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From Athens to Madrid, everyone once knew the function of public debt. It was a bogeyman, our terror of which seemed to justify successive waves of austerity measures and to convince citizens they needed to tighten their belts in order to avoid the next catastrophe hovering on the horizon.
Things have changed. Before Covid-19, politicians would never have argued for the massive increases in public debt we are seeing today. The pandemic has also revealed the cost of the austerity policies applied since the 1980s. It would be difficult — for the time being – for politicians to further cut hospital services, the education system or social security for the most precarious. And, since governments remain averse to extracting money from the richest, reviving a dying economy requires them to legitimise the rise in public debt.
The rhetoric of belt-tightening will come back to haunt us, as it did in 2009-2011 as a result of the enormous deficits caused by rescuing the banks that collapsed in the subprime mortgage crisis. Until then, neoliberalism has conceded a significant defeat by demonstrating the ease with which the economy can adapt to political imperatives: now, everything that used to be considered impossible seems trivial. We will have to remember this.
In this ebook :
• ‘Markets now rule the world’, by Wolfgang Streeck
• ‘Debt-ridden Europe is repeating our mistakes’, by Rafael Correa
• ‘Africa borrows on the open market’, by Sanou Mbaye
• ‘Greece: pay now, live later’, by Renaud Lambert
• ‘The defeat of Europe’, by Yanis Varoufakis
Taking Sides is a series of ebooks published by Le Monde diplomatique. In each ebook, we are releasing the most significant articles from our English-language archive since 1996, on a topic that merits your attention.
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