(…because sometimes I just have to feed my inner socialist…)
Mark Blyth: Austerity: The History of a Dangerous Idea
Conservatives today have succeeded in casting government spending as useless profligacy that has made the economy worse, centering the policy debate in the wake of the financial crisis on draconian budget cuts. We are told that we need to live in an age of austerity since we have all lived beyond our means and now need to tighten out 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, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn’t work. As the past two years of trying and countless other historical examples 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. Second, it relies upon those who didn’t make the mess to clean it up, which is always bad politics. Third, it rests upon a tenuous and thin body of evidence and argumentation that acts more to prop up dead economic ideas and preserve astonishingly skewed income and wealth distributions than to restore prosperity for all. In Austerity: The History of a Dangerous Idea, Blyth demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us.
And I have to say, as one for whom economics is a foreign language, that I can understand Mark Blyth quite well.
If you want a six minute summary, here it is: