Spending cuts and the threat to democracy

What America should learn from Europe and the Middle East.

The "sequester", which began on 1 March, is the American form of austerity, or cut-backs in government spending during a recession. Austerity, or stingy government in Europe has kept employment extremely depressed compared to what it would have been with government stimulus, as Paul Krugman argues.

On Saturday, there were massive protests throughout Portugal against Scrooge policies by the government, which have so destroyed the country’s economy that 2 per cent of the population has fled abroad for jobs in the past 2 years alone. On Friday, Greek workers staged a huge general strike. In Italy, anti-austerity feeling made grumpy comedian Beppe Grillo and his party the swing vote in the new parliament. Grillo may single-handedly destroy the eurozone. European newspapers rather amusingly demanded that Grillo now "take responsibility" and "tell us what he wants". He is a contrarian comedian. It would be like having Robin Williams or Tracy Morgan as the swing vote in Congress, with the press hounding them for their agricultural policy and asking them about the dangers of deflation. But Grillo's ascendancy, while less alarming than the resurgence of the Greek far right, is a manifestation of the rejection by the Italian public of the long dreary road prescribed by the "troika", (The International Monetary Fund, the European Union, the Central Bank), of further government cut-backs, reductions in minimum wage, high unemployment, no hope.

While for some odd reason the Middle East does not usually get analysed with the same social science tools as Europe, the political crisis in Egypt is related to the Muslim Brotherhood government’s austerity program. The latter, as Samuel Knight argues, is being pursued under pressure from the International Monetary Fund. Secretary of State John Kerry is in Cairo, also urging acceptance of the austerity program. Austerity is estimated to have reduced Egyptians’ real income by 3 per cent in January alone. Tunisia is doing better than Egypt economically, but the parliament, dominated by the religious Right, is also tempted by austerity measures, seeking to trim a point off the budget deficit this year while seeking 4.5 per cent growth. While letting the value of the Tunisian dinar fall would hurt consumers with regard to imported goods, it would make Tunisian textiles and tourism more affordable for those abroad. Tunisia's exports are hurt by European economic problems, and the country would do well to develop more Asian customers (Brazil has had success reorienting exports to the Pacific Rim). Likewise, although Yemen's economy improved in 2012 after a 10 per cent drop in the revolutionary year of 2011, if anything the government budget deficit of 5.5 per cent is not big enough to stimulate the economy properly.

Reducing the state budget at a time of economic contraction is the opposite of what the great economist John Maynard Keynes prescribed. When the economy is in the doldrums, the businesses are skittish about investing their money, and so keep it in the bank. The only force, Keynes argued, that can and will risk putting a lot of money into the economy during a deep recession is the government. Of course, the government has less money at that point, too, since tax receipts are reduced. So it will simply have to spend money it doesn't technically have, i.e. go into deficit and print extra paper money. The extra paper will, obviously, lose some of its value. But that loss can have benefits, too, since it will make the goods produced by the country less expensive abroad, and spur exports.

This argument is straightforward for most countries, and it is mysterious why European and some Middle Eastern governments reject it. It is complicated in the US by the position of the dollar as a reserve currency and by the fall of manufacturing to only 20 per cent of the US economy. The former means that large budget deficits don't necessarily reduce the dollar's value significantly, because the US only holds about a third of the world's dollars and there is a lot of confidence in its value. The latter means that even when the dollar falls against the yen or euro, the jump in exports is limited to a fifth of the economy and domestic services don’t get much of a boost. But actually these peculiarities of the US economy are not arguments for austerity; on the contrary, the reserve dollar allows the US to do stimulus without as much pain as one would otherwise expect.

