The ongoing physical battles on the streets of Greece have been mirrored in the rest of the financially struggling world with a rhetorical battle to establish the narrative of exactly what went wrong there. The deficit hawk
s are winning this battle. Their message is generally along the same line as this Forbes article:
A bailout, however, does nothing to fix the misguided policies that have generated Greece’s existing debt and ongoing deficits. Bailout therefore merely postpones the day of reckoning. Worse, bailout both rewards Greece’s bad past behavior and encourages such behavior in future. Greece will never change its misguided policies if the E.U. and IMF infuse it with new cash, just as no teenager who has overspent an allowance will reform if the parents merely expand that allowance.
I can’t comment on the causes of Greece’s fiscal woes, as I lack the requisite economics training to
say anything useful. But the line of thinking quoted has ramifications that go beyond Greece and beyond economics. The irresponsible teenager mentioned in the quote is a clear reference to the kitchen table metaphor, in which government budgets are compared to household budgets and extensive government services are compared to unnecessary luxuries that must be abandoned in times of fiscal scarcity.
There have been many criticisms of the kitchen table metaphor on strictly economic grounds, so they’re worth reading if you’re interested in the politics of the recession. I’m going to remain agnostic on the validity of the household/government comparison and focus instead on the second postulate of the analogy: that social services are luxuries. Before I begin, you should know that I have chosen to lay this out as a careful ethical argument, but I strongly considered abandoning stru
cture and instead stating this as a rant. You should therefore feel free to read the following in a really angry voice if it suits you.
If we’re talking about luxuries, we must first define what exactly we mean by t
he term. I propose the following: In ethics, a luxury refers to anything whose presence is an ethical good, but not a moral necessity. In other words, the presence of luxuries makes the world a better place, but the absence of luxuries does not necessarily make the world any worse. I recognize that other disciplines, such as economics or politics probably already have definitions for the term, so this definition is for ethical deliberations only. While it will undoubtedly be subject to Wittgensteinian counterexamples, I think the definition I have outlined accords with what most people mean when they talk about luxuries.
This definition jives well with what people do around the real kitchen table. If a person or family is struggling financially and cannot raise further income, the first thing they will look to cut is their luxuries. They will be more likely to buy fewer clothes or to cancel a vacation than to cut off their heating or buy less food. While your mileage may vary on what actually constitutes a personal luxury, the matter is not a subject of frequent and vigorous public debate. Unfortunately, such agreement does not exist on what constitutes a public luxury, and that is a big problem for determining ethical fiscal policy.
One way to resolve this is to take the focus off of government and place it instead on society as a whole. By drawing on labour and natural resources, society produces wealth which is then distributed amongst its members. The production and distribution of wealth can be done in a number of different ways, which are known as economic systems. In every
economic system, however, the reality is the same: labour and resources are required to produce wealth, which is then allocated tow
ards various purposes.
With that in mind, let’s look at a few items that would appear on the a few national kitchen tables as the world tries to sort out its budget in these tough times. The United States Environmental Protection Agency’s 2011 budget of US8.6 billion might seem a bit steep, until you consider the fact that in the same year, Americans spent $48.3 billion on pet care alone. In Canada, meanwhile, the CA $1 billion (approximate) that the CBC receives from the Federal government is dwarfed by the $22 billion that Canadians spent on Christmas gifts alone last year. Here in Britain, the
23 billion pounds spent by the department for Education, Innovation and Skills in 2008 (before the cuts) looks pretty small when compared with the 30 billion pounds spent on alcoholic drinks. And in all three countries, there is a small upper class that spends huge amounts of the national productivity on luxuries for itself. In the United States, $2 trillion-or 20% of the nation’s money-is owned by the top one percent. That figure is less severe in Canada and Britain, but still there is a lot of money being spent on personal luxuries by wealthy people.
Given all this, it is unlikely that we at the kitchen table would designate things like public health care, universal education, or environmental protection as luxuries. These government services are among the most important things that any society in any country spends its money on. The choice between cutting education or health care is an excruciating one, but if cutting back on the amount of money spent by the ultra-rich on private yachts is an option then the choice becomes obvious. As it currently stands, we’ve got it all back-asswards: cutting social services while maintaining (and even increasing) tax cuts for the wealthy is akin to our cash-strapped kitchen table family halving their f
This is a question of priorities. I have no problem with people spending money on Christmas or their pets or (god forbid) beer. I don’t even have any real objection to the extravagant spending of the super rich. But when fiscal circumstances force us to tighten our belt, then it is the real luxuries-particularly those purchased by the super rich-that should be cut back. The fact that this extends the cutting decisions beyond the government budget is immaterial. Taxes give us an instrument to decrease private spending on certain things and reallocate society’s resources towards more important goals, and when the decision is between a new sports car for a rich person or a life-saving surgery for a poor person, then we should not hesitate to cut the former. Luckily, even in times like this there is more than enough money to take care of the necessities and have a few luxuries on the side, but we should never forget which is which. As long as there are still talented people who can’t afford an education or people dying of treatable conditions for want of affordable health care, society should not be allocating its resources towards expensive personal luxuries. ood budget while buying a Porsche.
For more on this, see xkcd’s awesome money chart.