Austerity a False Solution to Economic Crisis

December 7, 2012, 4:05 PM EST

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Right wing governments calling for increased austerity are proposing a false solution to the economic crisis - a false solution that will unjustly tighten the belts of workers, the middle class, the unemployed and many others who didn't cause the crisis, CAW Economist Jim Stanford says.

In a presentation to CAW Council on the ongoing world-wide economic crisis, austerity, and the fight-back by working people, Stanford stressed it's important to understand the crisis was caused by a speculative bubble in U.S. housing in 2008 and other games played by the wealthy in "global financial casinos,"  stock markets and other financial institutions.

He said deficits around the globe didn't cause the crisis, but instead the economic crisis caused these government deficits. Stanford said plans to slash public programs, public sector jobs and further cut corporate taxes will not solve deficits. Instead, austerity will only make it worse.

"The books are not balanced because of underlying problems that governments have not attempted to solve," Stanford said. In fact, many right wing governments around the globe and in Canada are using the false solution of deficit reduction to achieve cutbacks they and their corporate backers wanted to achieve anyway - a version of the "Shock Doctrine" attack used by right wing governments and corporations on working people, which was outlined by Canadian author Naomi Klein.

Stanford said it's important to remember Canada's taxes are low and falling and that fair taxes are the best way to pay for public services that enhance the quality of life. Ensuring that our economy is producing good quality jobs means that workers will be able to pay taxes that will reduce the deficit and produce a stronger overall economy, he said.

On average, public programs (or the social wage) add 37 per cent to the standard of living of Canadians. He said three quarters of all Canadians pay less tax than they receive back.

"We can pay off the deficit simply by putting Canadians back to work.then we can pay for our public services," Stanford said.

Around the globe, Stanford said in nations where unions are strong public programs are larger, stronger and most effective. At the same time taxes are higher, but the public service benefits are huge.

Austerity is a false solution to a crisis created by private sector capitalism, Stanford said. He urged labour, the middle class and the rest of the 99 per cent to resist the right wing's call for tax cuts.

Delegate after delegate spoke out against government plans for increase austerity and public sector cutbacks. They approved a resolution calling on CAW locals to fight austerity, public service cutbacks, attacks on public sector workers, unions and pensions.

"Austerity is not the answer to our economic and fiscal problems," the resolution states. "It will only make them worse. Paying fair taxes to support quality public services is part of living in a decent society."

To read Jim Stanford's full power point presentation, please visit:

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