Eurozone didn’t admit a Lost Decade – France won’t admit austerity continues in 2019
Written for the Saker blog
One would think that if economic austerity had ended, wouldn’t it be trumpeted loudly?
After all, it has been going on for so long, is so hugely despised, is such an economic failure, and has been the source of so many protests, arrests, tear-gassings, water cannoning, police violence and – certainly – deaths due to the lack of adequate health care, suicides due to debt, etc. This is not a situation unique to France, the Eurozone’s 2nd-biggest economic driver, which has endured two years of Great Recession catastrophe and then seven consecutive years of austerity budgets.
I was practically all alone in January in pointing out the fact that the Eurozone officially achieved a “Lost Decade”: its average annual growth rate from 2008 to 2017 was just 0.6%. LOL, should we really fear that that socialist economic policies could possibly do worse? Certainly Vietnam, China, Cuba, Iran and the few others achieved far better rates in the past 10 years and often despite a so very unfree-market Cold War against them.
But apparently Lost Decades are only for non-Whites, such as in Japan, which is always reported to have had not one but two Lost Decades: 1.4% growth rate from 1991-2000, and 0.7% growth rate from 2001-2010 – the EU’s lost decade was even worse.
But Western mainstream journalists either don’t understand basic economics, simply cannot do basic arithmetic in which a variable like “x” is totally absent, or they are too willing to accept the propaganda of those who do understand economics but who are also dishonest/fanatical supporters of capitalism.
Those are the only options, because either France has ended austerity – which is big news for the Eurozone, which remains the weak macroeconomic link in the global economy – or it is continuing austerity in 2019 despite its total failure, which is also big news.
And yet, for the first time in seven years, France’s annual economic budget is out and the word “austerity” is nowhere to be found! Amazingly, this is not just English-language but even French-language reporting – the only exception I found was in an editorial by SudRadio. They aren’t conventional media, but I note that France’s most left union, Force Ouvrier, was the only one to use the French translation of austerity – politique de rigueur.
What gives? Is the entire concept of austerity passé? Am I just plain gauche (a French word which means “left”, but which in English has been class-twisted to mean “unsophisticated and socially awkward”) to bring it up?
The short answer is: journalists were so impressed that Macron swept a few tax cut-crumbs to the middle-class floor that they are ignoring the feast on the table enjoyed by the rich.
Imperialism, Zionism, fascism…add ‘austerity’ to the list of words Western media can’t properly define
Let’s start by defining terms, in order to avoid confusion. “Economic austerity” can be boiled down to three essential ideas: cutting of social services (in practice, this means passing the costs onto households for what used to be provided by the government – ER: so citizens are double-dipped because they don’t get a reduction in their taxes), refusing to invest taxes in or sell bonds for infrastructure programs which benefit the nation regardless of economic class, and increasing tax burdens on households in order to finance cutting taxes for the rich and/or corporations & businesses in the idea they will good-shepherd the economy back to strong growth (of course, there can be no strings attached to such tax cuts, in the form of promises to hire, invest, etc., as that would make it not capitalist austerity but more like socialism with Chinese characteristics).
This set of policies is on the far-right of the spectrum of economic thought, is often called “neoliberalism”, and is a 21st-century re-naming of what used to be called “trickle-down” economics, because the root of “neoliberalism” is that by placating/encouraging/protecting/promoting/aiding the rich, corporations and businesses, they will then willingly engage in economic practices which benefit the nation and which will also create economic growth (crucially, this growth rate will be superior to that which is suggested by those on the left of the spectrum of economic thought – economic socialism).
There can be no dispute that these last two paragraphs are entirely true, easily verifiable and agreed upon.
What I dispute in this article is that Western mainstream media is totally unable, incapable or unwilling to report on France’s 2019 budget from this economically honest, open, scientifically-based and non-judgmental point of view.
I can sum up the key measures: €19 billion in no-strings-attached tax cuts to businesses, €6 billion in tax cuts for households, combined with caps to senior pensions, regressive tax increases on consumer goods, and cuts to thousands of government jobs.
The headlines and angle of English-language mainstream media parrots Macron’s own analysis in a totally uncritical manner, as if the journalist is only in public relations. Reuters: France’s 2019 budget to ease tax burden on households, firms; AFP – French budget 2019: Government unveils major tax cuts as growth flags; Financial Times: France plans budget to cut taxes and rein in spending; Radio France Internationale – French government to put money in people’s pockets through tax cuts.
We see that they are referring to the tax cuts for businesses and households. Ok, I get that. What I object to is their overarching spin, which is: the 2019 budget mainly contains tax cuts which are being spread evenly and equally – this is completely false. And completely obvious: Even if we take the government’s figures at their word (and we shouldn’t, as I will demonstrate), granting three times more tax cuts to businesses than to households is certainly the maintenance of austerity policies!
