Tuesday, April 24, 2012

Austerity backlash.

The piece that is missing from the discussion of austerity measures in Europe and in North America is one of the main factors in whether electorates will support or deny them, and in turn whether austerity will ensure the viability of currencies and global markets.

When you actually look at the size of the electorate against that of the whole population, depending on demographics, it's about a half to two thirds of the total population. The same can be said for the size of the labour force. Depending on the level of unemployment, you can shrink the labour force even further. Now, given the number of people employed in the public sector - from direct government services, to academia, military, municipalities, states and provincies, social services, and the health care system, and broader public sector agencies, boards and programs - you are looking at about one-in-five to one-in-four (%20-%25 of the labour force, or greater in some countries) whose salary is paid directly by the government.

In Canada, according to the Statscan data, it is at least %20, but that's just where it starts...

Consider how couples and households vote. It is relatively rare that couples have different political views in the same household. It happens, but to say that for most individuals employed by government, there is a household of 2 or more who depend on that salary. Conservatively, we can estimate that of the working population in western democracies, the household income of a third or greater of the voting workforce depends directly on government spending programs.

Austerity measures affect the middle class the most, not because they depend on government services, but because they are paid to operate them. One government job in the household puts these people squarely in the middle-income bracket. That is, these people are not The Poor, nor are they entrepreneurs or small business owners.

The Boomer generation is the icing on the cake here, since many of them are going into retirement around now, and many of them were the beneficiaries of government spending, and will now become the beneficiaries of pensions that were publicly guaranteed. Retirees have one of the highest voter turnouts in the entire electorate. Many of those retiring (at least %20) are also from the public sector, and they established their opinions about the role of government during decades of massive growth funded by deficits and monetary inflation.

In terms of a voting bloc in the total electorate, when you take public servants (~%25), their supportive households (say, ~%12), and retirees (est. ~%12-%15 in a greying population) - the livelihoods of at least %50 of the electorate are bound directly to government maintaining or growing spending levels.  Spending is at its base, quid pro quo. 

From there, let's look at voter turnout. Of registered voters, depending on the year and the issues at hand, elections tend to bring out only about %60 to %80 of eligible voters. So with the household income of about half the total possible voters dependent on government spending, and low voter turnouts among the unemployed and the poor in elections, it is almost numerically impossible to be elected on a platform of spending cuts that would be sufficiently radical to balance government books, let alone pay down significant debt. It was hard enough to do that in times of massive economic growth, let alone with the clouds of recession overhead.

That the Conservative government in Canada has produced a budget designed to cut about 20,000 public service positions suggests they have caught on to this. For all the claims of hidden right wing conspiracies, the underlying agenda so far has been to restructure the the government in a way that disintegrates and prevents Liberal party ensconcement. Every government engages in the same kind of gerrymandering when they are in power, however, the Conservatives may be doing it with a bit more urgency. It might also explain a the more positive tack the Harper government has taken toward immigration. Far from being anti-immigrant, as conservatives have been thought of in the past, they are proposing a new "start-up visa" to bring more people into Canada. The country will need these new immigrants not only to work and be competitive in the economy, but also as a voting bloc to offset and dilute the power of what has become a kind of public sector establishment.

 Regardless of what one thinks of some of the more troubling and flagrantly anti-democratic elements of the Harper government, diluting the bloc of public employees and dependents who have re-elected ever more generous paymasters will preserve the country as a going financial concern.

 Unexpectedly, and perhaps rather grimly, the interim governments of Italy and Greece  are making the necessary changes to prevent economic collapse, and as a result, they may be the countries to come out of this mess sooner than the rest of us. (note: May 9th, 2012, Greece elected bunch of yahoos, totally not coming out of this soon.)

Given the percentage of government employees as a portion of the voting electorate - and as evidenced by the fall of the government of the Netherlands - and the gains made by radical parties in France on the right and left,  the pieces already in play in Europe do not bode well for democratic solutions to the debt crisis.

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