In the Sinister Disneyland of Xinjiang

China's Ongoing Oppression of the Uighurs

Western countries have accused China of genocide for its treatment of the Uighurs in Xinjiang. Beijing claims that everything is just fine in the homeland of the Muslim minority. We went there to take a look for ourselves.

By Georg Fahrion in Xinjiang



The images seem made-to-order, and they are. 

Following prayer, the Uighurs of Kashgar dance in the square in front of the Id Kah Mosque, one of the largest in the Xinjiang region. 

They spin by the hundreds, throwing their hands in the air, performing the Sema, a traditional dance of the Muslim Sufi brotherhoods, as drummers on the mosque’s huge portal beat out the rhythm. 

It is the morning of May 13, the date of this year’s Muslim festival of Id al-Fitr, the end of Ramadan.

Two drone cameras from Chinese state television buzz over the scene. 

Later, Chinese propagandists will disseminate the footage over social media channels – welcome images to the leadership in Beijing. 

They seem to prove, after all, that Uighurs can spontaneously and freely observe their traditions.

There is, however, nothing spontaneous about them. 

In previous days, the men had practiced the performance on the same square. 

One Uighur man says that he had been summoned for the occasion by a "lingdao,” a person of authority. 

A producer for state television shared the information in advance that the performance was scheduled for 11 a.m. 

Dozens of agents in civilian clothing are out on this holiday, standing in dark alcoves around the mosque even before sunrise. Stewards direct the dancing crowd.

Videos of earlier Id celebrations from Kashgar show that the Sema has been performed by Uighurs in previous years, so the staging isn’t completely improbable. 

And many of the children do look like they’re having fun. 

But upon closer inspection, many of the dancers look more discontented than joyful. 

One old man, moving along with labored, scurrying steps, seems almost out of breath, but he keeps on dancing anyway.

Muslims in front of the Id Kah Mosque in Kashgar: The oppression has entered a new phase. Foto: Roman Pilipey / epa / DER SPIEGEL


Is participation compulsory? 

Can those who have had enough simply leave? 

We’d like to ask the participants, but the state informers are listening in. 

This is how things always go in Xinjiang for journalists: Even as we observe something with our own eyes, we can’t be sure of what we are seeing. 

People cannot speak freely, and state control is omnipresent. 

But there are signals, gestures, contradictions everywhere. 

And so the impression grows that Xinjiang, four-and-a-half times the size of Germany, is little more than a Potemkin village, a make-believe world.

We spend a week travelling through the region, with stops in the capital of Urumqi, the rural area of Shanshan, the sleepy town of Yarkant and the oasis city of Kashgar.


The last time a team from DER SPIEGEL visited Xinjiang was in 2018. 

My colleague Bernhard Zand described Kashgar as being like "Baghdad after the war.”

He wrote of museum guards in flak jackets and imperious policemen everywhere – he described a region that seemed to be under siege.

Three years later, that’s no longer the case. 

The repression has changed and become less obvious. 

There are uniformed men patrolling here and there, but they carry batons instead of firearms. 

The density of security cameras isn’t higher than in Beijing and we are only stopped once at a checkpoint – and allowed to pass without much fuss. 

It seems like Chinese leaders believe that they have broken all resistance and can therefore allow things to relax. 

But the oppression of Muslims in Xinjiang isn’t over. 

It has merely entered a new phase.

This area of Central Asia has always been a place where different populations have mingled. 

Xinjiang means "new frontier”: Emperor Qianlong didn’t force it into the control of the Qing Empire until the middle of the 18th century. 

Purposely settled Han Chinese are now the second-largest population group here after the Uighurs, but the region is also home to Kazakhs, Mongols and Russians.

Following riots and terror attacks involving Uighur extremists, Beijing intensified a campaign against Muslims in 2017. 

According to estimates, up to one million people have been interned in camps – facilities leaders in Beijing denied existed before declaring them "vocational training centers.” 

There have been reports of forced labor and forced sterilizations, and according to China’s own statistics bureau, Xinjiang’s birth rate nearly halved between 2017 and 2019 alone.

