Austerity aids who?

...Governments run by people who are either rich or supported by rich, have only the best interest of the rich in their minds...

In my previous post, I had argued that austerity would only lead to further austerity as it shrinks the economy. Keynesian Theory of economics is a classical theory that every student of economics would come across. Then, why are the EU nations and IMF administering the hard-pill of austerity on Greece. Why UK administers austerity when it has only increased poverty? Why is Canada administering austerity, when it claims to be well-off in the media? Why is US administering austerity? Some one should be benefitted by it, right? Who gets benefitted by austerity and who loses?

Runners first

During the European Debt Crisis in the later part of 2008, many European countries assumed the indebtedness of their banks to prevent them from failing. This left many of the European countries in debt to the extent they were not able to pay their debts without assistance from third parties such as EFSF (European Financial Stability Facility), ECB (European Central Bank) and IMF (International Monetary fund). Since many of these organizations require austerity as a part of their bail-out programs, countries are forced to impose austerity measures. 

For example, Ireland imposed austerity measures when it assumed the debts of its private sector banks and had to be assisted by the EU and IMF. While Ireland eventually recovered and ended its austerity in the 2015 budget, the impact of austerity was substantial. Property values collapsed making people pay mortgage more than what their property worth.  The economy shrunk resulting in widespread employment which rose from 4.2% in 2007 to 14.6% in 2012. Ireland also saw huge emigration with around 34500 people leaving Ireland between 2009 and 2010. However, the impact of these measures were felt most by those who could not bear it. 

Similarly, austerity measures imposed by UK due to its bank bail-outs were also affecting the poorest population who could hardly bear the impacts. As of 2014, close to a quarter of the UK population are in poverty. Unemployment rate rose from around 5.7% in 2007 to over 8% in 2012. However, since 2012 unemployment rate has shown gradual decrease. However the austerity was again found to affect the poorest of population. 

Though here two countries are taken as an example, we could make a point that the poorest of poor are those who'd be affected the most, the losers to austerity. This is also because the poor are the biggest consumer of public services, which takes the major hit due to spending cuts. If people tend to commit suicide  then austerity is effectively eliminating poor instead of poverty. 

Winners next

Naturally, those who hold and control government debts gains the most. When the governments bailed the banks, the investors benefitted from the austerity as their assets grew while the poor suffered as it is their jobs and earnings which was taken to pay for bailing out the banks. Naturally, investors and the wealthy were the big winners. 

Further, when the governments cuts its services and shrinks its work force, the private sectors see a increase in the supply of labor. Most of these labor could be acquired at low cost, particularly for short-term. Temporary workers are neither paid on par with the permanent workers nor have the benefits of the latter, in many countries. Further, their employees could be forced to put on more hours at work with the threat of lay-off. In other words, austerity helps big corporations and the wealthy to exploit the labor of the poor. 

Naturally, the rich-poor divide has grown sharply since 2007 with many billionaires seeing large increase in their wealth. 

Conclusion

Clearly, Austerity aids the rich, corporations and the investors...

There are many studies hailing the rich and the reason for the growth of their wealth as due to their wise investments. However, these studies/articles carefully "forget" to mention that poor and middle class don't have enough disposable income to invest, in the first place. Further, while the rich may have their investment knowledge transferred from their parents or bought, the poor and middle class are left in the dark. 

Further, I believe the system itself is designed to aid the investors. While I cannot say for every country, I could about India and Canada. In India, the rich has the money to buy the Govt. officials and vital information to make informed decisions on their investment, though illegal. In Canada, the start-up visa program, I believe, was designed with the interest of the investors (venture-capitalists) in mind. For example, it wouldn't include crowd-sourcing opportunities to raise capital. The system provides little opportunities for immigrant researchers for entrepreneurial pursuits though, those pursuits could create more jobs for Canadians... Rich again has an opportunity to get a investor visa or buy a business...

This makes me wonder, if the Governments real intentions are to help its people or only a section of its population. I'm afraid, the Governments run by people who are either rich or supported by rich, have only the best interest of the rich in their minds. However, what I don't understand is why people don't realize this and why they are falling prey to politicians' lies...

Why are people poor?

Poverty is a problem all over the world. Since recession the rich-poor gap has only widened. In this article, I share some of my observations and thoughts on why some stay poor. 

