Process
Status Items Output None Questions None Claims None Highlights Done See section below
Document Notes
Looking at austerity and how to deal with it by being more communal.. power back in the hands of the people.
Highlights
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economic growth stalls and, in this brittle economic context, an external shock — like a pandemic or a war or an environmental catastrophe — can send inflation soaring. Investors then realize that a country is experiencing a long-term economic malaise due to a persistent dearth of investment and low productivity, making any investments in that country less desirable.
✏️ End result 🔗 View Highlight
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fewer massive, glamorous infrastructure projects that made use of expensive private sector financing and advice, and many more smaller, more sustainable investments. Investments like improving existing public transport capacity in areas currently underserved by our woeful privatized bus and rail services; or expanding renewable energy across the country; or funding desperately needed research into the climate crisis, and the development of new technologies to tackle it.
✏️ A better alternative to austerity or to wasteful public spending on over the top stuff 🔗 View Highlight
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Neoliberals point out that the problem with public investment is that the government often makes mistakes when it attempts to allocate resources. While the intention might be to boost economic capacity through sensible, sustainable investment, you end up with white elephants that make politicians look good.
✏️ The wasteful public spending that people react to with austerity. This can be a problem, but the solution isn’t cutting it all out.. but rather democratizing the process. Put it in the hands of the people, not the leaders trying to grandstand or promote themselves. 🔗 View Highlight
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Workers, communities, and citizens know precisely where public funding is lacking, and have near-endless creative ideas as to how this money could be used. Allowing public sector workers and service users a say in how education and health spending was allocated would promote efficiency and reduce waste. Allowing local communities to come together and decide how to spend money in their local areas would improve outcomes as well as strengthen democracy.
✏️ Need to read up on Porto Alegre and Iceland, where participatory budgeting like this is successful. #followup 🔗 View Highlight
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She plans to curb nonessential spending on private consultants, who have spent decades pushing the marketization of the public sector — an agenda that has reduced efficiency and accountability while increasing costs.
✏️ Sounds familiar 🔗 View Highlight
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As hundreds of economists — not to mention trade unionists, environmentalists, and historians — warned in 2010, austerity always and everywhere fails on its own terms.
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The idea behind austerity is that day-to-day public spending cannot exceed the amount collected in taxes over a long period of time. The issue is not that the government might “run out of money” — everyone knows that sovereign central banks can create money to finance a government’s spending needs.
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The issue is that excessive public spending can fuel inflation, and relatedly, expectations of excessive public spending can reduce investors’ demand for government debt, driving up borrowing costs.
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Over the long term, this cycle of rising debt, inflation, and interest rates can create the kinds of sovereign debt crises often seen in poor countries in the past.
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At a certain point, excessive and wasteful public spending will start to drive up inflation — and investors’ demand for government debt is likely to have fallen even before that point.
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But similar economic problems can also be caused by insufficient public spending.
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The reason higher public spending can cause inflation is that it can increase demand at a much faster rate than the supply of resources in an economy permits. If a government decides to employ millions of workers to build bridges to nowhere, then wages will increase without a commensurate rise in productivity. Over the long run, inflation will increase, and investors will start to question the nation’s solvency.
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the same problem can be caused by a long-term dearth of productive public sector investment. If a government spends decades cutting spending on public services, allowing infrastructure to degenerate without being replaced, and cutting spending on research and development, then the supply of productive resources in the economy dwindles. There are fewer productive, healthy, well-educated workers, fewer roads, bridges and ports to transport people and goods to where they are needed, and fewer new technologies for businesses to exploit.