Despite evidence to the contrary, several myths plague mainstream debates over the enduring human consequences of the global financial and economic crisis. This new briefing from CESR challenges eight widespread yet misguided perceptions about economic policy in times of crisis, and suggests a series of human rights-centered economic policy alternatives for governments to consider in order to address the dark flipside of austerity-driven cutbacks—a deepening economic and social rights deficit.
The myths dispelled in this timely publication are:
- Governments caused the crisis through runaway public spending.
- Deep cutbacks, especially to expensive social entitlement programs, are the only way to fix the deficit, calm the markets and thereby revitalize the economy
- But deficits are problematic. Just like individual households and companies, governments must live within their means.
- The leading central banks, international financial institutions, credit-rating agencies and other economic policy makers are neutral expert bodies.
- Central banks must be completely independent from public scrutiny to avoid hyper-inflation
- The social welfare state coupled with intractable labor protections are unaffordable, burdensome and discourage growth. \
- Austerity is justifiable because there are no other alternatives.
- There is nothing we can do about it.
Economic policy is public policy and therefore subject to international human rights law. Economic policy choices are a reflection of a government’s efforts to uphold its duties and obligations to human rights, particularly economic and social rights, in accordance with its own constitutional and international treaty commitments. Human rights norms, standards and principles also provide a programmatic framework and operational redlines for economic policy-making. Investing in people in line with international human rights norms and principles is not only legally compelling and morally correct; it can also work to pull our economies out of the trappings of ever deeper, austerity-driven recessions—what Nobel laureate Amartya Sen called a “spiralling catastrophe”.