تقليص العجز … العبودية المقنعة

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شدوا الحزام !

ليس هناك بُد من أن تقوم الحكومة بتخفيض الإنفاق، فمن غير المعقول أن تستمر في ضخ الأموال في أمور تافهة، مثل: الدعم والتعليم والصحة إذا كانت ترغب في ضبط ميزانيتها… يبدو أن خفض الإنفاق ضرورة ملحة من أجل تقليص العجز!

تمامًا مثل الأسرة، ليس من الممكن أن تظل الحكومة تقترض إلى الأبد، فلو تخيلنا أسرة تقترض طوال حياتها فبالتأكيد ستظل تغوص في الديون أكثر وأكثر ولن تنتشل نفسها منها أبدًا. عندما تكون ميزانية أسرتك أقل من مصروفاتها هنا يجب عليك أن “تشد الحزام” وتضحي وتقلل من الإنفاق… ونفس الشيء يحدث مع الحكومة.

وها قد وصلنا إلى جوهر الجدلية النيوليبرالية التي تبرر للحكومات التراجع عن مسؤولياتهم من أجل الصالح العام، وهو الأساس الذي يسوغون به تدابير التقشف. ولكن كل هذه ما هي إلا مغالطات تافهة … وإليكم الأسباب! …  إضغط هنا

The government simply must reduce spending; it cannot continue to pour money into things like subsidies, education and healthcare, if it hopes to ever balance the budget.  Public spending cuts are necessary to shrink the deficit.

 

Like a family, the government cannot just keep borrowing; if a family did that, they would get so far into debt they could never get out.  When your family budget is lower than your expenses, you have to tighten your belts, sacrifice, and cut your spending; it is the same with government.  Here we have the core of the neoliberal argument justifying why governments should renege on their responsibilities for the public welfare; the basic rationale for Austerity measures.  And it is a complete fallacy.  Here’s why…

First of all, governments are not like families.  They use this analogy because we can all understand it. In fact, we understand it all too well.  Being in debt, struggling to make ends meet, having more bills than we have income, having to scrimp and save and make those miserable choices between whether we will buy food instead of medicine; yes, we all understand that.  We know all about sacrificing in order to pay back creditors.  So when governments say that, it makes sense to us.

 

It is counter-intuitive to keep compounding debt when you are already in up to your ears.  But that’s because we humans have a life-cycle.  We get old, we get sick, we eventually lose the ability to work and earn. Not only do we understand that, our creditors understand it.  We have a limited timeframe for our capacity to pay off our debts.  OK, none of this applies to governments.

 

States do not have to plan for retirement.

 

Governments exist indefinitely, earn revenue indefinitely, and creditors understand that government has an unlimited timeframe for repayment.  There is no reason why governments need to have a balanced budget; no reason why they cannot operate on a continuous deficit, as long as that deficit is at a reasonably moderate level.  Former US Vice President Dick Cheney stated it quite bluntly (as he tends to do), but not inaccurately, when he said “deficits don’t matter.”

 

The United States has operated by deficit spending for the last 40 years.  Japan has a current debt-to-GDP ratio of 230%.  It is simply a falsehood to say that balancing the budget, paying down the debt, should take priority over public spending.  In fact, that is just really bad economics.  It is a formula for economic stagnation, if not a program for actually inducing economic shrinkage.

 

When the government reduces public spending; cutting subsidies, slashing funding for education, healthcare, and aid for the poor; the population has less money to spend.  That means they don’t buy things.  They don’t shop, don’t purchase goods and services; they can’t afford to.  That means less money circulating in the economy.  This, in turn, hurts small and medium sized businesses, entrepreneurs, who remain solvent from one fiscal quarter to the next by their short term profitability.

 

If people are not spending the little money they have, small businesses feel it immediately.  They have to lay-off workers, reduce their procurement of supplies, streamline operations, and so on; and if they can’t reduce expenses enough to stay afloat, these businesses have to close down.  So, even less money moving in the market; less taxes being paid on worker incomes and less sales tax revenues.  Prioritizing deficit reduction actually reduces the ability of the government to even pay back its debts.

 

So, let’s look at a few of our countries being sold this false economic ideology.  In Egypt, fuel subsidies were identified by the International Monetary Fund, and their “Amen Corner” among the elite class, as the main culprit responsible for all economic evils in the country.  Ahmed Heikal, chairman of Qalaa Holdings, said “Egypt’s subsidy system is the root of the problem”.  Only, it wasn’t.

 

The energy crisis in Egypt has nothing to do with lack of energy resources, or public subsidies for fuel.  Energy shortages in Egypt, and debt associated with the energy sector, stem from the insistence of foreign energy companies to take a disproportionate amount of the oil and gas they extract to sell in the open market for private profit.  Egypt produces more than enough energy for its own subsistence, but not enough to meet both the consumption needs of the population and also the demands of the energy companies.

 

In other words, subsidies did not have to be suspended, reduced, or reformed.  In fact, they could have been increased, if the greed of energy companies to turn a profit from Egypt’s resources was restrained.

 

Reducing subsidies increases hardship for the population, the more they have to spend to keep the lights on in their homes, the less they have to spend in the market.  That is bad for the economy.  Egypt’s deficit is around 11% of GDP, that is relatively moderate and manageable.  There is simply no urgent imperative to reduce that; it is comparable to the deficit-to-GDP ratio of the United Kingdom.  Cutting public spending, like slashing subsidies, will only impede the growth of the economy and hinder Egypt’s ability to pay that debt down.  The same applies elsewhere.

 

Tunisia, for instance, where protests are ongoing over unemployment, has a deficit-to-GDP ratio of only around 4.7%; lower than the US; that is not a deficit emergency.  Hysterically cutting away at public spending in an effort to balance the budget will only make things worse.  More jobs will be lost, less money will be circulating, and economic growth will grind to a halt.  You won’t be able to reduce your deficit anyway, even if you imagine that it is an urgent issue to tackle.

 

Morocco, which has greatly cut funding for education in an attempt to push for full privatization, under the pretext of balancing the budget, only has a deficit of about 5% of GDP.  Again, that is perfectly sustainable if there is sufficient economic activity and growth.  But slashing public spending, laying-off teachers and other workers, will hinder growth and make deficit maintenance all the more untenable.

 

You do not grow your economy by balancing the budget, you do not improve your ability to finance debt by measures that will ultimately shrink the sources of government revenues.  The argument that deficits must be lowered and debts paid off is nothing but a scam designed to cripple economies, dismantle national sovereignty, and dissolve the social contract between governments and their people.

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