By Julia Posca
Originally published on January 26 2015
See original French text here: http://www.journaldemontreal.com/2015/01/26/lausterite-ou-la-democratie-confisquee
Austerity is on everyone’s lips since the Liberal’s return to power in Quebec in April 2014. Our current political climate is resonant with the “debt crisis” which has been rocking Europe since the economic and financial crisis of 2008.
Yet fiscal austerity measures on both sides of the Atlantic are not simply a response to the economic crisis. In spite of the extent of austerity’s claim on the political landscape over the past seven years, the imperative of the balanced budget has been around since long before the subprime bubble burst, sweeping the global economy along with it. Austerity is simply the current manifestation of the question of balanced public finances.
One must turn back the clock to the mid-1970s in order to find the first battles waged by governments against public debt (at least in its neoliberal version). In those days, climbing inflation and global unrest put the breaks on economic growth, depleting state coffers. Those who intend to narrow the scope of public spending set their sights on social security spending, considerably on the rise since World War Two. The welfare state is traded in for the commodification of public services and the privatization of various state functions. Neoliberal doctrine is on the up swing, while politicians critical of social security nets are globally brought to power (Tatcher in the United Kingdom, Reagan in the United States, Mulroney in Canada, Bourassa in Quebec) or “installed” (Pinochet in Chile or Videla in Argentina).
The rise of neoliberalism goes hand in hand with the growing financial economy, made possible by the combination of market liberalization and globalization with the deregulation of the financial sector. Rating agencies flourished in this new context. Economic agents began to turn to them in order to assess the risks linked to various investments and loans in an ever-growing market. States eager to offset their budget shortfalls by issuing bonds (debt securities) became privy to the the verdict of rating agencies with regards to their debt position, as well as their public finances.
The expert status granted to these agencies, as well as the nature of the issue in which they are intervening (the balance of income and expenditure) succeed in creating the illusion that their evaluations of technical questions are neutral. Yet there is every indication that their evaluations are highly prescriptive: they propose a particular kind of budgetary policy oriented toward scaling back social expenditure. Studies conducted on government behaviour with regards to financial evaluations have clearly shown that rating agencies inspire a greater sense of budgetary orthodoxy in policy-makers.
The fact of elevating the zero-deficit principle to the status of law (Quebec did so in 1996) attests to the fact that the political class has effectively internalized the point of view of rating agencies (and of finance in general). The looming threat of the downgrade brandished by our elected officials short-circuits any debate on public finances by instilling a sense of fear and urgency in public opinion. One needn’t look further than to Philippe Couillard’s interview with Céline Galipeau on Radio-Canada from December 2014, during which he insists on achieving a balanced budget, claiming “that we can no longer allow ourselves to postpone what should have already been done”, and that in any case, rating agencies “control Quebec’s public finances, whether we like it or not”.
Austerity is seen for what it really is: an inevitability that deprives us of our ability to choose. It becomes hard to not interpret this bribe as confiscated democracy. It can inversely seem that the only way to demolish public services and be done with social solidarity once and for all, while taking the opportunity to keep up with the world’s growing inequalities, would be to take away the citizens’ right to decide otherwise.
Translated from the original French by Language and Dissent, a collectively-run blog supporting the anti-austerity struggle in Quebec. These are amateur translations written by volunteers; we have done our best to translate these pieces fairly and coherently, but the final texts may have their flaws. If you find any important errors in any of these texts, we would be very grateful if you would share them with us via email (languageanddissent [at] gmail [dot] com). Please read and distribute these texts in the spirit in which they were intended; that of solidarity and the sharing of information.