But by focusing on the tax cuts, what the English-language media has done is to say, essentially: “No need to discuss ‘austerity’ because there are tax cuts here.” For them, the equality of these tax cuts is a very small consideration.
I wonder…how few tax cuts to households would Macron have to give in order to lose this servile and slavish reporting? My guess: under €3 billion. Why did I choose that number? I don’t know – it just feels right; you can’t ask me to apply logic to reporting which is totally illogical, eh?
The initial French-language media parroted the pro-government line, but then the good ones had to actually dig deeper, as they actually live in France.
The reality, per fine media sources like Mediapart, is that it’s not €19 billion euros in tax cuts for business but more like €46 billion.
These cuts are all with no strings attached, but are made to support (I quote the government here) “investment and thus job creation”…which is the same old austerity logic: if you cut taxes for the rich, corporations and businesses, then good long-term investments, more jobs and higher wages will magically appear.
Plenty of French media, such as the appallingly fake-leftist Liberation, openly accused the government of lying about the €6 billion in cuts for households. They are correct, because all of those €6 billion in savings are already going to be levied in other ways, and every French media admitted this: the budget also contains regressive tax measures, in the form of tax increases on diesel gas and tobacco.
(These are “regressive” because they fall on everyone equally, even though they take a greater proportion of the incomes of the middle- and lower-classes. “Progressive” taxes, properly associated with the left wing of the economic spectrum, penalise those who can more easily afford it. )
And by increasing senior citizen pensions next year by only 0.3% when inflation is predicted for 1.4%, that is essentially another tax on the nation’s 16 million pensioners, as it reduces their income and represents a savings to the state of €3 billion euros.
To quote Mediapart, in case I am not believed: “But all of this ultimately resembles a zero-sum game for households. As is often the case with this government (see the poverty plan, for example), you give with one hand what you take from the other.”
So, no, France is NOT ending austerity with tax cuts for households, and only idiot/intern-level reporting would report that as fact.
It’s too bad the unsaid reality in journalism is: middle-aged journalists with guts and experience get pushed out the door in favor of 23-year old know-nothings who will work for half the price just to get their foot in the door.
No more fairies, no more ‘it’s Brussels’…no more fake justifications at all
Ah, but France’s overall fiscal deficit is actually rising, from 2.8% to 2.6%, and that is what makes this a “not austerity” budget right?
Just a bit of necessary background: the initial reason for austerity was to win the good graces of the “confidence fairy” of high finance, but for far longer it has been to satisfy the EU’s rule that fiscal deficits cannot exceed 3% (this number is totally arbitrary from an economic standpoint, and was repeatedly by broken by Germany and France anytime they so desired).
But the €46 billion in no-strings attached tax cuts to businesses represents a whopping 0.9% of France’s entire GDP. Therefore, if these fiscal gifts were not given, France’s fiscal deficit would actually be all the way down to a Eurozone honor-student level of 1.9% in 2019.
It is just terrible reporting to act as though France SIMPLY MUST give these no-burden tax cuts – they represent a huge societal and economic cost. Of course, for leftist reporting this is the first issue to tackle and debate.
That’s why we can always turn to Anglo-Canadian Reuters anytime we need some economic doublespeak. Economic publications, you see, are compelled to do a good job covering the economy, but that doesn’t mean that aren’t a perpetual motion-machine which justifies right-wing economics. They dismiss giving away this huge chunk of GDP with the impression that they are inevitable (under austerity) and somehow a novelty, too: “That would lift the budget shortfall close to the EU cap, although it would stand at 1.9 percent excluding the long-expected, one-off effect of plans to transform a corporate payroll tax credit scheme into a permanent tax cut.”
Therefore, we must make no mistake: France is not raising its fiscal deficit slightly, as is being repeatedly reported, it is significantly raising its fiscal deficit solely in order to transfer wealth to businesses. That, too, is perfectly in keeping with austerity policies.
So…just as I asked about the Eurozone’s Lost Decade: did I miss the meeting where we journalists we instructed to not talk about austerity anymore?
Of course not, but let’s go back to the “novelty” angle of Reuters, because this is something of an intellectual conspiracy which often goes unnoticed.
Imagine there’s no definitions & no history – you may say I’m a dreamer
A crucial paradox of capitalism must be remembered: capitalism, it is widely accepted, lurches from crisis to crisis, and yet each crisis is always reported as if it was a novelty. The Japanese Lost Decade, we are supposed to believe, is drastically different from the Eurozone Lost Decade, despite their innumerable similarities in both causes and alleged policy “remedies”. And what preceded the Japanese crisis? The Asian Tiger boom and bust, which was as much a creation of unscrupulous bankers as was the European Sovereign Debt crisis – again, no relation can be admitted. These are concepts which have been explored by must-read economists – yet “must-ignore”, for the Mainstream Media – such as Richard Werner (who wrote Princes of The Yen) and Michael Hudson (author of many superb critiques of neoliberal & 21st century capitalism).
