When the opposition to inane austerity is powerless

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The Berlaymont building in Brussels housing the European Commission
Picture credit: Protesilaos Stavrou CC BY-NC-SA

The standard litany against the kind of austerity we have seen being coercively implemented across Europe, is that it is unfair as it does not place proportional burdens on the rich. Politicians have used this rhetoric to illustrate their unflinching devotion to the toiling people, the poor and the beaten down, by proposing taxes on the rich and the banks as a remedy. While the austerity stratagems we have been witnessing certainly lead to outright injustice, for reasons that I shall outline below, it must be understood that these arguments of “unfairness” and “inequality” which only end up in policy prescriptions of increasing taxes and expanding the scope of the state, are far from meeting the lofty ideals they purport to uphold.

First of all by “austerity” we must understand that we are referring to a set of policies which aim at diminishing the welfare of the vast majority of individuals in society so as to bring in order the finances of the state. It has very little, if anything, to do with the diminution of the hypertrophied state wherever that may exist. As such “austerity” features tax increases and coercive intrusion of the state in the lives of individuals. Contrary to what many troika-style neoliberals think –and libertarians like myself are not neoliberals– the austerity we now see being forced upon us, is expanding the state rather than chopping it down.

Whatever pitiful government expenses are reduced are those which are aimed at the lowest parts of the income distribution; and while much can be said about the gross inefficiency of the welfare system, it must be stressed that state intervention in bailing out “too big to fail” corporations and in handing out sweetheart privileges to the filthy hands of a selective plutocratic elite and to their flunkies, ought to be a far greater source of concern and indignation, than even the most irrational “safety net”.

Thus the arid cost-benefit calculations of abolishing such ineffective measures as say the minimum wage, which completely ignore the fact that the state is simultaneously creating thoroughgoing distortions in the capital structure by sustaining toxic debts and financial malpractices, are nothing but obscurantist apologia to a chimerical efficiency and pseudo-competitiveness.

Either we abolish state intervention in propping up the deeply entrenched cronies of the power elite, as a prerequisite for restoring justice; or we provide the scientific patina of economic calculation to an oppressive and profoundly corporatist set of “austerity” measures.

Coming back to the timid opposition to such schemes, which only seeks to open a broad sluice gate for the introduction of new taxes and state despotism as a counter-weight to the injustice of austerity; we must bear in mind two crucially important things:

  1. Regarding the rich, “our” philanthropic states have been bailing them out ever since the crisis was brought upon us; while a panoply of regulations, be it safety criteria, copyrights, patent laws, entry requirements etc. have greatly consolidated their position and cartelized their commerce by insulating them from the powerful taming forces of genuine competition (which is fundamentally the ability to enter any kind of economic activity unhampered by state edicts or laws that create two or more classes of people in the profession, such as those who are “in” and those who are “out”). In the rigged corporate-capitalist economy of our days any measure directed against the rich, which does not aim at restoring the operation of genuine markets, is nothing but grist to the mill of cronyism as it sustains or engenders the same kind of cozy relationships between regulators and plutocrats which are at the root of this crisis, as a central feature of our failing economic model.
  2. The imposition of extra taxes on the rich, without any measure to undermine their privileged position in the rigged market; is a self-defeating policy, even if the rich do not choose to seek refuge in tax havens. It is crystal clear that such plutocrats, who are not subject to genuine competition and who consequently face fairly inelastic demand curves for their goods and services, have the power to rollover the costs of increased taxation on to their customers, without losing their market share and privileged position. In other words they can avoid paying extra taxes simply because they enjoy such a protected status which offers them the opportunity to do so with alacrity.

Perhaps the most outrageous case of such self-contradicting policies is with banks. “Our” states and their wise technocratic experts were quick to provide them with trillions of euro (and with oligopolistic status) allegedly to protect the savings of households; and now they say that we need to tax them, by introducing a financial transaction tax of some trivial rate, that will definitely be rolled over to society at large. The political humbuggery notwithstanding, financiers will not bear the actual cost of such taxes, thanks to their central position in the system which offers them the luxury of passing the cost to consumers.

If we really want the bankers, the corporatists and the plutocrats to pay; if a fair distribution of the burdens of this crisis is our ultimate goal; then we must boldly espouse a radically different approach of allowing unsustainable business models to go bankrupt, of toxic debts to be liquidated, of state malpractices to be abolished and of regulatory shackles on unprivileged society to be removed, so that genuine competition may emerge as against the rigged markets and oligopolies that now dominate our economy. Solutions exist, justice can be restored, but not through the canals of a failing economic model tailored to the interests and caprices of the political and corporate elite.

Stop bailing out and protecting losers by baptizing it social policy or even a necessary evil, as nothing can be further from the truth.