Wednesday, August 24, 2011

Put It On the Kids' Tab - A Cautionary Tale

We got used to it after WWII, governments borrowing money to be repaid by taxpayers in the future.  In an era of foreseeable, sustained growth that wasn't so bad.   The next generation of taxpayers would be much better off and quite capable of handling the government debt they inherited.

The problem today is that our political classes are still playing the long-term debt game even though it's becoming abundantly clear that the next generation of taxpayers not only will be less well off but will also be saddled with the social burden of a rapidly aging society.   With a deal like this - not of their making, not of their choosing - what choice do they have but to revolt, to take to the streets?

Ulrich Beck, who teaches sociology at the London School of Economics and at Harvard, says it's high time for young people to get very, very angry.

...For the first time, Europe's young people are experiencing their own "European fate." Better educated than ever and possessing high expectations, they are confronting a decline in the labor markets triggered by the threat of national bankruptcies and the economic crisis. Today one in five Europeans under 25 is unemployed.
In those places where they have set up their tent cities and raised their voices, they are demanding social justice. In Spain and Portugal, as well as in Tunisia, Egypt and Israel, they are voicing their demands in a way as nonviolent as it is powerful. Europe and its youth are united in their rage over politicians who are willing to spend unimaginable sums of money to rescue banks, even as they gamble away the futures of their countries' youth.

The headlines have been interchangeable for some time: Insecurity Over the Future of the Global Economy, EU Bailout Fund in Jeopardy, Merkel Attends Crisis Meeting with Sarkozy, Rating Agency Announces Downgrade of US Debt. Does the global financial crisis signal the deterioration of the old center? Ironically, it is authoritarian China that is playing the moral apostle on the financial front, with its sharp criticism of both democratic America and the EU.

There is one thing the financial crisis has undoubtedly achieved: Everyone (experts and politicians included) has been catapulted into a world that no one understands anymore. As far as the political reactions are concerned, there are two extreme scenarios that can be juxtaposed. The first is a Hegelian scenario, in which, given the threats that global risk capitalism engenders, the "ruse of reason" is afforded an historic opportunity. This is the cosmopolitan imperative: cooperate or fail, succeed together or fail individually.

At the same time, the inability to control financial risks (along with climate change and migration movements) presents a Carl Schmitt scenario, a strategic power game, which opens the door to ethnic and nationalist policy.

Ulrich Beck's article is presented in the context of challenges facing the European Union and, granted, the youth uprisings he mentions have broken out on the streets of Greece, Italy and Spain and not yet in North America, but pledging the kids' credit is not (unfortunately) limited to Europe by any means.  The United States clearly leads the pack on that one even as its hopelessly corrupt government and institutions cater to the well being of the richest of the rich at the expense of the worsening fate of the wage-earning, tax paying middle classes.   American youth haven't taken to the streets en masse - not yet anyway.   Yet theirs is a candle very much burning fiercely from both ends.

Welcome, again, to the Century of Revolution.

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