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Austerity: The History of a Dangerous Idea
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 austerity for what it is, and what it costs us.
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 austerity for what it is, and what it costs us.
288 pages, Hardcover
First published March 27, 2013
About the author
Mark Blyth
10 books154 followersMark McGann Blyth is a Scottish-American political scientist. He is currently the William R. Rhodes Professor of International Economics and Professor of International and Public Affairs at Brown University. At Brown, Blyth additionally directs the William R. Rhodes Center for International Economics and Finance at the Watson Institute for International and Public Affairs.
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February 14, 2014
AUSTERITY AND ITS MYTHS
Mark Blyth's "Austerity: The History of a Dangerous Idea" is an invaluable contribution to the debate on what direction policy should take post Credit-Crunch. In a civilised society, where ideas were debated on their merits and not on how useful they are to those with power and influence, it would minimally be a large part of the debate and in my opinion form the backdrop to a set of policies aimed at maintaining the welfare state, and bringing growth back to the economy.
Blyth includes the best short account of the credit crunch that I have read, and makes crystal clear where the sovereign debt came from: not over spending in the Public sector, but the costs of dealing with a massive private sector failure in the financial sector in terms of lost growth, bail-outs, and the rising welfare payments & tax shortfalls that accompany an economy which for the UK, in terms of GDP growth, has performed worse than it did during the Great Depression of 1929 onwards.
He looks at the theory behind the austerity idea and finds it to be somewhat threadbare, in short there is not much in the way of intellectual theory to back it up. It is more like a knee jerk reaction from central bankers (in particular the European Central Bank) and anti-state right wing politicians (among which one could include a substantial number of Labour politicians). What little theory there is, ie. the paper the Italian Alberto Alesina peddled at the ECOFIN meeting towards the end of the brief burst of Keynesian style expansion in 2008-09 is comprehensively debunked by Blyth for being decontextualized from actual political and economic events, and for setting time frames to produce results as favourable as possible for the pro-Austerity case. No matter, the media and the political right with their usual regard for facts, sang its praises to the sky!
As far as the "natural history" of Austerity goes, the record is miserable. Blyth makes the point that it only has a chance of working in a fairly narrow set of conditions, eg. one country does it in a context where neighbouring countries/trading partners economies are expanding, its not carried out in the middle of a recession, and its done gradually. None of these conditions apply, neither in the UK, the Eurozone (the main but by no means the main focus of Blyth's book) or the United States.
Austerity was also supposed to give the private sector the confidence to invest, on the basis that they knew public spending was being decreased and their future profits will thus not be highly taxed. But in the UK, according to even the Daily Torygraphs assistant editor Jeremy Warner: "UK corporates have cash sitting on their balance sheets of £754bn [2012 or 2 years into austerity], or around a half of annual GDP. These sums have doubled over the course of the past decade, with much of the growth having taken place during the financial crisis of the past four-and-a-half years." So much for that. Cameron/Clegg/Osborne now seem set on having another housing boom by insuring 15% of mortgages up to £600,000 thus reducing the deposits required from 20% to 5% of the house value. Doesn't seem particularly wise to me, or compatible with talk of rebalancing the economy, though not altogether different from Thatcher's policy of making consumer credit easier during the last bout of austerity during the early 1980's.
One alternative to Austerity which Blyth flags up, is to collect taxes. Richard Brooks (in his "The Great Tax Robbery" suggest that around £25bn could be raised not by introducing new taxes but in closing in on those who avoid taxes, and by closing loopholes with regard to existing taxes.
Overall this is an excellent book, that manages to be intellectually thorough as well as a well written, dryly witty, introduction to the arguments that is ideal for the general reader. Worth reading also on the subject (although their account of the credit crunch is confused and unsatisfactory) is Barry and Saville Kushner's "Who Needs the Cuts?: Myths of the Economic Crisis" which is particularly excellent on the media's handling of Austerity. On the tax side of the public finance equation Nicholas Shaxson's "Treasure Islands: Tax Havens and the Men who Stole the World" is priceless, as is Richard Brooks book cited above.
