What’s behind the fiscal cliff controversy in the United States?
According to John Weeks (Professor Emeritus and Senior Researcher at the Centre for Development Policy and Research at the University of London) in this interview, it’s “the financial interests”. How come? Weeks explains:
They [the financial sector] don’t produce anything themselves. So the way they get their income is they redistribute it from the rest of the economy. How are they going to do that? Where are they going to redistribute it from? They’ve pretty much driven the manufacturing sector into the ground in the United States, so the only place from which you can extract it is the government itself. So, therefore, I think part of the strategy is, cut government expenditure so that the financial sector will get it instead.
And there is more:
[T]he grand rentiers in the U.S. economy see a unique historical moment. (…) [T]he defeat of Romney was a setback, but in this moment they think that they can destroy the welfare state and that the vehicle for doing that is to use the deficit as an argument, you might say, a faux-technical argument (…). [Such faux-technical argument
sounds like this:] ‘you know, my heart bleeds, but the reality is we have to get this deficit down, and it is true we’re going to have to cut Social Security and we’re going to have to cut Medicare, but we just can’t afford it’ – which is complete rubbish. Of course we can afford it. We’re one of the richest countries in the world. If we can’t afford it, who can? So I think that they’re motivated by a desire to destroy the welfare state, what little of it is left in the United States, and in doing so, to redistribute income and wealth to themselves.
[Update Dec. 5, 2012: 1) On the ‘desire to destroy the welfare state’ see also The Obscenely Rich Men Bent on Shredding the Safety Net. 2) On the ‘middle-out economics’ solution, see Make-or-break moment for middle class. 3) On a perhaps more ingenious, Tobin tax-like way out, see Eliot Spitzer: Tax the Traders!].
To the Law, Economy and Society Group (LESG) the matter is of interest mainly in the aspects that potentially have to do with concerns about the limits of legal analysis and the need to reform the way jurists see the world. Such limits can be gauged from the fact that, by using existing categories of legal analysis, jurists in the United States and elsewhere have virtually nothing to say about the fiscal cliff controversy, in spite of the fact that expenditure cuts and/or tax increases may diminish the ability of many people to enjoy rights – and even fundamental rights (as already mentioned here). The transmission of the effects of expenditure cuts and/or tax increases in the United States will also harm other economies in the world and will affect the extent to which rights can be enjoyed in other countries. Again, typically, jurists will have nothing to say about the international (sometimes global) transmission of economic policy effects. [Update Jan. 11, 2013: On the “low-key role” played by U.S. judicial courts in response to admittedly illegal conducts connected to several aspects of the financial crisóstoma, see the piece by David Zaring here – published in the NY Times on January 7, 2013].
These are some of the concerns which the LESG attempts address in its research and seminar activities.