Privatization has been mentioned.
So let's say a la Greece, the Troika demand that a nation's services are sold off to get the government expenditure down.
Well,
If a service was well(ish) run prior to the sale date, it wouldn't have been costing the nation much anyway. The question would then be, what's the point of selling it off? The answer could only be, short term financial gain. Pay down a loan or two sharpish. Short sighted on the part of the government to say the least. But hey, the monthly expenditure would go down a bit off the back of the odd few paid off loans.
But, if it was in fact a drain on national resources pre privatization (ie poorly run) then the reduction in government expenditure would be marked. As it no longer had to prop up the service. The short term financial gain would be less but in the mid to long term, the savings would make up for that.
So in both cases the service being sold off has a 'positive' effect on the Nation's balance sheet. The difference is just one of timescale.
In theory, less government expenditure would mean less taxes....
But in austerity, it doesn't mean that at all. There's no way you'll get a tax reduction as a result.
Why?
Because the government uses the taxed fiat and the 'profit' from the sale to pay the private banking network who lie behind such things as the Troika. The bankers get a nice boost to the coffers. The people get nowt.
So, the national asset is gone. Handed over to the bread heads. The people invariably then see the service costs rise and their tax burden remain the same. A few of those people might make a few quid short term but the majority will see their real spending power diminish.
The newly privatized company will no doubt lay people off, hit into worker benefits etc. Those that remain in employment will invariably see their productivity expectations raised, conditions lowered....In many cases, people will see standards slip.
Now, Iceland let it's banks fail. In Britain this caused financial chaos as crucial services had their cash saved in those Icelandic banks.
The British 'economy' took a major hit.
The British Government could have lawfully created new debt free fiat to match every penny that had been sucked out by the Icelandic bank collapse. Because the original fiat was 'gone' the replacement fiat would not have been inflationary. It would just be a like for like thing, All those councils, education trusts etc that had 'lost out' could have pretty much carried on as per normal (except they'd hopefully have learnt summat
)
Instead, what we saw, was quantative easing. Whereby the government issued bonds that were 'bought' by the Bank of England (banking network). Those bonds being a promise to pay the fiat back with interest. The government didn't give that money out to the councils, education trusts etc (well maybe some), they gave it to the private banks. Who kept it. To keep them 'afloat'. The government then austeritied the heck out of the British economy to repay the banks for the bonds they hold, not just the principal (which the banks have already been given
) but interest on top.......Meaning they get paid 2 and a bit times).....leading to privatizations, poorer services etc.....Because QE introduces more fiat into the economy (albeit into the hands of the banks), it leads to inflation. Further lowering people's real 'purchase power'.
(EDIT: On reading that I feel I need to say I am in no way suggesting the collapse of the UK economy into austerity was solely down to Iceland's banks.)
And so it continues....
Right around the '1st world'....
The recurring theme is clear in every case bar the likes of Iceland. Government's, who are public servants, have in fact opted to serve the banks and make the people suffer. The reasons for this choice being ideological in combo with personal gain. Croneyism. This should have led to every complicit government being removed for breach of trust by now. But it hasn't.
And that's a whole new can of worms for other threads ofc.
