Altausterity Digest #62 August 23-29, 2018

The Economist discusses the growing current-account surpluses in the euro zone. Since the economic crisis several countries that had large deficits, including Ireland, Spain, and Portugal, have swung their finances into surplus. This has given the euro areas the world’s biggest absolute current-account surplus at $442bn. However, the raw numbers conceal the pain of the adjustment. Due to the euro zone’s monetary union, devaluations in currency were not permitted and therefore structural reforms including cutting wages, domestic demand and employment were all necessary. Furthermore, the wide gap in current-account balances between creditor nations (primarily Germany and the Netherlands) and debtor nations before and after the crisis has meant that some countries have benefited from the harsh adjustment measures implemented in other countries within the euro zone.

In a piece for the Financial Post, Howard Levitt argues that Ontario’s fiscal health means taking on, and dismantling the power of public sector unions. Using a reductionist supply-side argument, Levitt contends that the spending on public sector payroll, and the “inefficiencies” that collective agreements produce are what are standing in the way of “fiscal responsibility” in Ontario. Levitt predicts confrontations with public sector unions following Premier Doug Ford’s announcement that cannabis sales would be conducted by private retailers (and not the unionized LCBO system), and the announcements of teachers’ unions that they will defend members who refuse to revert to the 1998 sex-ed curriculum.

Protests in Russia have caused President Putin to soften pension reforms. After a dip in his approval rating, Putin said that the increase in retirement age from 55 to 63 for women would be reduced to 60, but that the increase from 60 to 65 for men would stay. Unions have argued that many will not live long enough to claim a pension. This claim is backed by World Health Organization figures, which say Russian men have an average life expectancy of 66, while women’s is much higher at 77. The planned reforms have caused Putin’s approval rating to decline from 80% to 64% - his lowest rating since Russia’s annexation of Crimea.  

The official death toll for the aftermath of Hurricane Maria in Puerto Rico was amended to 2,975 on Tuesday. This figure is 46 times larger than the previous official death toll of 64. Although the government of Puerto Rico had previously acknowledged that the official figure was probably much higher, no amended figure had been produced before Tuesday. The study offering the new death toll was conducted by researchers from George Washington University. Subsequent phases of the research will inquire further into the causes of death with the initial report citing poor healthcare provision and a lack of electricity and clean water as the preliminary leading causes of death following the storm. San Juan Mayor Carmen Yulin Cruz has been outspoken in criticizing the Trump administration for their criminal neglect and inadequate assistance in the aftermath of the storm. 

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