In its new briefing paper, A Cautionary Tale: The True Cost of Austerity and Inequality in Europe, Oxfam compares Europe’s current austerity measures to the failed “structural adjustment”  programs imposed on developing countries by the World Bank and International Monetary Fund in the 1980s and 1990s. The conclusion? “Europe is facing a lost decade. An additional 15 [million] to 25 million people across Europe could face the prospect of living in poverty by 2025 if austerity measures continue,” says the report. 

So why are austerity measures (like the job-killing “sequester,” which is forcing cuts to important public agencies and programs, including Head Start, the Centers for Disease Control and Prevention, the National Institutes of Health and FEMA disaster relief programs) being implemented in the first place? 

It’s clear that austerity policies dismantle the social safety net—whether in the United States, Europe or Latin America. It means that those who have done well in the economy—benefiting from the existence of a safety net—are pulling up the ladder behind them. Those who support austerity argue that society’s richest and most powerful deserve special tax breaks—tax breaks that starve social safety nets, making it harder to promote shared prosperity and more likely that wealth will remain concentrated. 

Instead of dumb ideas like austerity and sequestration, what does Oxfam recommend that Europe do instead? 

1. Invest in people and economic growth:
• Prioritize an economic stimulus program, promoting investments and capital spending;
• Target employment creation;
• Protect EU and member states’ overseas development aid budgets.

2. Invest in public services:
• Guarantee public, universal, high-quality education for all;
• Protect public, universal, high-quality health care and develop social protection systems that enable the most vulnerable to live with dignity and lift themselves out of poverty.

3. Strengthen institutional democracy:
• Promote greater participation in democratic processes by all stakeholders;
• Ensure greater transparency and accountability of political processes;
• Improve workplace democracy, including better employee representation and opportunities for greater shared ownership.

4. Build fair tax systems:
• Implement progressive taxation reforms, including a tax on wealth stocks and a Financial Transaction Tax;
• Tackle tax avoidance and evasion, including transparency and exchange of financial information, new international tax rules listing tax havens. 

These recommendations apply not just to Europe, but to America's economy as well. America’s workers can’t afford more policy choices that help the rich get richer while leaving the rest of us on our own. Our economic policies must reflect that we are all in this economy together. Every worker—­from the lowest paid to the highest paid—plays a part in economic growth, and every worker deserves respect, dignity and a decent life. As Oxfam puts it: “maintaining the current course will lead to a decade of rising inequality, and risk further financial crises and social unrest. Given the stakes, the economic, ethical and financial argument for change could not be stronger.” 

For more on how to build shared prosperity, check out this resolution passed at the AFL-CIO Convention on Sept. 10.