We badly need austerity… but not like this
There’s not enough money in the bank. That’s the problem facing almost every Western government at present. And the austerity consensus – cutting public spending – is the de facto route to avoid ‘doing a Greece’.
The debt problem is real, as the Greek tragedy proves. If you spend more than you have then, at some point, you’ll be caught short and the bailiffs will be at your door. Living within our means is vital. We badly need austerity… but not like this.
Because the problem with the current consensus is that it only looks at some of the costs. Right under the spotlight is public spending, which is basically the economics of government. We take a certain amount through tax and we spend a certain amount on services. With a low-growth future ahead of us, those two figures need to be much closer than they are.
But there are many other costs which have escaped the austerity gaze. And they are not just the responsibility of government; they are driven by you and me.
Counting the cost (all of it)
I’m writing this on an iPad, manufactured by Apple. It was probably made at a Foxconn factory in China, now notorious for its mistreatment of workers. It contains a concoction of various minerals, mined from around the world. One of these, called Coltan, is mined in the Democratic Republic of Congo where it is estimated that one third of boys leave their education in order to work in the pits for next-to-no pay.
Mining minerals also destroys unimaginably vast swathes of forest and their processing pumps megatonnes of harmful gasses into the atmosphere. As most of this mining and processing is now done in the poorer (and therefore cheaper) places of the world, it is those local communities who most suffer the consequences.
These costs have completely escaped the gaze of government austerity. Because for tax income to grow without raising the tax rate, the economy needs to grow. And in a consumer economy, growth depends on people consuming even more. But all of this points to the real cost we need to get under control: our spending spree of natural resources. Because we can carry on consuming, but the simple fact is this: there is not enough natural resource to go around.
Depending on which estimate you read, we need between 2 and 6 planets to sustain our current rate of consumption. But even the conservative end of that estimate is twice as many planets as we actually have! Now this is not just a left-wing argument. You could be a climate change sceptic, you could ignore the harmful effects of consumerism on people’s identity. You could ignore the human cost of production and keep the environmental cost out of view. But even if we narrow our vision right down to the success of our own economy and squeeze out every other factor, then we still face a monumental problem. The resources are running out, and so at some point the system will break. We’ll be caught short, and the bailiffs will be at our door.
And by then it will be much, much worse.
This is why we need a much bigger idea about austerity. Balancing the books of government is important. But balancing the books of our global society should be our priority. And that requires a fundamentally different vision for our future.
The future’s green
This is where Green economics comes in to play. People hear ‘green’ and automatically dismiss it as an environmental lobby. But Green movements across the world are at the forefront of providing viable alternatives to the current system.
The basis of Green economics is that we should properly count costs. Which is actually a very right-of-centre priority, despite Greens generally being seen as left-wing. We should count the cost to our planet and to the people living in it. In a global economy it’s no longer enough to only count costs at a national state-purse level. The true cost of our lives is absorbed by communities in other countries and by local environments in other places.
This iPad is an example. It cost around £450. That’s enough for Apple to manufacture, ship and sell the product and take some profit for themselves. But it doesn’t cover the cost of a living wage for workers, either in the factory where it was assembled or in the mines where the raw materials were first extracted. It doesn’t cover the cost of toxic emissions to local environments, as they are neither properly regulated, nor properly taxed. And because those costs are under-estimated, the raw materials themselves do not follow the proper economic rules of supply and demand. Not only should supply be more costly (and therefore lower), meaning that demand pushes up the price, the unsustainable nature of the system should be putting a monumental brake on demand. But the false economy of low-cost production – in other words, the fact that we’re not counting all the costs – means that the system can’t regulate itself. And so prices stay far too low.
Which is why we need a whole new kind of austerity.
No more something-for-nothing
To quote the current UK coalition government: ‘We need to end our something-for-nothing culture.’ Every day, consumers all across the Western world take something for nothing as the human and environmental cost of the goods and services we buy are waived. And there’s no doubt it’s a really difficult problem to fix; often these consumers are third or fourth generation whose families have never known anything different.
We expect costs to be low – and we’ll put up a big fight if they rise. But unless they do, our global economy is not sustainable.
So we need a new vision, where we value our stuff much more highly. Where we are less quick to throw away and we make fewer, better purchases. And we need a better, bigger vision for our economy and our government. We need investment in new, sustainable forms of manufacturing, in green transport, and in local environments. And we need governments that can hold businesses to account over how they treat the people and environments they require in order to succeed. Not in a spirit of antagonism. But from a belief that business, like government – like all society – can only thrive if costs are fully accounted for and core resources properly protected.
This is the kind of austerity that is good for everyone, not just a few. The sooner we embrace it, the sooner we can begin to build the kind of world that we hope for.