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Fiscal Fallacies: 8 Myths about the 'Age of Austerity'

Myth #8: There is nothing we can do about it.

This myth suggests that regardless of our disagreements with the way economic policy processes are being conducted in our names, we have little choice. Public participation and accountability are nice ideals, but the abruptness of needed reforms simply outpaces the possibility of providing the information and transparency needed. The rhetoric, language and letter of the law of human rights are nice platitudes, but offer no meaningful tools or avenues to dispute economic decisions, and cultivate actionable alternatives.

Did you know?

By shifting the burden to governments to prove its policies are designed and implemented in rights-realizing ways, human rights norms, principles and mechanisms—beyond being a manifestation of international law—offer potent empowering tools to turn the tide towards more just, resilient, inclusive and sustainable economic policy alternatives to austerity.

“No global economic and financial crisis diminishes the responsibility of State authorities and the international community with regard to human rights,” affirmed the United Nations Human Rights Council in 2009. As the UN Special Rapporteur on Human Rights and Extreme Poverty, further confirmed:  “while States have discretion to adopt policy measures according to their own context, human rights are not dispensable during times of economic hardship and States must design and implement all policies according to their human rights obligations.”

Currently, 160 countries—including most countries implementing austerity measures today—have bound themselves to the International Covenant on Economic, Social and Cultural Rights (ICESCR)—an international treaty which gives depth to the economic and social rights guarantees already in the Universal Declaration of Human Rights. As part of their obligations, government parties to the Covenant have legally committed themselves to improving the full realization of economic and social rights progressively over time by using the “maximum of available resources” to this end.

Unjustified, unnecessary, disproportionate and discriminatory cuts in public programs designed to fulfill the human rights to education, social protection, health, food, water, or housing—measures which disproportionately affect those who had no hand in causing the economic crisis—are not only immoral and economically counterproductive: For most governments, they are expressly unlawful, as the UN Committee on Economic, Social and Cultural Rights explained in an unprecedented letter to State parties to their Covenant in the context of deepening economic crisis in the spring of 2012. In other words, governments in crisis must justify that any cuts which affect rights are reasonable in reference to existing alternative resources which could be raised (through for example tax policy reforms) to recompense the losses in the public budget. In the rare cases where there are no alternatives, budgeting must be undertaken with the utmost care with respect to ESC rights, and must not lead to discrimination in law or in practice. Budgeting during an economic downturn must not undercut minimum essential levels of basic needs in society, and must embed the principles of transparency, public participation, accountability and remedy for harm done. It does not take much to deduce that many of the austerity packages in countries worldwide are likely to amount to “retrogressive measures,” and thus be considered unlawful under the Covenant.

Human rights responses

Human rights and social justice advocates have begun to strike back—in the street, in the courtroom and at the United Nations—to exact accountability for the profound casualties of the crisis.

Vibrant public campaigns in Ireland and Greece, for example, are enacting independent debt “audits” to demand the democratic right to full information on publicly-guaranteed debts to determine exactly who owes what to whom and by implication, who precisely is being "bailed out" and who ought to pay, if anyone. Advocates are increasingly coordinating these actions within an International Citizen Debt Audit Network  to challenge basic assumptions about the legitimacy of debt in times of crisis.

