Monday, May 14, 2012


The term "austerity" has been used a lot lately in the media in reference to untangling the mess of world economies. The term implies a sadhuk-like discipline, depriving oneself for one's own good and everyone else's. In Europe, where austerity measures are being considered to deal with the EU's dire economic situation, there is a lot of rebellion and pushback. France elected its first Socialist (and anti-austerity) President in many years, and now Spain is angrily rising up against such austerity measures.

In some cases, austerity on some level may not be off the mark. In the case of Greece (as someone put it) they want the benefits provided by countries like Norway, but they don't want to pay the taxes. The reason many socialist countries have such wonderful benefits is because the people pay a lot of taxes. In exchange, they are guaranteed a certain quality of life--in theory. Sometimes this works out well, other times it does not. Corruption and greed will upset any system.

The logic of austerity says that when money is a problem, you don't spend, and you get rid of things you don't need. On an individual level, this is quite a sensible way of behaving, and even has its own virtuous name: frugality. However, it is not the way to manage organizations or national economies.

John Maynard Keynes has a theory of economics that is gaining popularity again in the face of the global financial crisis. Keynes suggested that restrictive financial decisions on a microeconomic level had negative ramifications on the macroeconomic level. In short--decisions to be frugal and not spend had ramifications for the larger economy. The end result was known as a "general glut" where there is insufficient demand for output, and thus high unemployment ensues, and the economy stagnates. Austerity for the larger group will bring the economy to a standstill. The only way to pump life into the economy is for the larger group--the country's representatives, the government--to spend more money so that those who are frugal because they have less money can go back to spending. Spending is good for business, and generates jobs if there is enough demand.

When governments become austere, then that means money is not flowing to those in need of it, which means spending decreases even more, and unemployment goes up even more. One might argue that we don't have the money; in fact, we DO have the money, we've just also borrowed a lot and have to pay down.  The question of fiscal priority is what is debated, and there's been virtually no logic to that debate at all.

The problem in the U.S. is that Congress refuses to raise taxes on the very rich--not even by a small margin, as the President has suggested. Even that small margin would go a long way towards helping the deficit. Republicans argue that the rich are "job creators" and if they have less money they won't create jobs. But this is just a smokescreen; corporations won't be affected at all by the proposed tax increases. And--a good CEO does not create jobs. His or her job is to run the company with the greatest efficiency, which means spending the least amount of money. The only way a corporation will create jobs is if demand soars, and if no one can purchase products, demand will not go up.

Now jobs could be created by the government. They are in fact the only ones who really CAN create jobs. But in a climate of spending austerity for the government, jobs won't be created. In fact, what we see is people in government jobs being attacked as having too many benefits. In reality, these jobs often provide reasonable benefits for a productive and enjoyable life and career.

Which brings us to another point about austerity--quality of life. If you cut social programs, those who rely on those programs to make ends meet have no opportunity to have any quality of life. It goes back to the Horatio Alger "rags to riches" myth--if you are poor in America, it's OK, because hard work will make you rich. The implied corollary is that those in need of welfare are lazy. But most people in need of welfare work very very hard, and have been denied opportunities that others are fortunate enough to get. Many are disabled either mentally or physically, and can't go to Harvard to become CEO of a big company. And not everyone can do that, anyway--someone has to take the so-called "lesser" jobs. And those jobs frequently don't pay enough to make a living, and may not offer sufficient benefits, if any at all.

Not everyone wants to be an accountant or a Wall Street banker, and in the land of "Opportunity", the "greatest country in the world", we should be able to pursue our own passions and dreams. The taxes we pay support programs that make this possible. Cutting those programs to avoid taxing the rich, whose quality of life would be totally unaffected by the additional tax, demonstrates either incredible ignorance or greed. Which, I should note are 2 of Buddhism's 3 great evils of the world. (Wrath is the 3rd one.)

It's worth noting that we live in a society that attaches real value to monetary value. What I mean is that the more you have/spend, the more you're worth. So--for all my library director colleagues who like to be team players, cut budgets, and "make do with less", the actual unconscious message is, "you don't cost much, so you're not worth much." By contrast, if you spend every penny of your budget and be sure to note that you really NEED this and more (overspending occasionally is good, too), you are likely to not only keep your budget, but get more. If you think I'm wrong--look at how many directors cut their budgets, only to be told, "good, you can cut more next year."

Similarly, poorer people in society who can't spend as much as richer people are unconsciously seen by larger groups as "lesser" in value. How else can a supposedly "Christian" group of people justify giving the rich a break, while imposing further "austerity" on the poor (literally and relatively speaking)? The "poor" must not have as much value because they don't have/spend as much money.

I have probably told the story of Mrs. Takawa, who brought Reiki therapy to the United States from Japan. Mrs. Takawa used to give Reiki Master attunements for free. She quickly discovered that no one wanted them or valued them. So, she decided to start charging $10,000 for them. All of the sudden, people were clamoring for them, and took them seriously. She noted that this was a curiously American trait; I might suggest that it is a curious trait of Western civilization. The Eastern worldview is a bit different.

It's probably worthwhile to think about how we assess "value" and the consequences of imposing "austerity".

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