Last week, the world watched in stunned silence as rioters burned and pillaged dozens of neighborhoods in nine major British cities, with the lion's share of the chaos occurring in and around London. These shocking events led many to criticize U.K. Prime Minister David Cameron, both for his handling of the crisis (he spent the first two days of the riots on vacation in Tuscany), and for the role his controversial fiscal austerity program may have played in either causing or exacerbating this upheaval. While the blame for Cameron's program is probably overstated austerity has undoubtedly made the British economy worse in the short term, but most of the cuts in police personnel and social services haven't taken effect yet the British example should serve as a stark reminder to American lawmakers of the grave risks associated with austerity.
First of all, no self-respecting economist would say that American conservatives want to accomplish true austerity.' Normally, a country undertakes an austerity program, that is, massive reductions in government spending accompanied with steep tax increases, because it has so badly mismanaged its budget situation that no one will lend it enough money to cover its debts. The hope is that by inflicting catastrophic economic pain on its citizens in the short term, a country will give itself a chance at returning to sound fiscal footing in the future. Confusingly, American conservatives are only willing to embrace half of the formula they want to cut government spending while reducing taxes, inflicting the same economic hardship while blunting the theoretical benefits of deficit reduction.
Even still, the cut-spending-at-all-costs mindset that has infected our mainstream political discourse carries a number of terrible risks for our future. Most people tend to think of government spending in terms of entitlement programs, which are admittedly and justifiably controversial. Providing health care for children and the elderly (Medicaid and Medicare, respectively) is undoubtedly costly and inefficient whether or not the government should do so is more a question of societal values than sound economic judgment. Still, entitlement programs are not the only non-defense sectors that the government spends money on. Every year, the federal government spends billions of dollars helping state and local governments pay for their teachers, firefighters and police officers, and pays outright to fund an affordable national postal service, stimulate scientific research with no immediate commercial application, maintain our nation's transportation infrastructure and provide children with access to college funding, among many other things. Spending on these areas, more commonly referred to as discretionary spending,' is more accurately defined as necessary investments in our citizens and communities, rather than out-of-control government handouts. Unfortunately, because many of these programs provide a diffuse good to society and lack a powerful group of supporters, their funding is usually the first to go in any round of cuts.
After watching last week's riots, we should wonder whether such cuts are really wise. If similar spontaneous violence were to break out in our country, as has often occurred in the not-too-distant past, would we really be better off with fewer police officers and firefighters patrolling the streets? Further, might this path not be inviting such unrest? The causes of social nihilism are undoubtedly complex, but it's not a stretch to imagine that they are exacerbated when, in times of economic hardship and limited opportunity, programs that millions of Americans rely upon for their advancement or well-being are slashed without asking for equivalent sacrifices from wealthier Americans.
Cuts to programs such as Pell grants, state tuition assistance, community colleges and job re-training programs are particularly cruel and shortsighted. The economy is in the midst of a decades-long transition away from low-skilled labor and towards value-added service jobs that require high levels of education to perform. Cutting access to education only hastens our own economic demise and leaves many with a thoroughly hopeless future.
None of this is to say that we shouldn't take the problems of debt and deficits seriously we absolutely should (although the middle of an economic downturn seems a curious time to start). It is merely to say that not all cuts are good cuts, and that we must always remember that a great nation, like a great business, requires constant re-investment in itself and its people to thrive. We mustn't hamstring our present and future with indiscriminate cuts, or we may soon find ourselves in even darker times.