The parliaments of Canada, the Netherlands, the United Kingdom and Lithuania as well as U.S. Secretary of State Antony Blinken have designated China’s behavior as a "genocide” – an accusation that Beijing has angrily rejected. 

The fate of the Uighurs is also an issue in Germany. Just last week, the Human Rights Committee in German parliament, the Bundestag, spent three hours discussing the situation in Xinjiang and how it should be viewed under international law. 

The discussion came ahead of a vote on a new supply-chain law, which provides for sanctions against companies whose suppliers use forced labor. 

The vote was ultimately postponed, but if the law passes, it will impact German companies like VW, which operates a plant in Xinjiang.

Recently, the Bundestag’s Research Services established in an analysis that China’s campaign in Xinjiang fulfills the criteria for genocide. 

Should this become the accepted view among Germany’s political leadership – once pro-Beijing Chancellor Angela Merkel’s tenure comes to an end this fall, for example – it would have grave consequences for Germany’s relationship with its most important trading partner.

Shadows

It isn’t long after landing in Urumqi on our flight from Beijing that we discover our first tails. 

The men from state security always look the same: Between 20 and 40 years of age, physically fit enough to follow their targets for a couple of hours at a time, and dressed in a baseball cap, facemask and sunglasses. 

Their favorite accessory is a men’s handbag.

As we step out of the arrivals hall, a man wearing a wine-red T-shirt stares at me for a few seconds before turning away and raising his smartphone to his ear. 

At the taxi stand, he is a couple spots behind us in line. 

When we get a car after a 15-minute wait, he steps out of line and wanders away speaking into his phone, likely passing along the license plate number of our taxi. 

We’ll see him again that afternoon, seemingly randomly running into him in the center of the city – population 3.5 million. 

He follows us at a distance of 20 to 30 meters. 

It’s all rather obvious, a message to us that we are being watched.

Such shadows will be our constant companions in Xinjiang. 

In Urumqi, they follow us in a metallic-brown SUV. In Shanshan, it’s a white VW. 

In Yarkant, we are able to pinpoint five men who follow us on foot and on a moped. 

One of them is clearly not Han Chinese, and we guess that he might be Uighur. 

We are sometimes able to shake them: In Urumqi, for example, we suddenly cross the street through stop-and-go traffic and enter a shopping center, before then going out the back entrance. 

We turn around at each corner and see nobody following us. 

Later, though, they’re suddenly there again. 

We can only assume that they found us with the help of cameras and facial recognition technology.

They follow us everywhere, but they don’t interfere – a rather reserved approach compared to years past. 

Still, normal reporting isn’t possible under such conditions. 

Normally, we would speak with community leaders, clerics and intellectuals, but internal government documents – the so-called Karakax List – makes it clear that Uighurs have been interned for far milder infractions than speaking with foreign journalists. 

Things like phoning family members abroad, wearing beards or simply being seen as "unreliable” by state agencies. 

We don’t want to put anybody in danger. 

Our discussions are limited to random encounters and our impressions are thus inevitably incomplete.

Among Patriots

The vineyards shine bright green, interspersed with rows of darker poplars, with the desert starting just behind the last irrigation ditch. 

It’s 39 degrees Celsius (102 degrees Fahrenheit). 

A region of sand dunes and barren mountains and dotted with oil rigs. 

Shanshan, a rural area in eastern Xinjiang, is home to a breathtaking landscape. 

Our Uighur driver Ayni – a self-confident 31-year-old who likes to talk – is playing Turkish pop music on the car stereo.

He says that life here has become more relaxed in recent years. 

The police used to stop him all the time, he says, with roadblocks everywhere. 

Luckily, he says, that is now over. Indeed, we don’t have to stop once until we run low on fuel.

Police in Kashgar: No longer are security personnel heavily armed. Foto: Roman Pilipey / epa / DER SPIEGEL


In front of the gas station is a gate manned by two men in uniform. 

One of them opens all of the doors of our car, including the trunk and the hood. 

The other notes down the number of Ayni’s driver’s license. 

All passengers have to get out and Ayni has to have his ID scanned before the gate is opened and he can drive in – alone in the car. 