Mark Blyth's "Austerity: The History of a Dangerous Idea" is an invaluable contribution to the debate on what direction policy should take post Credit-Crunch. In a civilised society, where ideas were debated on their merits and not on how useful they are to those with power and influence, it would minimally be a large part of the debate and in my opinion form the backdrop to a set of policies aimed at maintaining the welfare state, and bringing growth back to the economy.
Blyth includes the best short account of the credit crunch that I have read, and makes crystal clear where the sovereign debt came from: not over spending in the Public sector, but the costs of dealing with a massive private sector failure in the financial sector in terms of lost growth, bail-outs, and the rising welfare payments & tax shortfalls that accompany an economy which for the UK, in terms of GDP growth, has performed worse than it did during the Great Depression of 1929 onwards.
He looks at the theory behind the austerity idea and finds it to be somewhat threadbare, in short there is not much in the way of intellectual theory to back it up. It is more like a knee jerk reaction from central bankers (in particular the European Central Bank) and anti-state right wing politicians (among which one could include a substantial number of Labour politicians). What little theory there is, ie. the paper the Italian Alberto Alesina peddled at the ECOFIN meeting towards the end of the brief burst of Keynesian style expansion in 2008-09 is comprehensively debunked by Blyth for being decontextualized from actual political and economic events, and for setting time frames to produce results as favourable as possible for the pro-Austerity case. No matter, the media and the political right with their usual regard for facts, sang its praises to the sky!
As far as the "natural history" of Austerity goes, the record is miserable. Blyth makes the point that it only has a chance of working in a fairly narrow set of conditions, eg. one country does it in a context where neighbouring countries/trading partners economies are expanding, its not carried out in the middle of a recession, and its done gradually. None of these conditions apply, neither in the UK, the Eurozone (the main but by no means the main focus of Blyth's book) or the United States.
Austerity was also supposed to give the private sector the confidence to invest, on the basis that they knew public spending was being decreased and their future profits will thus not be highly taxed. But in the UK, according to even the Daily Torygraphs assistant editor Jeremy Warner: "UK corporates have cash sitting on their balance sheets of £754bn [2012 or 2 years into austerity], or around a half of annual GDP. These sums have doubled over the course of the past decade, with much of the growth having taken place during the financial crisis of the past four-and-a-half years." So much for that. Cameron/Clegg/Osborne now seem set on having another housing boom by insuring 15% of mortgages up to £600,000 thus reducing the deposits required from 20% to 5% of the house value. Doesn't seem particularly wise to me, or compatible with talk of rebalancing the economy, though not altogether different from Thatcher's policy of making consumer credit easier during the last bout of austerity during the early 1980's.
One alternative to Austerity which Blyth flags up, is to collect taxes. Richard Brooks (in his "The Great Tax Robbery" suggest that around £25bn could be raised not by introducing new taxes but in closing in on those who avoid taxes, and by closing loopholes with regard to existing taxes.
Overall this is an excellent book, that manages to be intellectually thorough as well as a well written, dryly witty, introduction to the arguments that is ideal for the general reader. Worth reading also on the subject (although their account of the credit crunch is confused and unsatisfactory) is Barry and Saville Kushner's "Who Needs the Cuts?: Myths of the Economic Crisis" which is particularly excellent on the media's handling of Austerity. On the tax side of the public finance equation Nicholas Shaxson's "Treasure Islands: Tax Havens and the Men who Stole the World" is priceless, as is Richard Brooks book cited above.