I discussed their ideas last year in a 7-part series based around what will happen when the Eurozone’s Quantitative Easing ends, and which also debunked the fake-leftism in the 2016 book by former Greek Finance Minister Yanis Varoufakis. Following a decade of reporting from France, my analysis of their policies (and of others) is summed up in Part 7’s title: Forced recession as a tool of social war against the 99%
Crisis is – and no one should know this better than the French, who only recently exited living under a State of Emergency for two years (and only because Macron made nearly all the extraordinary police powers common practice) – a means of governance in capitalism, whereas socialism is the steady avoidance of economic crisis via long-term central planning.
France’s 2019 budget is perfectly in keeping with the neoliberal plan to suck the Eurozone People’s wealth into the pockets of the 1% worldwide (with the 1% in the US being the greatest beneficiaries, proportionally) and this is an obvious repeat of what they did to Japan. This is why we should assume there will be a second Lost Decade in the Eurozone, too – it is the same playbook. Certainly, there is absolutely no indication they are remotely close to changing their neoliberal policies, and the supremely neoliberal, post-1989 structure of the Eurozone itself makes that impossible.
Turn to the back of the neoliberal playbook and we find that austerity does not end until all the social gains made from 1917-1977 are reversed.
This is why the French government openly admitted their goal with this budget is to achieve another neoliberal aim: to encourage the jobless back to work…even though their wages have been reduced (because they have not kept pace with inflation for many decades) and even though job security and working conditions have been gutted by so-called labor “reforms”.
The other half of reducing “welfare dependency” is what is next on Macron’s political agenda, despite his record-low popularity – more “deforms” to unemployment insurance, i.e. make unemployment “benefits” even lower than the worst wages. This also explains why jobs at government unemployment centres are included among the 2019 budget’s announced 5,000 government job cuts – they want your experience at job centres to be as bad as possible to discourage you from seeking “benefits”. Neoliberal-God forbid that we don’t make life as miserable as possible for those who prefer unemployment to being treated like a dog and for wages which don’t even house and feed a dog.
France is behind Germany in US-UK-Anglo-Saxon aping, of course. What does the neoliberal playbook instruct when you have already had labor “reforms”, like in Germany? You let in 1 million highly-educated Syrians in order to create even more capitalist competition among workers and thus lower standards for accepting a job. This has the added side effect of fuelling that sentiment which creates plenty of headlines that can divert from your Lost Decade but which only makes its practitioners feel badly and angry – nationalism (as opposed to “patriotism”, which is not racist or Islamophobic).
What do we get when we give no-strings attached fiscal gifts to the rich? When we simply hope that they will invest in job creation? When we trust them without imposing any supervision, guidelines or even vague suggestions? Per Mediapart, we get €600,000 (taxpayer euros) per every job created. That money could provide around 20 decent government jobs (where people are actually doing things for your children, your grandparents, your society), or 40 (unwanted) unemployment cases (the virtue in this alternative scenario is: at least they are spending that welfare back into the real economy via buying luxuries such as food and housing, unlike the stock buybacks of businesses and the rich). But hey, it’s socialism and their big governments which are inefficient, right? Ugh…and I thought journalists didn’t understand economics.
I stand by my contention that the logic of capitalism dictates that the end of Quantitive Easing in the Eurozone, which was pushed back (again) to December, will trigger a massive rise in bond rates for countries like Spain and Italy and thus take us back to the Sovereign Debt Crisis of 2012. Why would international high finance – which cares not for country but only for profit – not go back to squeezing the nations which are vulnerable?
And QE, due to the concurrent implementation of neoliberal capitalist austerity instead of socialist-based investment policies, has been much worse than useless in terms of strengthening the shaky economic fundamentals of the Eurozone – it has instead re-fuelled unsustainable bubbles in stock and real estate markets and only been directed to the 1%. The Eurozone is weaker than it was in 2012: any shock to France’s economy and those €46 billion euros will not be annulled, but will only be much, much more expensive for the average citizen.
I’m quite sorry that I can’t report the end of austerity, but others are quite happy to, mistakenly, do so.
Western media have all of a sudden forgotten what “austerity” is, but I’m sure the French will realize that Macron has tried to pull the wool over their eyes.
Austerity is certainly not an empty slogan, but should be hurled with force; I refuse to accept that its use can be discontinued so easily.
Austerity remains a battle cry within capitalist-imperialist societies and a reminder to socialist-inspired countries of why they endure “sanctions”, that totally false phrase which tries to impart a legal veneer to murderous, law-breaking acts of economic war on innocent societies.
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Ramin Mazaheri is the chief correspondent in Paris for PressTV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His work has appeared in various journals, magazines and websites, as well as on radio and television. He can be reached on Facebook.