He seems to accept the procedure as a completely normal part of his daily life.

In fact, Ayni seems to have no shortage of patience when it comes to his encounters with the state. 

He emphasizes, for example, that the police who suddenly showed up in front of the door of his hotel room to examine his ID during his 2019 vacation in Beijing were extremely polite. 

And the fact that he was unable to travel to the national boxing championships in 2009 because there had been unrest in Urumqi a short time before was a pity, he says. 

"But on the other hand, our own people brought this upon us.”

In Xinjiang, we frequently encounter Uighurs who announce unprompted their loyalty to the party.

He loves the action movie "Wolf Warrior,” in which a Chinese hero routs his Western foes. 

During his drives, he listens to audio books to improve his Chinese. 

The Communist Party, he says, did a fantastic job during the pandemic – just look at India or the U.S. 

"I am proud to be Chinese.”

In Xinjiang, we frequently encounter Uighurs who announce unprompted their loyalty to the party. It could be that it is a genuine emotion. 

It could also, however, be a preventative step to ward off any potential suspicion.

In the train to Yarkant, an old man shows us pictures of a piece of woodwork he produced – apparently a hobby of his. 

It was not a mosque or anything like that, but the Gate of Heavenly Peace, a symbol of Beijing’s power. 

It bears Mao’s portrait, and it also features on the national coat of arms. 

The man’s model includes five wooden figures intended to represent the leaders of the People’s Republic: "Mao Zedong, Den Xiaoping, Jiang Zemin, Hun Jintao,” he recites eagerly. "And this is Xi Jinping.”

In Kashgar, we are happy to see that the city is so much livelier than in 2018. 

Back then, many of the shops in the old town were closed up, and when asked why, people would frequently respond: "The owners have gone to school to study,” a common euphemism for the re-education camps.

"You must have misheard,” says a young Uighur man.

A mosque in Yarkant: "Love the Party, Love the Fatherland.”

A mosque in Yarkant: "Love the Party, Love the Fatherland.” Foto: Roman Pilipey / epa / DER SPIEGEL


Apparently, everyone has taken to heart a message that can be read on red banners hanging from several mosques in Yarkant: "Ai dang, ai guo” – "Love the Party, Love the Fatherland.”

Uighur Culture – in Beijing Style

The city of Kashgar is located between the Taklamakan Desert and the snow-covered Pamir Mountains. 

For centuries, Kashgar was an important hub on the old Silk Road, a place of bazaars and caravanserais, a mud-brick maze of alleys, courtyards, passageways, staircases and squares. 

In 2006, director Marc Foster filmed "The Kite Runner” here because of its resemblance at the time to prewar Kabul.

A view across a modern section of Kashgar to the snow-covered peaks of the Pamir Mountains.

A view across a modern section of Kashgar to the snow-covered peaks of the Pamir Mountains. Foto: Roman Pilipey / epa / DER SPIEGEL


Now, with Xinjiang largely pacified in the eyes of Chinese officials, they are hoping to leverage the city’s potential. 

Kashgar is being developed into a mecca of tourism, a destination with an oriental flair. 

"It’s great, like Morocco,” says a visitor from the southwestern Chinese city of Guiyang. 

The old, mud-brick walls have disappeared behind a uniform coat of plaster, with walls now decorated with wagon wheels and amphoras. 

Tourists now wander through gates with pointed arches like in Baghdad and a city wall of concrete has been built on the clay cliffs. 

A Chinese temple with its curved roofline now graces the highest point of the old town. 

A tout tries to lure guests into a restaurant – dressed as the monkey king from "Journey to the West,” a classical novel of Chinese literature.

"I came for the spectacle. I think it’s great,” says one Chinese visitor as the Uighurs are dancing the Sema. 

He introduces himself as Yann and says that he studies philosophy in France. 

Because of the pandemic, though, he has taken a year off, which he is using for travel. 

By the way, he adds, "there will be a spectacle with a princess later in the old town.” 

As it turns out, it involves five princesses. 

They arrive on camelback, dressed in colorful costumes, before they perform a dance – as they do every day.

