Austerity: The History of a Dangerous Ideaby Mark Blyth
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
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.
"One of the especially good things in Mark Blyth's Austerity: The History of a Dangerous Idea is the way he traces the rise and fall of the idea of 'expansionary austerity', the proposition that cutting spending would actually lead to higher output. As Blyth documents, this idea 'spread like wildfire.'" --Paul Krugman, The New York Review of Books
"An important polemic... valid and compelling."--Lawrence Summers, Financial Times
"Essential reading... The economy is much too important to leave to economists. We need to understand how ideas shape it, and Blyth's new book provides an excellent starting point."--Washington Monthly
"Splendid new book." --Martin Wolf, Financial Times
"Austerity is an economic policy strategy, but is also an ideology and an approach to economic management freighted with politics. In this book Mark Blyth uncovers these successive strata. In doing so he wields his spade in a way that shows no patience for fools and foolishness." --Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science University of California, Berkeley
"Of all the zombie ideas that have been reanimated in the wake of the global financial crisis, austerity is the most dangerous. Mark Blyth shows how austerity created the disasters of the 1930s, and contributed to the descent of the world into global war. He shows how European austerity policies have prevented any recovery from the crisis of 2009, while rescuing and protecting the banks and financial institutions that created the crisis. An essential guide for anyone who wants to understand the current depression." --John Quiggin, author of Zombie Economics
"Most fascinating is the author's discussion of the historical underpinnings of austerity, first formulated by Enlightenment thinkers Locke, Hume and Adam Smith, around the (good) idea of parsimony and the (bad) idea of debt. Ultimately, writes Blyth, austerity is a 'zombie economic idea because it has been disproven time and again, but it just keeps coming.' A clear explanation of a complicated, and severely flawed, idea." --Kirkus Reviews
"Informed, passionate." --Dissent Magazine
"Mark Blyth's fascinating analysis guides the reader through 'the historical ideology which has classified debt as problematic.' In doing so he outlines the relevance of century-old debates between the advocates and opponents of laissez faire, and explains why, after a brief reemergence in 2008-09, and despite the lack of evidence supporting austerity, the world turned its back on Keynesian policies."
--Robert Skidelsky, author of Keynes: The Return of the Master
"Among all the calamities spawned by the global financial crisis, none was as easily avoidable as the idea that austerity policies were the only way out. In this feisty book, noted political scientist Mark Blyth covers new territory by recounting the intellectual history of this failed idea and how it came to exert a hold on the imagination of economists and politicians. It is an indication of the sorry state of macroeconomics that it takes a political scientist to expose so thoroughly one of the economics profession's most dangerous delusions."
--Dani Rodrik, Rafiq Hariri Professor of International Political Economy, The John F. Kennedy School of Government, Harvard University
"Blyth makes a compelling case that governments should give pause before embarking on a course of austerity. He approaches the subject with a seriousness that is to be welcomed and applauded." --Benjamin Grob-Fitzgibbon, University of Arkansas, International Social Science Review
- Oxford University Press
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Meet the Author
Mark Blyth is Professor of International Political Economy at Brown University. His books include Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century.
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This book traces the intellectual history of "expansionary austerity" from the original concerns with the size of government expressed by Adam Smith, John Locke and David Hume through the Austrian school of economics to the present day. It explains how a private banking crisis became a sovereign debt crisis and then goes on to compare the results achieved by countries that adopted austerity in times of financial crisis with those that did not. The book's subtitle (the history of a dangerous idea) suggests the outcomes. Wonderful book.
This is the best common sense explanation of global monetary policy & theory available that I have read to date. The author is right up-front about what parts of the book you may want to read or skip. I read it cover-to cover and learned a lot. I may read it again to reinforce some of the knowledge within.