Wayne O’Leary

Austerity Vs. Infrastructure

Don’t look now, but we’re about to witness a real-life demonstration of what America may look like if the tea-party wave that engulfed the US House of Representatives on Nov. 2 actually reaches critical mass on Capitol Hill. The preview is being brought to us by the newly elected coalition government of Great Britain, where a grand austerity experiment is currently underway.

The center-right partnership of David Cameron’s Conservatives and Nick Clegg’s Liberal Democrats (who sold their souls for a share of power) has embarked on the proverbial riverboat gamble. The plan is to radically slash the size and scope of government over the next five years, dismantling Britain’s decades-old welfare state and shredding the social safety net in the process, on the dubious proposition that, besides reducing the national deficit, this will somehow revive the stagnant economy and cure the recession. The functions of government, meanwhile, will be replaced by private charity, civic-minded voluntarism, and an up-by-the- bootstraps personal ethic — a kind of kick-ass rugged individualism with a smiley face. This expression of every-man-for-himself, which makes Margaret Thatcher’s hard-hearted retrenchment of the 1980s look mild by comparison, is amusingly called the Big Society.

Specifically, what Britain’s Conservatives intend is to pare all government departments to the bone, essentially neutering them and allowing the private marketplace to set policies and priorities. In all, there will be $125 billion in cuts - - an average of 19 percent across the board, with some agency budgets shrinking by a quarter to a half. Most stunning is the planned reduction in public-sector jobs; a total of 490,000 government workers will be laid off by 2015, the equivalent to 2.5 million job losses in this country, which has five times the UK’s population. The Big-Society notion that the moribund private sector will take up the slack lies in the realm of fantasy; a more likely prospect is the creation of a full-blown depression comparable to the 1930s and the re- creation of a 19th-century Dickensian Britain in the 21st century.

For the time being, this stark vision of the future has been successfully sold to the British people as the purifying fire they must pass through to rescue their nation from catastrophe. Like America’s tea-party Republicans (and some centrist Democrats), Britain’s ruling coalition refuses to admit that the worldwide financial collapse and recession was an inevitable result of capitalism running rampant, as it always does when left unsupervised and unchecked. Instead, the problem is somehow deemed to be excessive government spending, taxation, and regulation, plus a weakening of moral fiber on the part of the general public, whose members must learn to do with less for their own good — especially the undeserving poor, the lazy unemployed, and the coddled retirees.

How shrunken government and rock-bottom taxes would have prevented the financial shenanigans of “the city” in London or “the street” in New York, which brought the world to the edge of an abyss, is left unexplained. Nevertheless, it’s now proclaimed time to restore so-called business confidence by making the rest of society suffer. If we tighten our belts and give the corporate sector, here and in the UK, what it wants, it might deign to throw us a few low-paying jobs — or not, depending on whether the bribes are sufficient. Whatever the marketplace and its invisible hand decide, that’s what we deserve.

Such is the commonly held view of Britain’s coalition government and America’s Republican government-in-waiting, and it’s being put into effect right now across the Atlantic. The tea-party Republicans bent on blowing up the federal government would love to do the same here, but as long as Democrats control Washington, Britain’s emerging dog-eat-dog austerity society remains nothing more than a wet dream for American conservatives. Still, unless Democrats shake off the effects of their midterm drubbing and regain their nerve, that could change by 2012; they need, above all, to address the jobs issue, the substantive reason for their defeat.

The question is whether there is a viable public-policy alternative to the galloping, worldwide austerity fad being carried to its Hooveresque extreme in Britain. There is, and it’s called infrastructure. Contrary to common belief and conservative propaganda, President Obama’s economic stimulus worked (it saved or added about 2 million jobs), but not well enough because it was far too small in the amount of dollars slated directly for job creation. Close to 40% of the stimulus was wasted on useless tax cuts in a vain attempt to garner Republican votes; much of the rest went for various subsidies to save the states from bankruptcy. What’s needed now is a stimulus that focuses specifically on creating employment through publicly (funded infrastructure projects — something even some Republicans might agree to support.

A wide-ranging federal infrastructure program, the bigger the better, could accomplish several things at once. First, it could renew our crumbling collection of worn-out highways, dangerous bridges, antiquated sewer and water facilities, shabby public buildings, and the like. Second, it could provide for the creation of a desperately needed national high-speed rail system to relieve the pressure on an overburdened, two-dimensional air-and-highway transportation network. Third and most important, it could jump-start the somnolent manufacturing and construction sectors, generating jobs for millions of idle workers, blue-collar and white-collar alike. These workers would, in turn, become consumers and taxpayers again, contributing to a general multiplier effect.

To those who say it can’t be done and wouldn’t work, the answer is: it has. Much of the aging infrastructure we have now, which laid the groundwork for the meteoric economic growth of the postwar period, was built by FDR’s Public Works Administration (PWA) during the New Deal. Between 1933 and 1939, the PWA constructed, or funded through contract, 70% of the nation’s new educational buildings; 65% of its new courthouses, city halls, and sewage-treatment plants; 35% of its new hospitals; 10% of all new roads, bridges, and subways; and innumerable dams, docks, tunnels, and electrical-power plants, including such iconic structures as the Boulder (Hoover), Bonneville, and Grand Coulee dams.

Altogether, the PWA carried out 35,000 needed projects that private enterprise wouldn’t undertake and state governments couldn’t afford. More to the point, it also produced over 1.2 million jobs. Infrastructure spending works. Believe it.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy.

From The Progressive Populist, January 1-15, 2011