Human rights advocates are also challenging fiscal austerity measures on constitutional and other legal human rights grounds in the courts. Pensioners in Latvia for example challenged the constitutionality of a government reform restricting pension payments, and the Constitutional Court deemed the act unconstitutional citing the fundamental right to social security. The Court asserted that the State had the obligation to guarantee the minimum essential levels of the right irrespective of resources, and pointed to the fact that the government had not considered other less restrictive measures nor designed an effective remedy for reduced pensions. The Court refused to consider the conditions set out by international creditors as worthy of trumping Constitutional guarantees of the right to social security.  The Constitutional Court of Romania, meanwhile, forced the government to design alternatives to reducing the debt which would not affect fundamental rights. The Hungarian Constitutional Court meanwhile has been particularly active in challenging several government tax policies post-crisis, so much so that the government set out to amend the constitution to strip the court of its power to annul tax-related laws for all instances in which certain constitutional human rights were at stake. In the US, courts in New Jersey and California have received challenges to crisis-induced education and disability cuts respectively. Claims have also been brought into the UK courts to challenge that country’s post-crisis economic and social rights deficits. In a remarkable recent case, concerned British students brought a case against the government arguing that a policy tripling university tuition fees would effectively thwart equal university access for ethnic minorities, the poor and other marginalized groups, and was thus in breach of the right to education and non-discrimination set out in both the UK Human Rights Act and the European Convention of Human Rights. While judges did not overturn the policy, the High Court did hold that the Secretary of Business had "failed fully to carry out his public sector equality duties” and to give "due regard" to promoting equality of opportunity in education. Advocates in the UK meanwhile continue to insist that human rights provides a coherent, galvanizing alternative to the government cutbacks.

Civil society has also spearheaded several litigation initiatives against credit-rating agencies. A criminal complaint before Spain's Audiencia Nacional brought by the Observatori DESC and others against three major credit rating agencies (Moody’s, Fitch and Standard and Poor’s), for example, argued that the conflict of interest inherent in the biased determination of risk by these agencies breaches Criminal Code provisions against unlawful price manipulation and abuse of confidential information for private benefit. In articulating the public good being protected by these criminal code provisions, it challenged the notion that “market forces” are too abstract and indeterminate to be held to account, arguing that behind the market lie individual and corporate “subjects who should be held to account for their corresponding civil and criminal responsibility in these offences.” This case parallels a number of similar legal challenges against credit rating agencies in various states of the US and Italy. Advocates in Illinois, Ohio, Connecticut and California, for example, have accused different credit-rating agencies for acting fraudulently in providing factual evidence about investment ratings they knew to be false. Authorities in Italy meanwhile have also opened investigations against the three agencies for having downgraded Italy’s sovereign rating based on "untruthful, tendentious, incoherent and unfair" assessments, with reportedly significant damage to the country and its public debt.

Social justice advocates have even leveraged the United Nations human rights protection mechanisms to challenge austerity measures and insist on more people-centered economic recovery policies. The human rights dimensions of austerity measures in the US, Ireland, Greece and Spain have all been brought before independentUN bodies—compelling these governments to justify their conduct and openly answer before the international community. While it is true that these bodies can only offer non-binding recommendations and have no enforcement power strictly speaking, their observations have provided much-needed exposure, legitimacy and renewed strength to advocacy efforts back home. The UN ESCR Committee reviewing Spain, for example, has provided renewed force to civil society advocacy and litigation efforts when it expressed concern over austerity-driven reductions in levels of protection afforded to the rights to housing, health, education, and work, among others, and urged the government to guarantee that all austerity measures maintain the current levels of economic and social rights’ protection and are, at all times, temporary, proportional and non-detrimental to these rights. 

Wherever you are, your human rights are increasingly being sacrificed at the altar of financial stability. When individuals, households, communities, and whole nations must surrender their hard-won rights to education, adequate health care, and decent jobs in free and healthy conditions, to balance budget sheets, the basic values of human dignity are turned on their head. Why shouldn’t the indicators of social and human well-being be monitored, prioritized and valued at least as much as financial balances and the production of tradable goods and services?

“Nothing about us, without us!” Ultimately, it’s your choice: Stand back and watch as misguided, counterproductive, unlawful and wrong-headed austerity measures strip you of your human rights. Or fight back for human dignity in defiance of unneeded, disproportionate and unjustified cutbacks.

Dignity or indignation—It’s in your hands.

Photograph of protester on Wall Street courtesy of Geoffry Gertz/Sparked. This briefing can be accessed in pdf format here.