November 29, 2016
التقشف: تاريخ فكرة خطرة
يبدو أن التقشف هو شعار المرحلة، كأفراد وكحكومات، لهذا جاء هذا الكتاب مناسباً لفهم خطورة التقشف على الاقتصاد، فمارك بليث يجادل بأن التقشف ليس حلاً سحرياً، ويركز على فكرة أن الأزمة المالية الحالية ليست مشكلة إنفاق حكومي يتم حلها بالتقشف، وإنما هي مشكلة مصرفية، بدأها القطاع الخاص وتحملت تكاليفها الحكومات أو بالأصح دافع الضرائب، وها هو دافع الضرائب يتحمل العبء مجدداً من خلال التقشف وتخفيض الإنفاق الحكومي والذي سيمس حياته والخدمات التي تقدمها الحكومة له، يبرز بليث لا عدالة هذه الدائرة الاقتصادية التي يسحق فيها من لم يستفيدوا من فترات الازدهار وهم ذاتهم من يسدد فاتورة الأزمات.
يبدو أن التقشف هو شعار المرحلة، كأفراد وكحكومات، لهذا جاء هذا الكتاب مناسباً لفهم خطورة التقشف على الاقتصاد، فمارك بليث يجادل بأن التقشف ليس حلاً سحرياً، ويركز على فكرة أن الأزمة المالية الحالية ليست مشكلة إنفاق حكومي يتم حلها بالتقشف، وإنما هي مشكلة مصرفية، بدأها القطاع الخاص وتحملت تكاليفها الحكومات أو بالأصح دافع الضرائب، وها هو دافع الضرائب يتحمل العبء مجدداً من خلال التقشف وتخفيض الإنفاق الحكومي والذي سيمس حياته والخدمات التي تقدمها الحكومة له، يبرز بليث لا عدالة هذه الدائرة الاقتصادية التي يسحق فيها من لم يستفيدوا من فترات الازدهار وهم ذاتهم من يسدد فاتورة الأزمات.
January 28, 2021
"When it comes to austerity, mere facts seldom get in the way of a good ideology" (165).
"In sum, austerity is a dangerous idea for three reasons: it doesn't work in practice, it relies on the poor paying for the mistakes of the rich, and it rests upon the absence of a rather large fallacy of composition that is all too present in the modern world." (10)
A fantastic and essential read! Blyth offers a devastating critique of austerity, exploding the myth of the expansionary fiscal contraction, and correcting our micro-level view of how the economy works.
Preface - Situating himself as "the bullshit police", Blyth explains his mission to explore and critique the philosophical, historical and material reasons behind why austerity is propounded, the actors who got us into this mess, and why austerity fails again and again.
Chapter 1 - Beginning with the 2008 financial crash, Blyth explores how what was deemed "fiscally unthinkable" happened. The housing market bubble burst and the world blew up. The explosions' waves rippled globally, despite many economists overseas originally responding with "America's problem, not ours!". The response to this global crisis, driven by economists and politicians was simply - stop spending so that you can save money and pay off your debt. This is intuitive, obvious, you don't spend more than you have. In fact, an audience member on Question Time once made this point when talking to Yanis Varoufakis, shouting his blokey take on global economics, extracting his theory from his experience at the pub to the confused economist (see my link text.)
Chapter 2 - Focusing on four elements which Blyth argues are the main causes for the crash (of course causation is difficult in social science, but these are elements Blyth argues cannot be retrospectively removed from the resulting crash). These causes are: collateral deals in US repo markets, mortgage backed derivative structures, correlation and tail risk, and economic ideas embedded into the ideology of banking and regulation - all things which are "quintessentially private sector phenomena" (23).
The first factor, US repo deals, describes the sale and repurchase of asssets for cash by big businesses. With the 1980s banking deregulation, banks could separate loans, package them up and sell them on. This process lowered the apparent risks, gave borrowers better rates, and transformed banking from the boring career it was, to the exciting job it is today (see my link text).
The second factor, the structure of derivatives, caused the crash due to the way in which credit default swaps "(CDSs) were used as collateral in the repo market"(27). In short, with house prices constantly rising, alongside triple-A ratings (banks required a portion of their investments to be triple A) the tendency was to invest more and more into the housing market.