Uighurs as obedient extras in a portrayal of their own lives, a religion without passion or youth, a culture reduced to Disney-esque exoticism, easily digestible for the masses: This version of Uighur existence appears to be the one desired by China’s leaders.

          A Trip to KashgarFoto: Roman Pilipey / epa / DER SPIEGEL


Behind the colossal gate of the Id Kah Mosque – flanked by two squat minarets – is a roomy ground shaded by poplars, the wind rustling through the branches. 

A few old men are sweeping up fallen leaves, the only people here aside from a small group at the entrance.

The All-China Journalists Association, which is overseen by the Communist Party’s propaganda unit, is currently leading a tour through Xinjiang. 

In contrast to correspondents traveling on their own, such politically backed organizations are able to set up interviews, but only under official surveillance. 

The association has invited the Russian broadcaster RT, the Brazilian newspaper O Globo and Dutch television. 

They are currently interviewing the mosque’s Friday preacher. We join them.

Abbas Muhammat is 55 years old, a clean-shaven man wearing a Doppa, the traditional Uighur head covering. 

He has apparently been well briefed, not even pausing for thought at the more sensitive questions.

Cleric Muhammat in Kashgar Foto: Roman Pilipey / epa / DER SPIEGEL


According to a recent report by the Uyghur Human Rights Project, an NGO based in Washington, D.C., China has arrested at least 1,046 imams and religious figures in Xinjiang since 2014. 

"Those weren’t real Islamic clerics, but pseudo-clerics,” Muhammat says through an interpreter. 

"These imams spread extremism and soiled our reputation. They misled people.”

Yes, he says, one of his predecessors at the Id Kah Mosque had been arrested and sentenced to 15 years in prison. 

Yes, some members of the parish were also interned. 

"Some people followed this imam, they were his victims, so to speak.

There were a couple such incidents, yes.”

Muhammat seems unconcerned by how empty his mosque is: "It’s a common global trend that young people are increasingly focused on earning money. 

For them, employment is the priority,” he says. 

"But if they have a bit of spare time, they can come here to pray. 

There are no restrictions in place to keep the younger generation from praying.” 

He urges the group to return during prayer if they want to see worshippers. 

They can even hear the call of the muezzin, he says.

A few of the preacher’s claims are not borne out by our observations. 

We don’t hear a single call to prayer during our trip, not even on Id al-Fitr, the day marking the end of Ramadan. 

Thousands streamed into the mosque for morning Id prayers, that is true. 

But in contrast to everywhere else in the world, not a single child or teenager was accompanying his father. 

And among all of the faithful Muslims, only a few elderly men wore a beard.

"In China’s constitution, it says that every Chinese citizen has the right to believe in a religion or not. 

The laws are very well implemented here,” says Muhammat. 

"There is no such thing as a crackdown or discrimination.”

The streets speak a different language. 

According to Muhammat, there are at least 150 mosques in Kashgar. 

Yet the doors of many of the neighborhood mosques are padlocked shut and the minarets have been stooped.

The mosques are no longer in use.

Converted mosque in Kashgar: "Tourist toilets."

      Converted mosque in Kashgar: "Tourist toilets." Foto: Roman Pilipey / epa / DER SPIEGEL


Officials have repurposed one of the houses of prayer. 

Through a side door, passersby can walk into the room where the devout used to wash themselves before prayer: masonry benches for sitting facing a wall lined with water faucets and a long, tiled basin. 

Today, it is used as a urinal. 

Outside hangs a wooden sign reading in Chinese, Uighur and English: "Tourist toilets.”

Fear

On the morning that we set out to look for the camps, our minders are surprisingly nowhere to be seen. 

We spent most of the past few days walking – perhaps they have grown a bit inattentive and didn’t notice that we’ve had a rental car delivered to the front of our hotel.

In 2020, the Australian Strategic Policy Institute (ASPI) published a much-cited study on the camp system in Xinjiang. 

The researchers examined satellite images from the entire region and were thus able to identify at least 380 facilities. 

We have set out to track down a few of the coordinates from the study.

