astonished delight of its billionaire sponsors. Canada’s Conservative government is also hanging in there for privately sponsored neoliberalism in spite of its hundreds of political gaffes and its ongoing control of only about one-third of the total electorate.
The province of Quebec is another interesting case because voters here recently returned to power the anti-separatist Liberal Party. Curiously enough, the Liberals were handily re-elected in spite of being singled out by the ongoing Charbonneau Commission into provincial and municipal corruption, as the major source of all that collusion. Quebec’s new premier, Philippe Couillard, is particularly poorly placed to lead a vigorous assault on public expenditure because of his past role as a non-performing business partner of Canada’s king of corruption himself, Dr. Arthur Porter. Porter at least symbolically brings the whole game together for not only having corrupted the McGill University Health Center and the Quebec government, but also for having “duped” Canadian Prime Minister Stephen Harper into briefly appointing him to oversee the Canadian network of spy agencies.
Even though nothing has as yet been officially proved about the criminal guilt of any big-time political leader, the very idea that Couillard should become the guy running the most recent attack on the public sector is almost comically disturbing. The Quebec Liberals have zero credibility for this job since they were the ones most involved in encouraging construction companies to artificially inflate spending on public infrastructure in dozens of underhand ways. The private-sector friends of the provincial Liberal Party may not have had as much negative impact on Quebec government debt as did the much larger boondoggles of the world’s leading financiers over the past forty years. But it boggles the imagination to think that anyone could possibly rely on them to do anything to stop that kind of corruption. Like their Tea-Party cousins, the only thing that they are any good at is convincing middle-class people to pay for the bail-outs of the billionaire class.
