ABSTRACT
Introduction We had the opportunity to meet with Frederic Lee on various academic occasions and his wit and provocative enthusiasm always invigorated us. His relentless message that we should not give up using our full capacities to improve the lives of many and his consistent example shall be with us vividly, as we intend to show in this chapter. We have experienced the aggravation in the lives of many whenever the idea of ‘sound finance’ is put into action. It is our responsibility, thus, to scrutinize it. Sound finance economists and politicians proclaim that fiscal austerity gives confidence to financial markets and allows governments to pay lower interest rates on their debts. This arguably leads to a safer environment for investments as the reduction in inefficient government spending gives room to efficient private spending. As a result, it is said, production and employment increase. In order to legitimate their view and to gain social assent, those economists and politicians use analogical reasoning to claim that managing the central government’s budget is like managing the household finances. Analogical reasoning infers that one phenomenon is similar to another one in a certain respect on the basis that both phenomena are known to be similar in other respects. When applied in political and economic discourses, an analogy helps legitimate our views of “the on-going economic process that provides the flow of goods and services required by society to meet the needs of those who participate in its activities” (Gruchy 1987, 21). The functioning of a social provisioning process sets the institutional conditions by which burdens and provisions are distributed throughout all going concerns involved (Lee 2011a; Todorova 2007). Government spending, for instance, is crucial in the provisioning process of modern capitalism. It can be used to promote full employment and to drive transactions closer to socially desired values, beliefs, and ethical standards (Todorova 2013). Yet, the understanding of such a potential is obstructed by the state-as-household analogy, of which examples abound in the political arena. Margaret Thatcher (1975) once said “What is right for the family is right for Britain. The first priority is to cut Government spending drastically.” Decades
later across the Atlantic Ocean, President Obama (2011) unveiled the US budget and stated: “That’s what families across the country do every daythey live within their means and they invest in their family’s futures. And it’s time we did the same thing as a country. That’s how we’re going to get our fiscal house in order.” Similarly, Republicans have stated: “We believe the state should live within its means and budget just like families do every day” (Republican Caucus 2011). Public figures like Cindy Chafian agree: “I really equate it [federal government] to the family” (Mencimer 2011). Elsewhere, Gustavo Franco, President of the Brazilian Central Bank during President Cardoso’s first term (1995-1998), remarked about Brazil’s privatization program: “The economic logic of privatization has never been difficult to grasp. The family has huge debts, earnings disputed by relatives, and assets that create more costs than earnings. Selling some of these assets to pay debts is a very good idea to improve the family’s finances” (Franco 2004). Similarly, the Finance Minister of President Lula’s first term (2003-2006) Antonio Palocci said:
One should not doubt the fiscal commitment of this government, which will deal with the budget just like the worker deals with his. He spends only what he earns, pays his debts, and keeps a balanced life to preserve his reputation.