A 27-minute drive south of Kashgar’s center, a uniformed guard patrols on a walkway on top of a wall roughly eight meters (25 feet) high. 

Google Earth shows that there are around two dozen structures behind it. 

Through a telephoto lens, we can see that the guard has a rifle slung over his shoulder. 

He approaches a watchtower that juts up from the wall.

A camp in Xinjiang: Reports of forced labor and forced sterilization Foto: Roman Pilipey / epa / DER SPIEGEL


Is it a high-security prison of the kind to be found everywhere in the world? 

Or is it one of the region’s infamous camps? 

Chinese authorities leave our inquiries about the facility unanswered. 

ASPI analyst Nathan Ruser says that it is, in fact, a camp – inaugurated in 2020, at a time when China was claiming that it had already released all interned Uighurs.

The wall is blindingly white and the parallel, razor-wire fences glitter in the sunlight. 

It certainly looks as though the complex hasn’t been here for long. 

And from the road, it is possible to read slogans affixed on one of the roofs in large, red characters, including "qu ji duan hua” – which means "deradicalization.”

The system of surveillance has been perfected and the populace brought into line.

We also find another facility listed in the ASPI database – a similar ensemble of buildings set up parallel to each other. 

As we slowly drive by the entry gate, we can see two watchtowers in the back of the compound. 

But there is no razor wire on the wall circling the compound and the gate is only secured with a roll shutter. 

According to the signs, the facility is now a party school.

This building complex on the outskirts of Kashgar is thought to have been a re-education center for Uighurs. 

Today, it is home to a party school.

This building complex on the outskirts of Kashgar is thought to have been a re-education center for Uighurs. Today, it is home to a party school. Foto: Roman Pilipey / epa / DER SPIEGEL


These are just two cursory observations, but they do not contradict the conclusions reached in the ASPI study – namely that fences and watchtowers have been removed from some of the complexes as they have been repurposed, with security at others having been intensified.

One possible interpretation: Those who China has deemed incorrigible may have since been sentenced and transferred to regular prisons. 

Many of those who officials believe had assimilated to a sufficient degree could very well have been released – or put into the Labor Transfer Scheme that has distributed Uighurs among factories across the country. 

The system of surveillance has since been perfected and the populace brought into line.

A sandstorm kicks up as night falls on our final evening in Kashgar. 

Visibility is poor as we step out of a restaurant and wave down a taxi. 

Plus, we are all wearing facemasks. 

The driver cannot clearly see who is stepping into his vehicle.

As we drive off, he says cheerfully that he is a Uighur, before asking what ethnicity we belong to. 

We answer that I am a German and my photographer a Ukrainian. 

"Foreigners?” the driver blurts, suddenly seeming uncomfortable. 

"Oh no. 

If I had known that, I wouldn’t have picked you up. 

I thought you were maybe Tajiks!” 

Xinjiang borders Tajikistan and there is a Tajik minority in the region, many of whom have Caucasian features similar to our own – and they make for much less-sensitive fares for a taxi driver than we Europeans.

We try to calm him by telling him that we have taken a number of taxis in Xinjiang and none of the drivers have voiced similar concerns. 

"But you have no idea what happens to us once you get out,” he replies. 

"Look, there are two cameras here in the car!” 

He does drive us the few hundred meters to our hotel but asks that we pay him cash instead of via WeChat, as is standard. 

He doesn’t want a data trail.

The image that we take home with us from Xinjiang remains a bit fuzzy. 

But one thing is clear: The fear persists. 

US democracy is still in the danger zone

Threat has outgrown Trump as Republican states seek to control what happens in future elections

Edward Luce

Were a 2020-style showdown to recur in 2024, the system will have been stripped of many of its protections © AP


Early into Donald Trump’s presidency, the Economist Intelligence Unit downgraded the US to a “flawed democracy”. 

Unfortunately it still belongs there. 

Far from putting Trumpian distempers into the rear-view mirror, Joe Biden’s victory has deepened them. 

Trump’s style of politics has taken on a life independent of him. 

Even if he retired to a monastery, the Republican party has chosen its course. 

