Re: The Tough Love of ‘Austerity’

[Dave Monroe]

Austerity: The History of a Dangerous Idea
Mark Blyth


Politicians today in both Europe and the United States have succeeded
in casting government spending as reckless wastefulness that has made
the economy worse. In contrast, they have advanced a policy of
draconian budget cuts–austerity–to solve the financial crisis. We are
told that we have all lived beyond our means and now need to tighten
our belts. This view conveniently forgets where all that debt came
from. Not from an orgy of government spending, but as the direct
result of bailing out, recapitalizing, and adding liquidity to the
broken banking system. Through these actions private debt was
rechristened as government debt while those responsible for generating
it walked away scot free, placing the blame on the state, and the
burden on the taxpayer.

That burden now takes the form of a global turn to austerity, the
policy of reducing domestic wages and prices to restore
competitiveness and balance the budget. The problem is, I argue here,
that austerity is a very dangerous idea. First of all, it doesn’t
work. As the past four years and countless historical examples from
the last 100 years show, while it makes sense for any one state to try
and cut its way to growth, it simply cannot work when all states try
it simultaneously: all we do is shrink the economy. In the worst case,
austerity policies worsened the Great Depression and created the
conditions for seizures of power by the forces responsible for the
Second World War: the Nazis and the Japanese military establishment.
The arguments for austerity are tenuous and the evidence thin. Rather
than expanding growth and opportunity, the repeated revival of this
dead economic idea has almost always led to low growth along with
increases in wealth and income inequality. Written not for the
academy, but for all of us with an interest in how we’ve come to our
current disastrous economic situation, this book demands that we
recognize austerity for what it is, and what it costs us.

http://www.markblyth.com/books/austerity-the-history-of-a-dangerous-idea/

On Fri, Aug 7, 2015 at 11:17 PM, Dave Monroe <against.the.dave at gmail.com> wrote:
> Austerity: The Great Failure
> Florian Schui
>
>
> Austerity is at the center of political debates today. Its defenders
> praise it as a panacea that will prepare the ground for future growth
> and stability. Critics insist it will precipitate a vicious cycle of
> economic decline, possibly leading to political collapse. But the
> notion that abstinence from consumption brings benefits to states,
> societies, or individuals is hardly new. This book puts the debates of
> our own day in perspective by exploring the long history of
> austerity—a popular idea that lives on despite a track record of
> dismal failure.
>
> Florian Schui shows that arguments in favor of austerity were—and are
> today—mainly based on moral and political considerations, rather than
> on economic analysis. Unexpectedly, it is the critics of austerity who
> have framed their arguments in the language of economics. Schui finds
> that austerity has failed intellectually and in economic terms every
> timeit has been attempted. He examines thinkers who have influenced
> our ideas about abstinence from Aristotle through such modern economic
> thinkers as Smith, Marx, Veblen, Weber, Hayek, and Keynes, as well as
> the motives behind specific twentieth-century austerity efforts. The
> persistence of the concept cannot be explained from an economic
> perspective, Schui concludes, but only from the persuasive appeal of
> the moral and political ideas linked to it.
>
> http://yalepress.yale.edu/book.asp?isbn=9780300203936
>
> On Fri, Aug 7, 2015 at 10:46 PM, Dave Monroe <against.the.dave at gmail.com> wrote:
>> http://www.etymonline.com/index.php?term=austerity
>>
>> On Fri, Aug 7, 2015 at 10:19 PM, Dave Monroe <against.the.dave at gmail.com> wrote:
>>> http://www.nytimes.com/2015/08/09/magazine/the-tough-love-of-austerity.html
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