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N.L.’s fiscal crisis was not inevitable

By: | January 23, 2016

Yet our politicians tell us we all must pay.

Jon Parsons
Power and Dissent offers a critical take on culture, society and politics in Newfoundland and Labrador

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Photo by Zach Bonnell.

The province of Newfoundland and Labrador is in a major financial crisis, with a $2 billion deficit on a $7 billion annual budget, and projections that net debt for this province of some 500,000 people may reach $22 billion by 2020.

This is the harsh reality, we are told, of a problem we collectively face. The provincial government has called upon government departments and agencies to find savings of 30 per cent, while a series of public engagement sessions and online crowdsourcing efforts are underway to solicit public feedback on how to make cuts and increases to deal with the shortfall.

I have watched closely the discussion on social media and the ideas put forward on the government’s crowdsourcing website, and I must say that I am disappointed (but not shocked) by the militant and cavalier attitude with which regular citizens of the province have called for the dismantling of public services and generally offloading the financial strain on the most vulnerable people in society.

For example, suggestions have been put forward to end public legal aid, shut down services for homeless and impoverished youth, as well as eliminate the unions, claw back pensions, and reduce wages for public servants.

Again, it is not so much surprising as it is disappointing to see the way people turn on one another and allow themselves to be pitted one segment of society against another, on command and at the direction of their leaders. This is evidence of few things: 1) the end of collective attitudes and social solidarity; 2) the acceptance that this debt is public; 3) belief in the moral responsibility to sacrifice and repay.

Debt beyond economics

In the last few years there have been a number of far-ranging studies of debt. I recommend David Graeber’s Debt: The First 5000 Years, Margaret Atwood’s Payback: Debt and the Shadow Side of Wealth, and Maurizio Lazzarato’s The Making of Indebted Man.

 Debt has, beyond rudimentary calculation, little to do with economics and is more about political, social, and ethical considerations.

There are significant differences in what these authors have to say about debt, but a few important commonalities as well. One perspective they share is that debt has, beyond rudimentary calculation, little to do with economics and is more about political, social, and ethical considerations.

Here is an extract from Lazzarato’s book that speaks to this “beyond economics” of debt and also, in my view, the current financial crisis in Newfoundland and Labrador:

The objectives of the debt economy are thoroughly political: the neutralization of collective attitudes (mutualization, solidarity, cooperation, rights for all, etc.) and the memory of the collective struggles, action, and organization of “wage-earners” and the “proletariat.” Growth gained on credit (finance) aims to diffuse the conflict. Having to confront subjectivities that consider public assistance, retirement, education, etc., as collective rights guaranteed by past struggle is not the same thing as governing “debtors,” small business owners, and minor shareholders.

I understand very well that some folks will read the word “proletariat” above and come up against some serious cognitive dissonance, just as some folks have difficulty hearing the descriptive term “neoliberalism” without scoffing, and just as some folks can’t understand the suggestion on the crowdsourcing website for a “communist revolution” as anything other than a joke.

So let’s try and think about this idea of debt as a political, social, and ethical category in concrete terms and in the context of present-day Newfoundland and Labrador.

How we got here, where we are going

The current deficit and debt faced by the provincial government did not materialize from nowhere. They are the result of decisions that were made by a small number of people, and also because of the whims of the global trade in oil. It is true, of course, that our government, our industrialists, and our elites had nothing to do with global market forces opening a gaping hole in the province’s economy – just as the regular citizens of the province had nothing to do with volatility in oil prices either.

 The current deficit and debt…are the result of decisions that were made by a small number of people, and also because of the whims of the global trade in oil.

However, our government and local elites did have control over a number of specific policies and decisions that also created the current financial crisis: tax breaks upwards of $744 million annually and totaling some $4.2 billion since 2004; corporate give-aways and preferential royalty regimes on extractive industries like mining in Labrador; and the financial albatross of Muskrat Falls (see here and here), to name just a few.

These and other such decisions were as important as the price of oil with respect to the creation of the current financial crisis, and were decisions that everyday people had no say in.

Of course, some will say that because of our system of representative government, the public consents to such decisions (even if they are mostly unaware of them). But the important point to note here is that regardless of your opinion on the manufacture of consent in representative democracies, the discussion is moving away from economics and into the realm of politics and ethics – i.e. what constitutes consent for decisions supposedly made on behalf of the public, and who is then responsible and left holding the check.

In this way, the socialization of debt is accomplished by some sleight of hand, a shell game, whereby the responsibility for the decisions that were made, and thus the economic debt, is passed on to the public.

And the nature of the game in Newfoundland and Labrador today is to convince the public that because of decisions that were made by others, decisions that essentially functioned for the benefit of a select few, those things that were won in collective struggle that are of collective benefit to society — like the welfare state, like public sector unions, like pensions, healthcare, education — ought to be sacrificed in order to pay “our” debt.

Those who forget history…

More than anything, what I want to offer here is a cautionary note against the belief that the current financial crisis was somehow inevitable. It was not.

One aspect of this crisis, the price of oil, was clearly beyond the control of our politicians and captains of industry. But other factors that brought us to this place were the direct result of the decisions and priorities of those who presume to be our leaders. The belief in the inevitability of the current state of affairs is part of the ruse intended to convince us to accept collective responsibility for the crisis, to make us feel we are morally obliged to deal with a debacle that was not of our making.

 All these things were won not because of some favor bestowed on the people of Newfoundland and Labrador by a benevolent ruling class, but because everyday people took back what was rightfully theirs.

Again, some will say that we have consented to the governance of our supposed leaders, but one could as easily say that outport fishing families in past centuries consented to the rule of the merchants. After all, one might say, fishing families continued to deal with those same merchants to whom they were perpetually in debt and ultimately chose to remain in their communities. But does anyone today take seriously this line of thought? As though the options available to people in olden-time outports were anything other than dealing with the merchant or starving to death?

Our people learned more about debt in the 1920s and ’30s, and again one could say the people consented to the corruption of the then-government, consented to economic collapse and the end of our democracy and self-rule. But we know better now, don’t we?

We know there was nothing inevitable about the tyranny of mercantilism and rampant corruption. We know that the way things were organized and the systems of power were set up to benefit a select few at the expense of the many, and that whenever cracks formed it was the average, everyday people who paid the price.

And finally, let us never forget how the people of Newfoundland and Labrador responded, through solidarity and mutual aid, by organizing into unions to oppose the stranglehold of the merchant class, by rising up against corruption and demanding rights and welfare, and by fighting for social services and a decent standard of life for everyone.

All these things were won not because of some favor bestowed on the people of Newfoundland and Labrador by a benevolent ruling class, but because everyday people took back what was rightfully theirs.

At this current juncture in our history, let’s not allow the supposed inevitability and moral responsibility for debt to be a vehicle for giving it all away.

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