The danger this poses to US democracy is twofold. 

The first is to America’s rules of choosing its president. 

The grip of what is rightly called the “big lie” about last year’s “stolen election” should not be underestimated. 

Had there been any evidence of fraud last November, William Barr, Trump’s ultraloyal attorney-general, would have jumped on it. 

His justice department found no evidence of malpractice.

Like all myths, the stolen election is immune to evidence. 

Nor can it be dismissed, as it sometimes is, as purely the result of sore loser syndrome. Republican-governed states such as Arizona and Georgia are passing laws to seize control over their electoral college returns. 

They are motivated as much by what they want to happen in 2024 as by an effort to placate Trump. 

These are forward-looking power grabs from independent election officials. 

Some such provisions would embarrass Viktor Orban’s Hungary — the original “illiberal democracy”. 

The pattern is to deprive Democratic cities such as Houston of voting outlets while making it easier to vote in conservative rural areas. 

The second danger is the nature of other laws that Republican states are passing, some of which make Trump look moderate. 

Texas is about to remove the need for almost any gun buyer to have a licence. 

The state also just voted to limit abortion to six weeks with no exceptions for rape or incest. 

Texan Republicans have a reputation for being extreme. 

Their platform calls for the US to withdraw from the UN and abolition of the Federal Reserve. 

But the state is also a bellwether of where national Republicans often go. 

It would be misleading to blame the party’s course solely on Trump’s base. 

Many of these steps are being taken without pressure from below. 

Some Republican leaders, such as Florida governor Ron DeSantis, are angling to succeed Trump in 2024. 

Others, such as Texas’s Greg Abbott, are enacting laws that have long been on their donor wish list. 

There was no grassroots clamour in Texas to make buying firearms simpler or voting harder.

The strategy is to stoke dread of an America under existential threat from alien influences — Europeanised liberals who wish to outnumber hard-working Americans with imported voters. 

Trump has long encouraged such paranoia. 

But it has acquired a new velocity since his defeat. 

In a recent poll for the conservative American Enterprise Institute, 56 per cent of Republicans supported the use of force to “protect the traditional American way of life”. 

Of course, it is easy to over-dramatise what people tell pollsters they might do in real life. 

Most Americans, including almost half of Republicans, reject political violence. Biden’s approval rating has not dropped below 50 per cent — a ceiling Trump never breached. 

And the system passed a severe stress test between last November’s election and Biden’s inauguration. All of which is true. 

But this account misses the serious changes to rules governing future elections. 

Republicans are not far behind Democrats in the polls, at a moment when Biden is delivering a huge vaccine rollout that is driving an economic rebound. 

The odds that Democrats will lose one or other chamber of Congress next year are high. 

Before then, district boundaries will have been redrawn following America’s recent census. 

The majority of states are Republican-controlled so the new map will largely favour them. 

Were a 2020-style showdown to recur in 2024, the system will have been stripped of many of its protections. 

Change — good or bad — sometimes hinges on the tiniest margin. 

Biden’s presidency would be faring very differently today had his party not narrowly won the two Georgia Senate run-off elections in January. 

This gave Democrats the 50:50 Senate he needed. 

Since then, Georgia has rewritten its rules to make that outcome much less likely — a move Biden described as “Jim Crow in the 21st century”. 

Biden was only exaggerating a little. 

It is too soon to take America off the democracy danger list.  

Austerity’s Hidden Purpose

Even if everyone agreed that printing another trillion dollars to finance a basic income for the poor would boost neither inflation nor interest rates, the rich and powerful would still oppose it. After all, their most important interest is not to conserve economic potential, but to preserve the power of the few to compel the many.

Yanis Varoufakis


ATHENS – Back in the 1830s, Thomas Peel decided to migrate from England to Swan River in Western Australia. 

A man of means, Peel took along, besides his family, “300 persons of the working class, men, women, and children,” as well as “means of subsistence and production to the amount of £50,000.” 

But soon after arrival, Peel’s plans were in ruins.

The cause was not disease, disaster, or bad soil. 

