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AltAusterity Digest #43 April 12-18, 2018

This week in Austerity News:

Apr 24, 2018

A report titled “Raising the Bar” by the Fabian Society thinktank has outlined an alternative policy strategy for raising UK living standards. The low growth in living standards of work-age households in the UK has a dismal record as real family income is not expected to pass pre-crisis levels until the 2020s. The Fabian’s six-point plan for an alternative recovery involves increased public investment and a cautious approach to raising interest rates; improving working conditions for precarious workers; increased power for trade unions; devolving economic powers to local and regional authorities; an industrial strategy based on R&D with a target of promoting green jobs; and a more progressive tax system. The plan has been endorsed by the Trade Unions Congress (TUC) and several Labour MPs.

An article by Forbes discusses a new working paper from the IMF that questions whether the established relationship between government debt and debt default in advanced economies is as sound as previously thought. The previous argument, which provided the “scientific” justification for austerity, was that if debt-to-GDP levels rose too high, and debt interest rose with it, that servicing the debt would either become unaffordable for future generations or would lead to default in the event of an economic downturn. However, the cited IMF study which looked at 6 advanced economies over the long-term, has concluded that “unless governments can commit to infinitely large deficits, they can issue as much debt as they like without becoming insolvent.”

The recent wave of teacher’s strikes in American “red states” – Arizona, West Virginia, Kentucky and Oklahoma – may be shifting political power away from the Republicans. In all four states, teachers are reacting to Republican-controlled legislatures which have overseen a decline in state education funding and an expansion of the private school system. The mobilization of teachers has not just come from “progressives” but has also been driven in part by disaffected Republican-leaning teachers. This shift has seen an upsurge in the number of teachers running for office as the backlash against “establishment elites” continues. In Kentucky alone, 40 educators have filed to run for office in a context which the former president of the Kentucky Education Association referred to as a “state-wide movement.”

Canadian Federal Government spending will be up 7% over last year’s estimate and 2.1% over actual spending from last year. Targeted areas for expansion include the environment, immigration, transport and Indigenous services. The Departments receiving the greatest increases over 2017 spending include Indigenous Services (2,500%), the Office of the Parliamentary Budget Officer (940%), and the RCMP External Review Committee (67%).  These costs will be partially offset by decreases in regional economic development funds. The Northern Economic Development Agency’s budget will be cut by 40%, and regional spending will be down for Southern Ontario (30.5%), the West (25%) and Quebec (9%). The only region to get an increase will be the Atlantic region (5%) where the Liberal’s swept every riding in the 2015 election.

That's it for this week's Digest! Check back next Friday morning for another edition, or subscribe to our newsletter for a weekly roundup. We'll also Tweet each time we add new content, so you can keep up with our work @AltAusterity and join the #altausterity conversation!