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The lie of austerity no longer holds
Owen Jones | The Journal |
Translated by Lucía Balducci
Since banks plunged the Western world into economic chaos, we are told that only cuts could save us.
When the Conservatives and the Liberal Democrats formed their coalition for austerity in 2010 they told the electorate - in apocalyptic tone without scissors cuts George Osborne, UK follow the path of Greece.
They got tired of using the metaphor, without any economic value, to compare the country with the family economy: a family can not overspend if you are in debt, so the same applies to a nation.
So this ideological fallacy became popular.
But now, thanks to Portugal , we know that the experiment imposed austerity in Europe was destined to fail. Portugal was one of the European nations hardest hit by the economic crisis.
After a rescue at the hands of international organizations , including the International Monetary Fund creditors demanded strict austerity measures Lisbon enthusiastically implemented during the period of Conservative government.
They privatized utilities, rose VAT, added a tax on income, cut public wages and pensions, reduced social benefits and extended working hours.
In a two - year period, spending on education was reduced by devastating 23% .
Also they suffered from health and social security.
The human consequences were dire.
Unemployment reached 17.5% in 2013 ; in 2012 they increased by 41% business failures; and increased poverty .
Logic said that this was necessary to cure the disease waste.
In late 2015 the experiment was terminated. He came to the possession of a new socialist government , with the support of all parties of more radical left.
Prime Minister António Costa, promised to "turn the page " of austerity and said the country had stepped back three decades.
The opposition predicted a disaster. "Voodoo economics, " they called it . They may need another bailout, with the consequent recession and greater cuts than before.
After all, there was a precedent few months ago that Greece had chosen Syriza and the EU authorities were in no mood to let that experiment went well. How can Portugal avoid their own Greek tragedy?
The economic rationale of the new Portuguese government was clear: the cuts reduced demand.
In order to achieve true economic recovery, it had to increase demand.
The government promised to raise the minimum wage, roll back increases in regressive taxes, restore public wages and pensions to their previous levels to crises- the wages of many had been reduced by 30% - and reinstall four holidays national who had been canceled.
Social security aid for low - income families were increased, while applied a luxury tax to property of a value greater than 600,000 euros.
Augured disaster that did not happen. In autumn 2016, a year after assuming power, the government boasted economic growth and 13% increase in investment entrepreneurs.
This year, the figures show that the deficit has been halved, to 2.1% -the lowest since the return of democracy to the country for four decades.
In fact, it is the first time that Portugal has failed to comply with tax rates in the eurozone.
Meanwhile, the economy has continued growth for 13 quarters .
During the years of cuts, charities warned of the " social emergency ".
Now, the Portuguese Government can function as a model for the rest of the continent. "Europe chose the path of austerity and had much worse results" , said Economy Minister Manuel Caldeira Cabral.
"What we're showing is that policies that recover the purchasing power of the population moderately increases trust and investment return," he added.
Portugal has increased public spending, reduced the deficit, unemployment attacked and achieved sustained economic growth. We were told that such a thing was impossible and almost delirious.
And British workers have suffered the biggest cuts in wages since the nineteenth century, while the coalition government even failed to meet the goal of eliminating the deficit by 2015. Why?
Partly because low wages mean less taxes, more government aid to low income and that workers spend less money. Portugal is increasing consumption, while the British Conservatives annihilated.
Portugal's success is both inspiring and frustrating.
All the suffering that has gone Europe, and for what? What about Greece, where more than half of young people are unemployed , where they decimated public health, where increased infant mortality and suicide rates?
What about Spain, where hundreds of thousands of people were evicted from their homes?
And what about France, where economic insecurity he stoked the rise of the extreme right?
Portugal and the United Kingdom also offer lessons for social democracy.
After the financial collapse, social democratic parties austerity received with open arms. And what was the result? The political collapse. In Spain, support for the Socialists fell from 44% to about half, while the radical left we stayed with their votes.
In Greece, Pasok has virtually disappeared as a political force.
In France, the Socialists managed to just over 6% in the first round of presidential elections this year .
And this year, in the Netherlands, the Labor Party went from getting 25% of the vote to less than 6%.
On the contrary, the two social democratic parties have decided to move away from austerity -in Portugal and the UK - are doing better than most of their European counterparts.
In fact, polls show the Socialists in Portugal draw 10 points ahead on the right of the country.
In Europe, it justified the austerity mantra "no alternative", with the purpose of bringing people to a state of submission: must be adults and live in the real world once.
Portugal has steadfastly proven to be a lie.
European left should use the example of Portugal to reshape the European Union and put an end to the austerity measures in the eurozone.
In the UK, the Labor Party can take courage to break with the economic order of conservatives.
Throughout Europe's lost decade, millions of us we argued that there had to be an alternative.
Now we know there is.
Owen Jones | The newspaper