Peel’s labor force abandoned him, got themselves plots of land in the surrounding wilderness, and went into “business” for themselves. 

Although Peel had brought labor, money, and physical capital with him, the workers’ access to alternatives meant that he could not bring capitalism.

Karl Marx recounted Peel’s story in Capital, Volume I to make the point that “capital is not a thing, but a social relation between persons.” 

The parable remains useful today in illuminating not only the difference between money and capital, but also why austerity, despite its illogicality, keeps coming back.

For now, austerity is out of fashion. 

With governments spending like there’s no tomorrow – or, rather, to ensure that there is a tomorrow – fiscal spending cuts to rein in public debt do not rank high among political priorities. 

US President Joe Biden’s unexpectedly large – and popular – stimulus and investment program has pushed austerity further down the agenda. 

But, like mass tourism and large wedding parties, austerity is lingering in the shadows, ready for a comeback, egged on by ubiquitous chatter about impending hyperinflation and crippling bond yields unless governments re-embrace it.

There is little doubt that austerity is based on faulty thinking, leading to self-defeating policy. 

The fallacy lies in the failure to recognize that, unlike a person, family, or company, government cannot bank on its income being independent of its spending. 

If you and I choose to save money that we could have spent on new shoes, we will keep that money. 

But this way of saving is not open to the government. 

If it cuts spending during periods of low or falling private spending, then the sum of private and government spending will decline faster.

This sum is national income. 

So, for governments pursuing austerity, spending cuts mean lower national income and fewer taxes. 

Unlike a household or a business, if the government cuts its spending during tough times, it is cutting its revenues, too.

But if austerity is such a bad idea, sapping our economies of energy, why is it so popular among the powerful? 

One explanation is that while they recognize that state spending on the impecunious masses is an excellent insurance policy against recessions as well as against threats to their property, they are loath to pay the premium (taxes). 

This is probably true – nothing unites oligarchs more than hostility to taxes – but it does not explain staunch opposition to the idea of spending central-bank money on the poor.

If you asked economists whose theories align with the interests of the wealthiest 0.1% why they oppose monetary financing of redistributive policies that benefit the poor, their answer would hinge on inflation fears. 

The more sophisticated would go a little further: such largesse would eventually hurt its intended beneficiaries because interest rates would soar. 

Immediately, the government, facing higher debt repayments, would be forced to cut its expenditures. 

An almighty recession would then ensue, hitting the poor first and foremost.

This is not the place for yet another rendition of that debate. 

But suppose for a moment, and for argument’s sake, that everyone agreed that printing another trillion dollars to finance a basic income for the poor would boost neither inflation nor interest rates. 

The rich and powerful would still oppose it, owing to the debilitating fear that they would end up like Peel in Australia: monied but bereft of the power to compel the less monied.

We are already seeing evidence of this. 

In the United States, employers are reporting that they cannot find workers as pandemic lockdown rules are lifted. 

What they really mean is that they cannot find workers who will work for the pittance on offer. 

The Biden administration’s extension of a $300 weekly supplementary payment to the unemployed has meant that the combined benefits workers receive are more than twice the federal minimum wage – which Congress refused to lift. 

In short, employers are experiencing something akin to what happened to Peel soon after he arrived in Swan River.

If I am right, Biden is now facing an impossible task. 

Because of the way financial markets decoupled after 2008 from actual capitalist production, every level of fiscal stimulus that he chooses will be both too little and too much. 

It will be too little because it will fail to generate good jobs in sufficient numbers. 

And it will be too much, because, given many corporations’ low profitability and high debt, even the slightest increase in interest rates will cause a cascade of corporate bankruptcies and financial-market tantrums.

The only way to overcome this conundrum, and to rebalance both the financial markets and the real economy, is to lift working-class Americans’ incomes substantially and write off much of the debt – for example, student loans – that keeps them bogged down.

But, because this would empower the majority and raise the specter of Peel’s fate, the rich and powerful will prefer a return to good old austerity. 

After all, their most important interest is not to conserve economic potential. 

It is to preserve the power of the few to compel the many.


Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and Professor of Economics at the University of Athens.