The third factor, correlation and liquidity, caused the links between investments to be blurred. One main issue with this was Value at Risk models. These models used probability to predict the risk of investments failing. They had one huge problem however, they failed to predict low probability, high impact events (36). Since, capitalists assume that history will repeat itself, these models ignored what Nassim Taleb calls the "Black Swan". The crash, which nobody saw coming, was exactly that, a black swan event. With this event, it "spread globally as investors sought the protection of liquidity but failed to find it... one bank's liquidity depends upon another bank's willingness to be illiquid. And at that moment, no one wanted to be illiquid" (31).
Furthermore, the political power of financial ideas, arising out of embedded neoliberalism, caused bankers and finance gurus to believe that people were "super smart investors" in capitalist society. Therefore, moral hazard and large shocks were ignored as possible causes of a crisis. This is why Fannie Mae and Freddie Mac or state-spending (which was actually on a downward trend) were blamed for the crisis, and not the banks who actually made malinvestments.
Chapter 3 - Blyth explores how the European crisis was caused by market failure, and not state spending. This chapter was difficult to fully grasp, but the simple point is that the private sector caused bubble caused the huge debts, and a "bait and switch" was done. The debt of countries in the Eurozone was now part of the national debt, rather than the localised debt of the private sector.
*I will be rereading this chapter and update this section soon.*
Chapter 4 - Beginning the intellectual and practical history of austerity, Blyth explores the rather shallow genealogy of austerity as a policy proposal. This chapter focuses on the classical liberal and early neoliberal current (1692-1942) which underlies austerity. John Locke, Adam Smith and David Hume all grappled with the state. These liberal figures had a "can't live with it, can't live without it" dilemma vis a vis the state. Hume disliked public debt, fearing that it would destroy the economy; Smith disliked easy credit and supported investment from profit, as well as supporting taxes only on luxuries rather than income; Locke's theory of the state acknowledges it's necessary existence, but despises the forced nature of taxation to uphold it (see Anarchy, State, and Utopia). The irony is that despite David Hume's excessively pessimistic take on debt, Britain went on to conquer and dominate the globe, despite these enormous and destructive debts that skinflint liberals feared.
Following this, David Ricardo, John Stuart Mill and then the Austrian School thinkers such as Ludwig von Mises, Joseph Schumpeter and Friedrich von Hayek (who Blyth labels the original "neoliberals", which is a bit of a simplification) all repeat these classical ideas on the state. Blyth sees an example of this as during Herbert Hoover's liquidationism (119) or Schumpeter's idea of "creative destruction" (120).
Chapter 5 - The intellectual history post-1942 is explored in this chapter. Blyth examines Ordoliberalism in Germany, which pushed for fiscal responsibility, and a state which encourages a proper legal framework for competition to push economic growth. The Freiburg School is behind the economics of ordoliberalism, and they were part of the historical school which, which was politically aligned with the Austrian School, but lacked the absolute laissez faire attitude of folks like Mises and Hayek (seeMemoirs). The Austrian School, or at least that which was politically usable (e.g. through Hayek and Mises' classical liberalism and their opposition to state intervention) gained popularity in the 1980s, through Milton Friedman's monetarism.
"In short, classical liberals produced austerity by default, Austrians and Ordoliberals produced austerity by design, and latter day neoliberals produced Austerity by exclusion: by definition any other policy would fail" (152).
Following this, the 1980s and 1980s saw public choice theory, the Washington Consensus, the IMF and World Bank's policies, as well as the post-socialist transition, all saw a "one-size-fits all! approach to policy across the globe, with austerity being compulsory (163). Faulty papers by public choice and the Bocconi School of economics argued that you could cut your way to growth. These, scrutinised papers became embedded in the European Central Bank, the UK Treasury and ECOFIN, who all cited them. However, critics of the paper have noted that the econometrics were faulty, and austerity only worked as special cases. In other words, if you shoot a gun 100 times blindly, you'll eventually hit a target. For Blyth, successful austerity is the bullet which eventually hits something.