Instead, the Tea Party has forced the US into an artificial crisis with the "sequester", taking $100bn a year out of the economy for the next ten years, which will cut half a point of economic growth and harm workers, keeping unemployment high – not to mention the harm it likely will do to medical research, higher education, etc. That this austerity is being pursued by the GOP in part in hopes of disillusioning voters with President Obama in his second term is fairly obvious, but it is also in order to protect the 2003 Bush tax cuts for the wealthy, 80 per cent of which have been retained. Sequester, as usual with these things in the US, is actually a tax on the middle classes to benefit the wealthy, since it preserves undeserved tax cuts for the latter by reducing government services for the former.

That austerity does not work economically should be clear. But that it creates populist discontents that are shaking southern Europe and could derail Middle East democratisation is even more alarming. The world needs stimulus, not Scrooge government if it is to pull out of the crisis kicked off by corrupt bankers in 2008.

This is a cross-post from Juan Cole's blog Informed Comment

Barack Obama holds a cabinet meeting at the White House on 4 March. (Photo: Getty.)
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I am an immigrant – and I believe “migrant” is a far from neutral term

 A seemingly neutral term like "migrant" is so potentially pernicious because we don’t take the kind of care we should in assessing its effect on us.

I am an immigrant. I came to the UK 20 years ago from the US to teach philosophy at the University of Sheffield, where I am now a professor. My American accent remains very strong. I used to be surprised when, despite hearing me speak, people would express anti-immigration sentiments to me, with a clear expectation of agreement. I would tell them that I am an immigrant. “I don’t mean you”, they’d respond, surprised that I count myself as an immigrant.

This shows that seemingly neutral words – like "immigrant" – are not always used in a neutral way. The supposedly neutral word "migrant" is increasingly used by the media to describe the large numbers of desperate people travelling into and across Europe, fleeing war and persecution.

But this use has recently come under attack.

To some, this attack is baffling. A migrant is just a person who migrates, surely, and these people are migrating. What can be wrong with this truthful description? One thing that might be wrong with it, however, is that, according to the UN, that’s not what a migrant is:

The term 'migrant'… should be understood as covering all cases where the decision to migrate is taken freely by the individual concerned, for reasons of 'personal convenience' and without intervention of an external compelling factor.

While maybe among the desperate risking their lives to escape places like Syria and Afghanistan, there is a person or two who has joined them for reasons of “convenience”, these people are surely vanishingly rare. According to the UN, then, it is simply factually wrong to call these people migrants.

But why, a more compelling objection goes, should we even care about language? People are dying and need help, and there goes the left again worrying about words. The reason to care about language is that the language we deliberate in shapes our deliberations. We’d see this without hesitation if racial slurs were being used to describe these people. And few people of good will would defend Katie Hopkins’ use of the term "cockroach". We know all too well how such clearly dehumanising words help put in place patterns of thought that make genocide possible. But "migrant"? "Migrant" is not a slur. 

Those who study the intersection of language and politics, however, have become increasingly aware that terms that seem innocent, like "migrant", can do some of the worst damage. This is because we are not aware of the ways that they are affecting our thought. Almost all of us, below our consciousness, are prone to ugly biases that we would reject if we were conscious of them. We see this in studies showing that people presented with the same CV judge it to be less attractive if the name at the top is a typically black one.

Apparently innocent words can come to function as dogwhistles, speaking to our unconscious in ways that our egalitarian conscious selves would reject if only we realised what was going on.

In America, the apparently race-neutral term "welfare" has come to be so strongly associated with black people that attitudes to any policy described using this term correlate with racial attitudes. Fascinatingly, adding an explicit reference to race removes this effect – if it’s too obvious, our conscious egalitarian selves step in. And this is why a seemingly neutral term like "migrant" is so potentially pernicious: it is not, as the UN recognises, actually a neutral term. But it seems like it is – which means we don’t take the kind of care we should in assessing its effect on us.

The suggested alternative terms are "refugee" – which calls attention to the fact that these people are fleeing intolerable conditions of violence; and the simple "human being" – which reminds us of our moral obligations. Either of these is an improvement on the inaccurate "migrant", which threatens to distort our discussions without our even realising it.

Professor Jennifer Saul is from the University of Sheffield's Department of Philosophy.