Deficit Hawks Stampede Lawmakers and the Public Using “Smart for One, Dumb for All” Morality

http://politics2100.wordpress.com/2011/05/31/smartdumbmorality/

As I have argued here in earlier posts, the debate about budget deficits is a monumental one, determining in its outcome the shape of society and the type of economy that will prevail in the US and other developed nations.  The debate is fundamentally about for whose benefit and in what way government will operate and spend money, and what are the ultimate purposes of government and by extension society as a whole.  This debate is complex but is not beyond comprehension.  In this post, I will attempt to explain how this debate in the public sphere has been conducted in a way that misleads and bars the way to a more prosperous, sustainable, and just future.

One Native American hunting technique was stampeding buffalo over a cliff. Using somewhat more sophisticated techniques, the campaign of exaggerated fears about budget deficits is steering the public and lawmakers in the wrong direction with potentially disastrous consequences.

Most important to understand is that the clash between fiscal “austerians” or deficit hawks and their opponents is a clash of moral systems that underlie the most important decisions we make as a society as well as individuals.  These moral systems co-determine both what we think is economically valuable as well as what we think is socially valuable.  They even influence how we think in general, a.k.a. our cognition.  These moral/“meta-ethical” frameworks operate most of the time outside the frame of our conscious awareness, but at this critical time, we must focus on these frameworks themselves.

Before outlining how our thinking and our moral systems interact around these issues, I want to make a quick sketch of the public debt debates as they have proceeded in the United States and in other developed countries.  In doing so, I would like to bring as much as possible to awareness the nuances of the arguments being made before offering an explanation for them.

The Public Deficit Debate Summarized

Advocates of fiscal austerity (“deficit hawks”) generally argue:

1. Government budget deficits and public debt (i.e. net result of yearly budget deficits as opposed to surpluses) in the developed world are rising in an out-of-control manner.
2. Public debt and government budget deficits are in themselves signs and causes of economic weakness, as grave, or graver than, high unemployment or weak aggregate demand (i.e. overall wishes to buy and financial means to buy goods and services).
3. A large portion of public debt and government budget deficits are due to out-of-control “entitlement” spending, i.e. social welfare payments
4. As deficit spending requires governments to issue securities to pay for the spending, bond market investors will either refuse to lend to or charge exorbitant interest on government securities issued by governments that spend on deficit, especially (for some reason) if this spending is on social welfare
5. While some advocates of fiscal austerity, claim consistency in their argument by suggesting that they would also cut non-social welfare spending such as on national defense or bank bailouts or suggesting that taxes should be raised to cover expenditures, the general trend has been to push for and the enactment of real actions to cut social welfare programs.