Austerity

Broad Definition: To eliminate Deficits

Occurs when debt is high, creates justification for it

• Can be achieved by increasing taxes or decreasing spending

  • “belt tightening” analogy to households

  • taken out loan to buy home, can’t buy as much after

• Almost always achieved by decreasing spending

  • Can even be present when deficits are increasing

Narrow Definition: When deficits are reduced by decreasing spending as well as lowering taxes. These reductions are often done to the

Reduction of the welfare state

• Often involves on lowering taxes

• Doesn’t just hinge on eliminating deficits, as lowering taxes increases deficits

Goal of Austerity

Suggests that its real goal is the shrinking of the welfare state

The protective role of the state that emerged after the Great Depression in many nations

• Many were out of work

• Governments tried to create policies where people would be protective from economic collapse

  • Employment insurance

  • Social assistance

  • Universal public health

  • Universal public education

• point of welfare state

• In austerity, these points are usually first to be cut to lower taxes and increase income of the government

Distributional Consequences of Austerity

• Cuts and Austerity would impact poor people at a much higher rate than rich people

• (Marxist Lineage) Disadvantaged people who earn money from wages are have less power compared to those who earn their money from profits (owners of businesses, etc)

  • economic system is one of inequality

Europe after 2008

Had to bail out many of their financial institutions, were going to go bankrupt

• Europe handed them a fuck ton of money to bail

• Europe now had a huge deficit

• healthcare, foreign aid, social housing, income supports for the poor were all cut

  • uk had a long history that had housing run by gov agencies

  • cut job search services

  • England did very big cuts to the healthcare system, used to be seen as the world model

The Body Economic:

• hundred of thousands of people died early deaths because of the cuts made by the uk government

• living in poor housing, not affording good meals