New book explores consequences of 2009 global financial crisis on public sector
Carlo Fanelli, an assistant professor in the Faculty of Liberal Arts and Professional Studies at York University, is the co-editor of a new book of essays with Bryan Evans, a professor at Ryerson University. The book, released in July, is titled The Public Sector in an Age of Austerity (McGill-Queen’s University Press, 2018). It follows up on the 2007 financial crisis and its latent impact on the public sector and presents a number of viewpoints from some of the country’s leading thinkers.
“One of the central themes throughout this collection is that while the Great Recession may be behind us, its after-effects continue to shape public debate and policy-making,” says Fanelli. “What began as an isolated series of mortgage defaults in pockets of the United States economy in 2007, leading to the insolvency of a few high-risk lenders, quickly turned into a major bank and financial market liquidity crisis.”
From there, the crisis exploded into an economy-wide problem of insolvency for a whole range of vastly over-leveraged financial institutions, says Fanelli. “The financial meltdown then just as quickly mutated into a global economic crisis by 2009 as the U.S. subprime mortgage-backed securities that triggered the crisis were discovered in the portfolios of banks and hedge funds around the world.”
The implications of the unfolding crisis were catastrophic, long lasting and, most notably, trillions of dollars of debt were loaded onto government balance sheets. “The governments of the G8/G20, coordinated by central banks given increased operational powers, intervened with trillions in loans to guarantee interbank lending,” explains Fanelli. “A series of forced bank mergers, quasi-nationalizations and bailouts of the private sector by the public sector soon followed, resulting in ‘troubled assets’ being shifted into the state sector and onto central bank balance sheets. In other words, private debt become public debt and this set the stage for an otherwise permanent era of austerity that was to come.”
At the core of the collection of essays is a rejection of the premise that governments’ financial challenges stem from overgenerous public sector wages or abuse from the users of public services. Instead, the book’s contributors demonstrate how some three decades of tax cuts have eroded revenue-raising capacities, leading to cutbacks in public services, demands for concessions from public sector workers and the privatization of public assets. “In other words, governments do not have a spending crisis but a revenue crisis rooted in the policies of neoliberalism and the dogma that the market knows best,” says Fanelli.
Fanelli and Evans began work on the book in 2014. “One of the things we noticed was that while there was a great deal of attention being paid to what was happening in the United States and Europe, very little attention was being paid to what was happening in Canada. In fact, some governments in Canada were outright denying Canada had been impacted by the Great Recession at all. We, of course, didn’t agree,” says Fanelli.
It was in this context that the duo solicited contributions from some of the leading commentators across each of the provinces and territories to examine how public finances, spending and employment relations had been impacted in the context of recession. While each of the provinces and territories have resorted to variations of austerity, multiple methods have been used to reduce the deficit and balance budgets, including tax-shifting for competitiveness, reductions to service levels, contracting out, public-private partnerships and privatization, notes Fanelli. “New workplace arrangements have proliferated including the use of part-time and short-term contracts, casual and seasonal forms of employment, as well as new restrictions on workers’ rights to unionize and bargain collectively.”
The refrain “do more with less” underscored government efforts to deal with the consequences of the financial crisis. “From a fiscal standpoint, austerity may be counterproductive; and from an equity standpoint there is an important need to redress longstanding exclusions along race, class and gender as social inequality continues to grow,” says Fanelli. In this regard, Fanelli and Evans have organized this collection of essays into chapters, each considers how public policies can be developed in a manner that enhances accessibility in more socially equitable ways.”
While each of the chapters share certain parallels, all are unique. Fanelli and Evans have collected an insightful and diverse collection of essays from all areas of the country.
One authored by Keith Brownsey (Mount Royal College) examines how revenue generation and public spending has been impacted since the 2008 recession in what has historically been Canada’s most socially and fiscally conservative province of Alberta. Tracing the focus on deficit and debt elimination from former premier Ralph Klein over to Ed Stelmach, Brownsey shows how the privatization of public services, austere public spending, reductions to public sector workers’ wages and deregulatory changes to electricity generation, including reductions to corporate income taxes, became part and parcel of consecutive Alberta governments, known euphemistically as “the Alberta advantage.”
Across the country, although Quebecers came into the crisis with a far more robust and redistributive welfare state, McMaster University Professors Peter Graefe and Hubert Rioux Ouimet write that the ebb and flow of partisan politics seems to have made austerity a powerful card for conservative forces that have long sought to restructure the provincial state. Graefe and Ouimet draw attention to how Quebec social and union movements have mobilized impressive opposition to austerity programs, concluding with an examination of how the limited ability to find and form relays in institutional politics to block or stymie neoliberal initiatives has resembled these conditions elsewhere.
In the north, the Nunavut Act was passed in 1993, paving the way for the territory to come into existence in 1999. Although austerity is often thought of as something introduced in the 1980s and 1990s, University of Saskatchewan Professor Jack Hicks, in his essay, shows how the eastern and central Arctic never had a period of normal Keynesian welfare state development.
Fanelli is an assistant professor and coordinator of work and labour studies in the Department of Social Science and appointed to the Graduate Program in Sociology at York University. He received his PhD in sociology and political economy from Carleton University. In addition to numerous journal articles, he is the author of Megacity Malaise: Neoliberalism, Public Services and Labour in Toronto. Since 2009, he has also been editor-in-chief of Alternate Routes: A Journal of Critical Social Research published by Athabasca University Press.