Wednesday, May 25, 2011

Protesting Austerity Measures

Tibor R. Machan

Throughout Europe it is now routine--but it is not unfamiliar by now in the US either--for people to march and otherwise protest (sometimes with out and out reckless violence) austerity measures the government officials have decided to deploy so as to cope with the enormous debt they have amassed, mostly from committing to paying out huge entitlements that are not covered by funds either present or promised.

This is happening in Greece, Portugal, Spain, and other countries and only a few are somewhat prepared to handle them internally, without depending on getting funds from other countries. Of course, many in those other countries are themselves protesting these efforts to rectify profligacy by raiding the treasuries, with EU sanction, of the better managed ones. (Not that any of these welfare states have escaped completely their considerable financial malpractice!) But a substantial portion of the citizenry of Germany, for example, does not view this public wealth redistribution with enthusiasm. And while such welfare states as Germany may have numerous citizens who favor wealth redistribution within their societies, most stop at the border (which goes to show you what kind of “generosity” and “compassion” is involved in welfare statism).

The puzzle is that so many people seem to be aghast at the fact that when the politicians and bureaucrats, most often with substantial support from large segments of the citizenry, accumulate enormous debts, the country not only runs out of funds but looses its credit rating so that borrowing becomes more and more troublesome. Yes, and this is something the USA faces as do Greece, Portugal, Spain, etc.

But why are people protesting? Isn’t it a plain fact of public--not to mention private--finance that one cannot get blood out of a turnip? Aren’t people aware of all this form their own personal economic situations? When one maxes out one’s credit cards, is no longer able to refinance one’s home, and experiences all sorts of economic setbacks--caused, usually, by a smorgasbord of malpractice throughout the economy (which is nearly impossible to sort out so that it might be possible to tell the guilty from the innocent)--why is it that folks insist that somehow, anyhow, all this just get papered over or simply overlooked and that their hefty entitlements based on the fantasy of eternal welfare statism keep being undisturbed?

There can be numerous states of mind that may account for this. One of them is certainly the kind of political shenanigans perpetrated by the likes of those who insist that it is all the fault of the wealthy, who are soaking the treasury somehow--and if so, mostly with the complicity of the self-same politicians--and if only the rich could be soaked back, it would all get fixed. The idea that all this is a zero sum game--so that some are raking in huge gains at the expense of others and it would take but a bit of thorough investigation to sort it all out--is quite prominent in the minds of many, judging by the comments of prominent pundits and media figures on Op Ed pages and talk shows.

Yet there is also the plain delusion on the part of millions of people that one can indeed get blood out of a turnip, a delusion backed by some academic economists’ fancy idea that all it takes to remedy matters is to carry out some kind of magic--like deploying the famous Keynesian multiplier effect whereby the bureaucrats pump a bit of funny money into the economy via artificial money printing and public spending only to have it turn into massive wealth down the road (via the creation of employment based on such phony spending). Still, to make this credible one needs a large portion of the citizenry who all believe in magic to start with, that somehow debts can be wished away, not paid up, for example. That something can come from nothing (and idea that some philosophers actually propose)!

I am sure there are many other sources of the idea that when countries run out of funds, these can be made up by engaging in some imaginative accounting or something, so that there is no need for austerity, certainly for any austerity that will have an impact on the entitlements received by people to whom promises were made based on, well, sheer hope and wishful thinking.

So why aren’t politicians and bureaucrats--and their academic cheerleaders--coming out with some honest explanations, insisting that the citizenry face up to all this and stop throwing hysterical fits when finally the chicken come home to roost? Because most of these public servants are cowards and refuse to make any effort at genuine leadership, statesmanship. So much for their serving the public interest.

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