On April Fool's day, the Seattle Times editorial board called for Gov. Jay Inslee to "make deep cuts to the supplemental budget Washington’s Legislature finalized just a few weeks ago."
They know the cuts will be painful (meaning, for the poor) and they want him to be strong (meaning, ignore the cries of the poor). The good news, according to this board, is that "...legislative leaders from both parties are supporting deep cuts."
It appears that the board has a very dim idea of the actual size of the economic crisis that began in early March. To picture their way of thinking (budget cuts will restore order in state's books), one needs to imagine a man or woman trying to catch a whale with a fishhook. But how earth (or in the universe) will any kind of budget cuts make sense in an economy that lost millions of jobs last week and the week before that, and that will lose many millions more in the weeks to come?
And look at the USA today: The virus is only beginning to spread in major states like Texas and Florida. This means they will be in lockdown for three months at the least. So, even as Washington state recovers in a month, massive sections of the US will be, economically speaking, offline. Against this overwhelming reality, the board supports and promotes what can only amount to puny budget cuts. And to make things even more bizarre, the board believes these cuts are needed now because "the economic effects of coronavirus measures are [not] understood." I must mention again that the opinion piece was posted on April 1.
This is a lie. We do not need to cut the state budget. We need to tax the rich. Coronavirus requires painful cuts to Washington state budget https://t.co/eioZLmc3rY via @seattletimes
— Nick Hanauer (@NickHanauer) April 2, 2020
But what is easily understood by anyone who does not hate the poor as much Seattle Times' editorial board is that the pre-virus state government was severely under-spending. We can know this with certainty because we can see what happened to the state when the novel coronavirus hit: Washington did not have the means to come at all close to anything that can be described as the successful management of a pandemic. The explanation for this deficiency is found in the size of the state's budget. Obviously it was way too small. And the board's solution to this plain fact? Cut more. Cut some more. Cut again. Unfucking believable.
The board also wants Seattle to have what it recognizes as "political courage":
Local governments also should be preparing for dramatic cuts, particularly in new spending programs, that the state will be unable to backfill.
This massive reset of government spending requires strong leadership and political will. It also must be transparent, with constituents informed of options considered and different scenarios upon which elected officials are basing decisions.
The most monstrous thing about austerity is how it refuses to die despite its long record of failure. The rich will just never give it up. It is all they can offer when the economy is growing and when the economy is contracting. But let's put aside all of that and seriously consider how a profit-driven economy works.
This may surprise many readers, but the kind of capitalism the US and Europe has had since the end of the First World War requires that the government spends a lot. This is made clear by a feature of a macroeconomic model called the Kalecki relation (it's named after the 20th century Polish economist Michał Kalecki) that identifies profits as, in essence, private investments plus government budget deficits. This relation was expanded by another 20th century economist, this time the American Hyman Minsky, in his theory of sectoral balances. This theory maintains that balances of the domestic market and the government function in this way: When the latter does not spend, this deprives the former of one of its two sources of profits. The market is then left with just investments, which are not at all stable or dependable.
So, even a counter-cyclical policy, such as budget cuts during a boom, effectively diminishes or weakens that boom and results in a fragile economy. If you look at the matter in this way, then we can see that the crash of 2001 was not just about a bubble in the tech sector but also Bill Clinton's much-celebrated budget surplus between 1998 and 2000. And so, cutting spending during a boom is not, for a profit-driven economy, exactly a good thing. But it's certainly catastrophic during a downturn, because both investment and government spending have dwindled.
My point: Austerity only makes sense if it is seen as a weapon for maintaining class power. It is that and nothing more. And here, I think, we reach the heart of the matter. Is capitalism all about profits, or mostly about class domination?