In February, the board of commissioners of Ohio’s Ashtabula County faced a scene familiar to local governments across America: a budget shortfall. They began to cut spending and reduced the sheriff’s budget by 20 per cent. A law enforcement agency staff that only a few years ago numbered 112, and had subsequently been pared down to 70, was cut again to 49 people and just one squad car for a county of 1,900 sq. km along the shore of Lake Erie. The sheriff’s department adapted. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don’t respond to property crimes,” deputy sheriff Ron Fenton told Maclean’s. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.”
How have things got this bad? How has the world’s superpower suddenly become so poor that its police forces are crumbling?
Well, it hasn’t. US GDP per capita was $45,600 in 2009, down from a peak of $46,900 in 2008. That 2.8% drop is breathtakingly sharp but it still leaves a country with enormous wealth (NZ’s comparable GDP per capita was $29,200 in 2008).
The real issue is where all that wealth is going to. Since the neo-liberal revolution, governments have cut tax on the wealthy again and again. In good times, surpluses are taken as a reason to cut taxes on the rich. In recession, the solution to economic woe is tax cuts for, you guessed it, the rich. The result is that more and more wealth is piling into fewer and fewer hands, and governments at all levels on a knife edge with chronic underfunding and ballooning debt.
The typical American worker’s wages are still where they were in the 1970s. To fund higher consumption they increased their debt, borrowing against the value of their houses, which was only a viable strategy until housing prices inevitably collapsed. Now, it is the American middleclass and the enourmous underclass who are suffering the job and wage cuts, and getting it in the back as governments slash the social wage (public services).
Meanwhile, the rich are sitting pretty, taking an ever larger slice of a shrinking cake.
New Zealand was fortunate enough to have nine years of a Labour-led government that arrested, and partially reversed, the neo-liberal agenda. But now the neo-libs are back in charge and implementing their same old failed agenda. The rich are getting huge tax cuts while public services are being cut. Government debt is rising and the Nats are making it worse by borrowing a billion dollars over the coming four years to fund tax cuts for the rich. In the end, that debt has to be repaid somehow. While the neolibs are in charge the solution will never be higher taxes, it’ll be service cuts, which are just the same as a tax hike for families who are forced to pay out of pocket for services that were publicly provided (or go without).
Some of the passages in the McLean’s article are so familiar you can just take out America and put in New Zealand in its place:
“We have been involved for three decades now in paring back public commitments and public spending, and that started with the Reagan revolution. We are living with the outcomes and consequences,”
“As we watch the middle class crumbling, for me this is a major indication that we are turning into a Third World country,”… “The distinguishing characteristic of the Third World country is you have the people at the top and the rest—you don’t have a thriving middle class”
“The American dream was already based on the idea you could work hard and do well and your children will do better. Now we are confronted with downward mobility across the board. You have the phenomenon of unprecedented numbers of college grads who can’t get jobs.” The current public sector cutbacks in education and infrastructure will only make things worse, Huffington says. “You are both hurting people in the present, and basically undercutting your economic growth and prosperity in the future.”
“the Chinese are building world-record trains and we’re taxing kids who go to school!” [ECE cuts anyone?]
“Class sizes are being increased and teachers are being laid off. School districts around the country are cutting the school day or the school week or the school year—effectively furloughing students.”
and if we insist on continuing down the neo-liberal path – the aim of which is to underfund government and cut spending to the point where the State can be ‘drowned in a bathtub’ – then we’ll have no-one to blame but ourselves when we face the same consequences as America:
“The city of Dallas is not picking up litter in public parks. Flint, Mich., laid off 23 of 88 firefighters and closed two fire stations. In some places it’s almost literally the dark ages: the city of Shelton in Washington state decided to follow the example of numerous other localities and last week turned off 114 of its 860 street lights. Others have axed bus service and cut back on library hours.”
“When we come out of this recession we’re going to see government functioning very differently,” says Byers. “We are seeing more public-private partnership than we ever had for things like recreation and parks. We are seeing some of them privatize libraries. They lease the library to a private corporation that employs the workers who don’t carry retirement or health benefits.” Or they could wind up like Hood River County, Ore., which in August closed its three libraries altogether.Some governments are looking for creative ways to replace plummeting property and sales tax revenues. Facing a US$1-billion budget shortfall, Montgomery County in Maryland appealed for corporate sponsors to step up and adopt porta-potties in its public parks. In the end, the privies were saved by a combination of park employees taking early retirement, a few private sponsorships, and a negotiated discount from the supplier, Don’s Johns. Meanwhile, Montgomery County’s school system, banking on its reputation for high standards and test scores, took the unusual step of selling its curriculum to a private textbook publisher, Pearson, for US$2.3 million and royalties of up to three per cent on sales. As part of the deal, county classrooms can be used as “showrooms”—which critics said effectively turns students and teachers into salesmen for a corporation. But the superintendent, Jerry Weast, told the Washington Post, “I tend to look at this from the perspective that we are broke.”
“Back to the Stone Age” is the name of a seminar organized in March by civil engineers at Indiana’s Purdue University for local county supervisors interested in saving money by breaking up paved roads and turning them back to gravel. … The state of Michigan had similar conversations. It has converted at least 50 miles of paved road to gravel in the last few years.
Despite its position as the world’s unrivalled superpower, international comparisons show the U.S. slipping on a number of fronts. On education, the United States has been falling behind, in everything from science and engineering to basic literacy. The U.S. once had the world’s highest proportion of young adults with post-secondary degrees; now it ranks 12th, according to the College Board, an association of education institutions. (Canada is now number one.) In 2001, the U.S. ranked fourth in the world in per capita broadband Internet use; it now ranks 15th out of 30 nations”
America has become a plutocracy again, where a tiny elite control the vast bulk of the wealth and the rest have to compete over less and less. Plutocracies are socially unstable (note the rise of reactionaries in the US) and they culminate in economic melt-down. Not to mention they’re just plain unjust.
Yesterday on Breakfast, some airhead neoliberal academic was on claiming a ‘tall-poppy’ syndrome was holding New Zealand back and we should be more like the US. The US where councils can’t afford to run street lights and education is being cut to the bone and the wealthy elite fiddle while the country burns around them? Yeah, excuse me if I don’t think we should follow that path any further than we have.