Austerity is not an option

President Eisgruber’s May 4 letter correctly diagnoses the present crisis. COVID-19 has unleashed a public health and socioeconomic catastrophe. It leaves no country, no realm of society, and no institution untouched. Where Eisgruber is wrong, however, is in the response he deems necessary. If the closest analogy we have to the pandemic is indeed a war, then the “budgetary discipline” he prescribes cannot be the answer. No war has been, nor ever could be, won with austerity. Austerity will only deepen our crisis: all to shield the University’s endowment and its investors at the expense of everyone else.

We keep hearing the world’s political leaders invoke wartime rhetoric to mobilize their societies against COVID-19. President Trump has declared himself a “wartime president” and activated the Defense Protection Act. These gestures remain symbolic, since he has yet to systematically implement the DPA to order private industry to produce essential medical supplies. Eisgruber’s letter deploys the same set of embattled metaphors of collective “struggle” and “sacrifice” to prepare students and workers to bear the brunt of the hardships which await austerity. Yet the paradox here is that both Trump and Eisgruber leverage wartime language for their own conservative economic policies. But wars are not fought by way of austerity. Instead, policies of stimulus are needed to mobilize resources. That is precisely what we need now.

The total wars of the 20th century were waged with enormous government spending and investment. Government stimulus programs financed military-industrial production and mitigated the social costs of war, such as profiteering, runaway inflation, shortages, depleted morale, increasing inequalities, loss of life, and lost income suffered by widows and orphans.

It was not in wartime that governments resorted to austerity measures, but afterwards, and with tragic consequences. Austerity policies in the early 1920s prevented recovery from the mass dislocations of the First World War. Imposed monetary deflation following WWI — driven by the imperative of restoring the international gold standard — dragged the world into a second crisis. Austerity measures begot mass unemployment in Europe, industrial strife, and the surge of political extremism. The downward spiral into ever deeper political and economic crisis — leading to the Great Depression and the collapse of democracy into fascism, totalitarianism, and the maelstrom of another world war — arguably began with the austerity policies of 1919–22.

Likewise, the International Monetary Fund (IMF) has argued that austerity did “more harm than good” after 2008. Rather than improve recovery from the Great Recession, austerity measures deepened the crisis. Princeton University joined in these policies, imposing hiring freezes and budget cuts. Since then, the University has passively looked onto a shrinking job market. The new COVID-19 slate of hiring cuts comes on the tail of a decade of market contraction in academia. We are still paying the costs of these bad policy decisions. Why are we being asked to pay for more?

We are now at a crossroads, as institutions and governments decide how to respond to COVID-19’s mass economic contraction: will their response lead us back to the policy mistakes of 2008, or the 1920s? Eisgruber’s budgetary discipline — along with that of other Universities — paired with Trump’s governmental inaction will only dig us deeper into this crisis. The greatest irony is that while both of our leaders compare the pandemic to a war, they are actually dragging us into the same abyss that followed WWI.

If we believe Eisgruber’s letter, austerity is necessary. Eisgruber alleges that the University’s revenue streams have taken a dramatic hit in the last eight weeks: “ailing markets” have sliced the endowment’s return, private giving is down, dormitory room charges have crashed, all while new extraordinary expenses have been taken on. But the administration is asking graduate students and University workers to bear the brunt of these costs, while shareholders and the endowment are insulated from the restructuring. The University is asking us to make “sacrifices” while it proceeds to sacrifice us.

At least, so far as we know. The University has yet to open its books. It therefore cannot mandate that we face the economic hardships of austerity without publishing the data that proves losses on projected returns are commensurate with the cuts. There is reason to be skeptical. The Dow Jones and S&P’s 500 index reported the strongest monthly returns for April 2020 since 1987. Although the market has dipped again in May, we need not automatically conclude that radical cuts are necessary. While the pandemic has devastated most businesses, there are a few big winners. Big tech first among them. But private educational institutions with massive endowments may also be winners. Princeton is insulated from government funding cuts, unlike state schools, and enrollment in higher education tends to increase in recessions. At the very least, we have no grounds to believe the University needs to make all these cuts until it publicizes its losses.

Eisgruber’s suspect comparison to wartime suggests precisely what the University should actually be doing: rejecting austerity and redistributing the costs of cuts so that they do not fall on the most vulnerable, i.e., students and workers. For graduate students, the constant uncertainty caused by the pandemic and a job market plagued by structural austerity since 2008 may amount to the destruction of our academic careers. Even without guaranteed funding and visa extensions, we have lost months and months of productive research in labs, libraries, and archives. What is the University losing?

If we refuse austerity, it does not mean we deny the pandemic will impose costs on the University. The question is, who will pay for them? Princeton has already made this decision. It has chosen austerity, while the Trump administration continues to resist Democrats’ proposals for further stimulus checks.

Austerity is never a solution in times of crisis. All it means is saving the few — precisely those who need no saving — at the expense of the many. The University has chosen to save its endowment. But to what end, if only to let vulnerable students and workers fall off a cliff?

Bianca Centrone & Liane Hewitt are Ph.D Students in the History Department.