It’s budget time, and conflicts over “austerity” are continuing to rage across the western world. Canada’s budgets are out, Spain held a general strike Thursday and the situation in Italy and Portugal is continuing to worsen.

Greece and Italy
News from Europe just keeps getting more disturbing. Italy has now seen two men set themselves on fire to protest economic conditions. One did it outside a tax office, another outside the town hall over thousands in unpaid wages. Greece is taking an even scarier turn as the (unelected) government move on with plans to open 30 widely opposed “detention camps” for illegal immigrants, who they’re now attempting to scapegoat for their economic woes. This follows similar measures and proposals aimed at the Roma (“Gypsies”) in Italy and France.

These two nations are furthest along in “austerity” plans (especially Greece). They’ve both had their heads-of-state (Berlusconi and Papandreau) replaced by “technocrats”. Their economies are growing so toxic they threaten the EU itself, and austerity programs so have only worsened debt burdens by wrecking their economies. They’ve both seen enormous, riotous social unrest. Watching this from the relative security of a nation like Canada, it’s time to ask ourselves: is this is really the path we want to embark down?

Spain and Portugal
Spain yesterday saw a general strike grip the country, where (of course) some clashed with police setting tires and trash cans alight as barricades in the street. Yesterday, Spain announced their “austerity budget“, hoping to satisfy European Union creditors. It contains 27 billion in cuts, some of the worst cuts seen since the end of Franco’s dictatorship. Spanish unions and protest groups are pledging to keep fighting. Neighbouring Portugal held a similar general strike last week, and business analysts are again beginning to fear that either of the above (or Italy) may become “the next Greece”. EU Ministers met today to discuss raising the “firewall” bailout fund closer to a trillion dollars, fearing another debt-crisis and bailouts which could cripple the European banking system.

Canada
Thursday, Federal Minister of Finance Flaherty announced his “austerity” budget, as expected. During the speech a group of protesters raised a ruckus in the gallery and had to be “escorted out”. The day before, McGuinty released his, and the reality of the proposed cuts is beginning to sink in. Federally, over $5 billion in cuts have been announced, expected to directly result in about 19 000 public jobs lost over the next few years, raised eligibility ages for retirement benefits and gutted environmental oversight. The subject of new taxes was avoided, with the Conservatives hoping further investments in large resource-extraction projects like the Tar Sands and related pipelines will bring in more revenue. It’s being called the “least green budget in decades“, inflaming Environmental and First-Nations groups.

In Ontario, the main cost-cutting measure is a two-year public-sector wage freeze along with cuts to pensions. Over the next three years, cuts worth $17.7 billion are planned, with a third of it coming from wages. These measures follow a somewhat watered-down model provided by the Drummond Report, released earlier this year warning of dire financial consequences if Ontario didn’t deal with our deficits.

Canada isn’t Greece, Spain or Italy – we very clearly aren’t in the midst of a “debt crisis”. We aren’t even “sorta” grappling with one like France, Britain or America. We have the lowest debt-GDP ratio in the G7, our own currency and some of the world’s largest stocks of natural resources. Our economy was largely shielded from the shocks of the last five years for these reasons, and we needed a far smaller “bailout”. Our social programs aren’t all that lavish by European standards, and our economy is in far better shape. To say that Canada “needs” an austerity program is absolutely ludicrous, but that’s never stopped our politicians before.

Austerity Everywhere
The rapid spread of austerity programs, beyond borders and regardless of party in power, shows how widespread these problems really are. As much as I’d like to place the blame on Harper or McGuinty, they are only a few in the long list of politicians participating. Our new global economy has generated a global crisis, and it’s going to take a global movement to fight back.

Wages, pensions, social programs and other benefits have always been a battleground. They’re a part of the bargain we drive in exchange for our work and compliance with laws. Most of these rights and benefits were only gained at the end of long and hard-fought struggles. This bargaining session never ends – there’s always a mediation between us and those in power (bosses, the government, etc). There will always be efforts to peel back these gains and pay us less in one way or another. When this happens, people fight back. This is the subject of a very interesting paper now making the rounds online, Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009 by Jacopo Ponticelli and Hans-Joachim Voth of the CEPR. From the ninety years they studied, they found “a clear positive correlation between fiscal retrenchment and instability”. These results were tested against all the usual explanations – recessions, democratic/autocratic governments and the amount of media coverage, among other variables, and none showed much effect (with the possible exception of limiting the powers of government’s executive branch…). The lesson here? If you begin to pay people less for their obedience, be prepared to expect less of it.

This fight is already underway. Big days to watch for include April 21st (Toronto), May 5th (Ottawa) and of course Mayday, May 1st (everywhere). There are already big conflicts underway in Quebec (students) and British Columbia (teachers, northerners), as well as many cities like Toronto and Halifax. With these budgets now on the table, Canada’s entry into this international conflict is now official. Austerity is everywhere and the effects are only beginning to be felt, but so is the backlash.

It sure is going to be an interesting spring.

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