The Politics of Waste

Downward GraphCommentators often try to obscure simple truths by utilising the dry vocabulary of economics. Behind all the superfluous talk of deficits and GDP figures, there is one underlying fact: we’re not as rich as we used to be, or rather, not as wealthy as we thought we were. Governments and citizens alike got caught up in the heady pleasures of cheap credit and indulged primal instincts to grab everything they desired. People bought expensive cars, expensive homes, expensive televisions, believing that somehow, some way, the debts would be paid. Governments also spent wildly: on wars, on public works, on bridges to nowhere, even sometimes on worthy things like education and health. They believed that tax revenues would somehow be sustained, and indeed, rise to the point that they would solve deficit problems.

It’s easy to scoff now, but perhaps we should have kept in mind the wisdom of Napoleon III: according to the historian Fenton Bresler, “when he (Napoleon III) was happy, he was afraid”. When things seem good, we should be worried about what might come along and undo it. Euphoria on both a personal and societal level is generally a transitory experience and often followed by a much darker mood.

President Obama now has the melancholy associated with sifting through the wreckage, rather like the owner of a hotel finding the main ballroom after it had been trashed by a wild party the previous night. Drunk people in stained tuxedos and gowns lay on the floor snoozing, there are unidentifiable liquid spills on the carpet, shards of smashed glasses and plates glitter in the light of dawn and there is litter strewn everywhere. The sole sensible reaction is to sigh, pick up the broom, and make a start; to be fair to the President, he is trying. This is preferable to the present situation in Britain. The current government is at least partially responsible for the catastrophe: they are now making desperate attempts to redefine chaos as order, and if their questionable assertions are met with scepticism, they then suggest that only the people who made the mess are qualified to clean it up.

However, both President Obama and the British Government are so caught up with immediate repairs that they are paying less attention to a more difficult task: the hubris of the Anglo-American entente should be punctured. New Labour and Clinton Democrats are just as much to blame as Conservatives and Republicans: thanks to Eighties era policies such as privatisation and deregulation, and subsequent stock market rises, business somehow became more trusted than the state by all parties to run matters effectively. The illusion of managerial competence, however, created a more pernicious idea: Labour and American Democrats alike thought that spending more, in and of itself, would yield to improved services, particularly if the state utilised private consultants such as Halliburton or Perot Systems. There was euphoria when the opportunity to test the theory presented itself, especially when Labour took the reins of power in 1997. The joyous crowds and the simplistic promises of a new dawn should have told us something; rather than happy, we should have been afraid.

The Economist recently spelled out why: in their report on the increasing size of government, they showed a series of interesting statistics which detailed the failures of the Anglo-American model. The government’s share of GDP in Britain is 52%; in the United States, this share is above 40% and rising. Yet, the government’s share of GDP in Germany is much less than that in Britain, and the differential between the United States’ share and Canada’s is only two percentage points.

Step back a moment: Britain is spending more as a percentage of its national output than Germany on its public services, yet by any measure these services are inferior. Take a train ride in Germany, then embark a comparable journey in Britain: the point will be hammered home. Germany also has a modern, progressive programme for encouraging individuals to utilise clean energy; Britain still struggles with getting even the most rudimentary wind farms built. For Americans, the comparisons are just as stark: the United States is spending nearly as much as a percentage of its wealth as Canada, yet doesn’t have its social welfare system, nor has its subsidised education, nor its single payer health care. An even starker comparison comes from the the United Nations Human Development Index: according to this listing, Canada is ranked fourth in the world, the United States is twelfth. Britain is one place ahead of Germany in the same index, but then again, Britain’s figures are not harmed by the incorporation an impoverished post-communist nation with all its resulting difficulties and costs.

What is more, when both Britain and the United States look to trim their spending, they appear unable or unwilling to look at systemic failures: rather, they want to cut meat instead of fat. Yesterday, it was announced that Britain’s universities will have their budgets cut by £449 million, the result of which will be to reduce access to higher education; this is likely to have a detrimental effect on an economy that desperately needs more skilled graduates in order to remain viable.

The purpose of these cuts is as dubious as their effect: the unstated intention is to restore the previous euphoria. If governments cut and the bond markets smile upon them, low interest rates can be maintained. The system, awash with liquidity, will eventually gain sufficient froth to inflate yet another bubble of heightened expectations. Pour out the gin and tonics, put on the party hats, happy days are here again. Most politicians would rather not talk about limits, however we should charge them with cowardice rather than stupidity: after all, their constituents by and large would rather not hear about constraints. We don’t want to go through the difficult, rigourous process of trying to figure out what precisely went wrong and planning for a modest, sustainable future. Being responsible gets in the way of having fun. However, the politics of waste should not be allowed to wither in the bright glare of economic recovery: any respite should give us the space to think and worry about the future. When we are happier, we should be ever afraid, particularly of the opportunities that are being missed.

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