Austerity: The History of a Dangerous Idea

Front Cover
OUP USA, May 23, 2013 - Business & Economics - 288 pages
11 Reviews
Selected as a Financial Times Best Book of 2013

Governments 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, according to political economist Mark Blyth, is 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. As Blyth amply demonstrates, 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. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us.
 

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LibraryThing Review

User Review  - VGAHarris - LibraryThing

The central thesis as the title indicates, is that historically, with a few exceptions, austerity has not been a successful policy. It takes you through a very dense, technical sweep of classical ... Read full review

LibraryThing Review

User Review  - seabear - LibraryThing

Joe Hockey's first budget as Federal Treasurer has been generating a flurry of discussion in the media in Australia over the last week or two. His approach seemed to be cut straight from the European ... Read full review

Contents

1 A Primer on Austerity Debt and Morality Plays
1
Why We All Need to Be Austere
19
Austeritys Twin Histories
95
Conclusion
227
Notes
245
Index
279
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About the author (2013)


Mark Blyth is Professor of International Political Economy at Brown University. He is the author of Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century.

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