A very accessible article, for those whoâd like an introduction to the subject.
Neoliberal economists are (not to be dramatic about it) my personal, moral, and of course class enemies, but a part of me canât help admiring the con artistry. I mean the sheer scope of it, itâs breathtaking!
Here, take the deficit-to-GDP ratio. They will tell you that this needs to be lower than 3%, otherwise itâs Armageddon. The EUâs Stability and Growth Pact ordains it, the IMF prescribes it, oh how lucky we are to have such esteemed, educated, and intelligent experts looking out for us. But wait, how did that number come about? How was it calculated?
As it happened, two French economists pulled it out of their ass in 1981, because the President asked for:
seemingly the work of neutral experts
And they chose deficit-to-GDP because:
âdeficitâ is a very impressive word
GDP is the economistsâ go-to number, like, isnât everything about GDP?
both terms seem clear-cut and scientific
anythingâs better than debt-to-GDP ratio, which means nothing at all *
[* Thatâs another rule: the debt-to-GDP ratio needs to be 60% or lower otherwise itâs Armageddon, quoth the Stability and Growth Pact. Why? Nobody knows. Debt is a number without a timeframe (youâre supposed to pay that much, but when? all of it today? in tiny installments over the next 90 years? thatâs pretty important!), whereas GDP is a number that concerns 1 year only. This ratio means absolutely nothing, but itâs easy to calculate and can be used to convince people that going against their interests is actually in their interest. See? Spectacular con artistry.]
And they chose specifically 3% because:
they wanted a number thatâs ânice and round, a beautiful chimera (in the original sense)â [THESE ARE THE EXACT WORDS]
in that yearâs budget, the deficit-to-GDP ratio happened to be very close to 3%
1% or 2% would be too low, people would complain and stuff
2 is a number thatâs âsomewhat flat, and seems fabricatedâ
whereas 3 is âa solid figure, with illustrious precedents (some of which venerated)â [IâM NOT MAKING THIS UP, I SWEAR]
So basically, the French President asked and his economists came up with a fucking magic number, and everyone bought it. Hook line and sinker. Isnât that incredible? Arenât you a little bit in awe of the sheer nerve of those fraudsters? What a con! And nobody checked on them at the time because they were economists, they had DEGREES and stuff. In fact, by 2010 they were so emboldened and untouchable, that one of them went out and publicly revealed their whole thought process, and did so with GLEE. (Which is how I got verbatim quotes for you from a first person narrative. Itâs surreal. Heâs actually proud.)
And hereâs the irony: The president was a newly elected âsocialistâ Mitterand, the economists in question were left over from the previous conservative government of Giscard d'Estaing, and the reason Mitterand asked for a magic number was that he was balancing the budget and all his ministers were asking for money, and he had already tripled the expenditures from last year (ending up with a deficit-to-GDP ratio, you guessed it, slightly less than 3%), and he needed a pseudo-scientific excuse to tell them to fuck off. Man, the â80s were a disaster all around.
Since then, this arbitrary 3%, which was fabricated for short-term political convenience, has become part of the neoliberal gospel, and is blindly taken for granted by French, European and global institutions. And guys, this isnât academic. This made-up figure has literal human casualties. Ending up with a higher than 3% deficit-to-GDP ratio can convince (or force, as the case might beâŠ) a government to adopt austerity measures, and austerity costs lives and breeds monsters. This is BAD.
