Belt tighteners of the World Unite: The failings of the G20
When I hear a man talk of Sound Finance, I know him for an enemy of the people.
Hyde Park orator, quoted by G. Madan in Geoffrey Madan’s Notebooks (1981)
The positioning of the powers at the latest G20 conference made an odd spectacle. For one, a prominent supporter of the
G20 conference Prime Minister Kevin Rudd of Australia, was absent, ambushed by a party vote at home. But in the broader
picture, the language of the Toronto declaration seems less ambitious, less keen than those extolled at the London
Summit over a year ago. Then, Gordon Brown spoke about the necessity of close co-ordination and the indivisible nature
of prosperity. From the economic ruins, nations might labour to bring forth a new order.
Today, we find leaders such as Britain’s David Cameron keen on reducing such a gathering to a mere workshop of
deliberations, a seminar in progress. Discussion is had, views expressed, and everyone goes on with their own business.
That business, it is becoming all too clear, involves trimming the fat off budgets.
Then there was, for instance, a reversal of fiscal roles. The United States, long-time advocate of neo-liberal
austerity, had effectively reversed itself in the context of deficit spending. Stimulus packages were all the rage. The
economics of John Maynard Keynes re-surfaced. But the European countries present at the conference, including an
ensemble of centre-right governments (France, the United Kingdom, Germany), were speaking with an unusually similar
voice: austerity measures were necessary. Prudence in spending was a precondition to good economic health.
No doubt feeling a unified front was necessary in the face of economic problems, the scythe was unsheathed and war
declared on national debts. The communiqué or the meeting commits countries to slashing their deficits in half by 2013.
From the sovereign debt crisis in Greece, which ushered in IMF ethics on a grand scale, fiscal conservatism has become
an overwhelmingly tempting policy for European states. This was not the case two years ago, when European governments
rushed to splash public proceeds in order to halt the slide into economic oblivion.
The change is well reflected by the comments of Austria’s finance minister Josef Proell, who has expressed something of
a panic about excessive spending. ‘The crisis we presently find ourselves in is the largest Europe has ever faced.
Irresponsible spending of public funds – living today as if there were no tomorrow – has led in some cases essentially
to collapse’ (Deutsche Welle, Jun 17).
Belt tightening is the new wisdom, as governments show their terror at the presence of unbalanced books and a fear at
punishing the key players behind the financial crisis. The bankers are beginning to rest more easily. Slashing and
burning will be the new orthodoxy. The welfare state and security nets are being rolled back and, in this sea of fiscal
conservatism, Washington, pressured by the Republicans, may well follow suit.
Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne and
is currently in San Francisco. Email: email@example.com