No Age of Austerity for the Rich

We are, pundits
frequently inform us, living through an "age of austerity". True,
perhaps; but what that means, and what community responses it mandates,
vary widely from country to country.

UK chancellor George Osborne's emergency budget
was stark in the cuts that it laid out - and there's obviously a good
case to be made that the notion of an impending debt crisis was largely
used as a foil for an ideologically motivated attack on the public
sector. But, to sell the cuts, the government couldn't resort to a
simplistic "government-is-bad, welfare-is-awful" rhetoric. It wouldn't
have worked with an electorate that still retains some affection for
the redistributive, protective functions of government vis-a-vis the
nation's poor; that still believes in a societal obligation to smooth
out the roughest edges of a market system.

And so, in addition to
cutting many public services by an eye-popping 25%, the budget also
increased taxes. Most interestingly, it significantly raised the
capital gains tax, a tax that falls largely on wealthier Brits.

For
all its faults, Osborne's budget was one that made some attempt, both
rhetorically and in reality, to share the pain. In that sense, the
language of "austerity", with its deliberate historical linkage to the
dreary, but socially cohesive, post-second world war years, wasn't
entirely misguided. For in the aftermath of the second world war a
shared sacrifice narrative developed that, in a powerful way, served as
something of a societal glue, a cross-class bonding mechanism, keeping
a devastated, in some ways humbled, country from fissuring as its
imperial greatness waned; paving the way, eventually, for a return to
prosperity in the 1950s.

Today, David Cameron's government
asserts, a stunning fiscal crisis exacerbated by a growing sovereign
debt crisis threatens to similarly undermine Britain's prospects - and,
to head off such a collapse in the future, a dose of unpleasant tasting
economic medicine is required today.

As I wrote earlier in this
article, it's not an argument that I really buy. Whatever the
hyperbole, Britain isn't nearly as vulnerable as was Greece
to an investor stampede away from financing its debt. It didn't have to
make immediate swingeing cuts to education, to welfare, to housing
benefits; instead, its new political leaders have chosen to. And yet,
given these choices, I find the language of shared sacrifice, and the
willingness to raise taxes on the wealthy, more honest, and more
socially responsible than the equivalent language of conservatives in America today.

While the Obama administration
isn't averse to Keynesian spending at a federal level, arguing that
short-term deficits are necessary so long as the economy remains as
fragile as it is, conservative anti-taxers elsewhere in the political
system are using the economic meltdown as an excuse to roll back state
government on an absolutely vast scale.

Cities, counties and
states around America, faced with collapsing tax revenues and
electorates hostile to any and all tax increases, are implementing
slash-and-burn cuts to mental health services, drug treatment
programmes, welfare aid, medical coverage for low income residents and
the elderly, environmental protection programmes, child protective
services, transport systems, schools, universities, community policing,
fire departments and many other vital services. Collectively, these
cuts diminish the quality of life for all Americans; but,
disproportionately, they impact the quality of life and the already-low
economic opportunities of the poorest sections of the populations.

For
the podium-pounders of the American right - Rush Limbaugh, Glenn Beck,
Sarah Palin, California's Republican gubernatorial candidate Meg
Whitman, South Carolina Tea Partier Nikki Haley and others -
"austerity" doesn't in any meaningful way imply shared sacrifice.
Instead it means fewer services for the poor and also lower taxes for
the affluent. It's Thatcherism, or Reaganism, on steroids, entirely
divorced from the realities of the moment, entirely unconstrained by
historical allegiance to an alternative economic vision. Opposition to
taxes has become not a strategy - as it was with Thatcher - but more of
a mantra. "No new taxes" is a simplistic sound-bite that has become an
all-consuming movement.

A proposal such as Osborne's, to raise
capital gains taxes from 18% to 28%, would be stillborn in the US. As
for VAT, some progressives in the United States
have begun, very tentatively, exploring the possibility of a federal
value added tax as a way to raise revenues to keep vital social
programmes solvent. But, the public doesn't support such a tax and for
most conservative politicians opposing the creation of a value added
tax, were one to be proposed, would become a sacred calling of even
greater magnitude than their opposition to healthcare reform. It's
unlikely, as a result, that America will have a VAT of, say, even five
percent anytime soon. As for 20%? As Seinfeld might say,
"Fuggeddaboutit."

Today's British conservatives, and their
Liberal coalition partners, might be deeply sceptical of the nanny
state; but they aren't anti-government per se. When push comes to
shove, they have absolutely no desire to defund the basic
infrastructure of governance. Conservatives in America, by contrast,
have wholeheartedly embraced a destructive anti-government'ism. It is
an ideology that doesn't recognise either the necessity of using
government institutions to ameliorate the condition of the poor or the
importance of using government's tax-raising abilities to keep social
systems and public infrastructure functioning properly during economic
down times.

If austerity in some ways implies shared sacrifice to
preserve a shared public sphere, America isn't really experiencing such
an age. Yes, it is an era of utter hardship for tens of millions of
families. But, at the same time, it is a moment of great wealth for the
country's upper echelon. And, if the anti-tax movement keeps its
momentum, especially at a state level, there is a real risk that on the
ground it will also become an age of ever-growing inequality.