1. They are lazy: Some may take offence on this but if the truth be told, it is the poor who spend more time with their TV's (or any entertainment) than the rich (who delve more on self-improvement, management, etc.). For example, the grumpy cat pic (the owner became a millionaire what about those who got entertained?). How many times have you come across someone sharing items that makes or motivates someone to think/think differently? Further, if you give an idea to make money to a middle class or poor, he/she would immediately produce a deluge of ideas off-his-hat of why your idea won't work and why he/she would never do it (I'm sure many have many pics like Grumpy Cat pic but none even tried to think of something to use them). On the other hand, if you give that idea to a rich he/she would immediately try to analyze the potential of the idea and try to think of how he could make it work. While some may attribute this attitude of the poor to their disinclination to risk taking, I would only attribute it to their laziness to put even the smallest of effort to think it through.
2. They tend to blame everyone else but themselves: The first step to improvement is to acknowledge one's mistake. For example, many wouldn't know that Walt Disney was twice bankrupt before his current successful venture. Hollywood actor Will Smith went nearly broke in 1990 but now is considered among the money-wise. History is replete with people who have outgrown their initial failures. If you ask them why they failed the first time they'd tell you what they did wrong, how they should have done it and possibly why they were successful now. On the other hand, go to a poor and ask the reason for his plight, he/she would immediately blame everyone else (parents, teachers, politicians, economy, poverty, etc.) except themselves.  Personally, my parents never wanted me to do my Masters or PhD. I wanted to pursue higher studies, and I hid all my efforts through my elaborate schemes saving every penny that I could. They were taken off-guard when I went to them with my admission to my Masters. Hence, in my perspective, self-improvement could only begin with self-realization! So, not acknowledging one's own mistake or giving excuses for their lack of action is never going to help anyone.
3. They believe in everyone: The poor trusts everyone, astrologers, politicians, priests, etc, with no questions asked. On the other hand, rich tries to make use of these elements to their advantage. For example, royalties are portrayed by various religious entities throughout history as descendants of Gods or adorned by them to rule common men. Many people believe that and tend to live their life in poverty. While the rich(royalty), would use those religious elements to make the common men endorse their dominion and strengthen their power. Nazis were very adept at spreading rumours to win people's mind, the theory is now widely known as the "Goebbel's law". Now, this is one of the pillars of Psy-warfare (Chinese have a large number of people working on this). Even now, Mr. Modi's Govt. is trying to crack-down NGOs that are trying to protect environment. GoI's (Govt. of India) contention is that these NGOs are funded by foreign elements to prevent development in India. However, if those Nuclear plants come to existence, aren't these the foreign countries which are benefitting from it? Why none asked Mr. Modi's Govt., this question? However, Mr. Modi has no problem in NGOs working to destroy Indian culture or spread Western propaganda (Ex. The Hindu*). In either case, people believed the GoI and didn't even care to question the logic. In this context, I'm only remembered of the great sayings of Thiruvalluvar (sage poet who lived more than 2000 years ago), when I think about their state!
4. They follow the crowd: One of the most deplorable things among the poor is their tendency to follow the crowd. Aren't there any better options, no poor or middle class care to look or hardly do. On the other hand, rich tend to constantly look out for new opportunities. Steve Jobs, learnt calligraphy, which eventually motivated him invent the first Apple Computers. Hardly, a middle class or poor, tend to make the connection between calligraphy and computers. Basically, they do things because everyone does them. When we had our baby, some of our acquaintances/friends (Canada and its Govt. as such is promoting breast-feeding in a great way...) were "advising" us to use baby-formula instead mother's milk. I was both astounded and disappointed. Their reason, every other person they knew of used that brand of formula-milk. None, cared to look or analyze the benefits of one over  the other. 
5. Under or Over educated: Most of the poor either are less educated or overeducated. American Bureau of Labor statistics makes a direct connection between the level of education and the amount of money earned. Though this is an average, less education could be considered a cause for low income. However, what is not very apparent is, too much education also tends to make one poor. Statistics paint a grim picture of the student debt of graduates, every year. Consider also the plight of postdocs who have great ideas but not much opportunities. In Australia, one postdoc seemed to have worked as a forklift, before getting into some position. On the other hand, rich start to earn early. While education is in their interest, they would rather spend more time in learning their business and developing it. 
6. They are cowards: The poor are less inclined to take risk or to stand out from the crowd. Even when their property is acquired by their Govt.,  or forcefully abducted by some "mafia" the poor hardly put a brave fight, even when they might have an advantage of winning the fight. For example, take the case of Target which recently failed in Canada. The CEO went home with more money than the severance package of all the other Target employees' put together. Even though the leadership is responsible for the failure, it is employees who ended up paying the price. Yet, there has been no noticeable protest or anger about it. This is irrespective of the fact that Canada is in election mode now and no politician would risk antagonizing their electorate. 
7. They are not born rich: Being born to rich couple has its advantage. A recent study found the  richer twin to have better mental faculties than the poorer twin. Further, even when a poor has some idea, it is the rich who have the money to implement that and they usually hire the poor for their ideas. However, the good news is that around 50% of the new-billionaires are self-made (Ex. Sergey Brin).
8. Lack of sacrifice: Every achievement requires sacrifice (No pain, no gain). Many rich, would have almost sacrificed their entire youth to get to the point they are now. They would have traded their "popularity" in their schools for their current position even be ridiculed and bullied. Many wouldn't even have had an opportunity to have date, while working like a nerd (many are). While, I wonder how many of the poor had ever sacrificed their want for an ice-cream or the dinner to save that one buck for investing?!
9. Selflessness: One of the interesting things about rich, is that they are mean and tend to stretch every bit of their dollar. Warren Buffett, though is one among the top 10 billionaires consistently, who is well-known for his frugality.  However, he is not the only one. Think about the poor, they are usually over spending and more generous than these billionaires.

Please don't forget to share with us your thoughts on why you think poor are poor...

* It is my observation that 'The Hindu' publish mostly Western propaganda, when it comes to socio-economic issues and hardly prints a rational comment opposing that view. Please refer to my earlier post, for example.