Chapter 6 - Blyth then moves from the intellectual history to the natural history of austerity. Exploring Denmark, Ireland, Sweden, Australia, Sweden, UK, US, Germany, Japan, France and the REBLL countries, Blyth shows that austerity failed in each and every of these countries, with the gold standard being an amplifier for these issues. In summary, except for a few temporary expansions when countries were not on gold, austerity in the early 20th century failed and provided the ground for the instability which lead to WW2 (204).
In Britain, for example, Churchill putting Brits back on the gold standard saw unemployment rise from 10% to 22%, with debt increasing from 170% of GDP to 190%. It was only until Britain got off gold and then underwent rearmament that the economy grew, in other words, due to mass government spending and fiat money. Similarly, the US saw a similar rise in unemployment after getting on gold, a tide reversed by Roosevelt increased spending and debt.
In the case of Germany, Blyth argues that it was austerity which brought Hitler to power. Austerity didn't actually come from the political right, but the Marxist left, through the SPD. This was because the SPD let business cycles run, after the deliberate hyperinflationary policies which preceded them. "By 1933, the lesson should have been clear. You can't run a gold standard in a democracy. Eventually people will vote against it" (197).
In Japan, perhaps the most interesting case in this book, Blyth notes how the countries went from negative growth rates (-2%, -9.7 in the 1920s) to being one of the best growing economies in the twentieth century, after increasing government spending, with a growth rate of 4% and a falling debt burden (199). "Austerity created the worst depression in Japanese history, provoked an assassination campaign against bankers, and empowered the wonderful folks who brought you Pearl Harbour" (200).
In France, austerity lead to France's defeat in WW2. With France's austerity policies leading to France spending 10% of what Germany spent in military expenditures. Hitler knew that France would defend its currency and avoid any Keynesian spending, something Hitler didn't care about (seeA History of Economics: The Past as the Present).
As for the REBBL countries which were praised in the literature cited by the UK Treasury and ECB actually demonstrated that austerity worked well! No, I'm joking of course, the REBLL countries ended up in more debt than they began with (226). As well as this, the IMF, as well as many members of the Bocconi School, began to "lose faith in austerity" (216). Despite Latvia being raised as an exemplar of successful austerity, 79% of Latvians argued that the economy was "bad" (222-223).
Chapter 7 - In the final chapter, Blyth explains his take on what we should do moving forward. For Blyth, a serious approach to raising tax revenue (e.g. getting offshore taxes, and a one-off tax to avoid capital flight), financial repression and he regrets his agreement with the TINA logistics of bailing out the banks after 2008. Summarising his views, he uses the twin examples of Iceland and Ireland, noting how Irish debt:GDP has more than tripled after 3 years of austerity, whereas Iceland's policies of increasing welfare and allowing banks to go bankrupt has shown a high growth and has not contracted at the level the IMF estimated.
"In sum, austerity is a dangerous idea for three reasons: it doesn't work in practice, it relies on the poor paying for the mistakes of the rich, and it rests upon the absence of a rather large fallacy of composition that is all too present in the modern world." (10)
A fantastic and essential read! Blyth offers a devastating critique of austerity, exploding the myth of the expansionary fiscal contraction, and correcting our micro-level view of how the economy works.
Preface - Situating himself as "the bullshit police", Blyth explains his mission to explore and critique the philosophical, historical and material reasons behind why austerity is propounded, the actors who got us into this mess, and why austerity fails again and again.
Chapter 1 - Beginning with the 2008 financial crash, Blyth explores how what was deemed "fiscally unthinkable" happened. The housing market bubble burst and the world blew up. The explosions' waves rippled globally, despite many economists overseas originally responding with "America's problem, not ours!". The response to this global crisis, driven by economists and politicians was simply - stop spending so that you can save money and pay off your debt. This is intuitive, obvious, you don't spend more than you have. In fact, an audience member on Question Time once made this point when talking to Yanis Varoufakis, shouting his blokey take on global economics, extracting his theory from his experience at the pub to the confused economist (see my link text.)
Chapter 2 - Focusing on four elements which Blyth argues are the main causes for the crash (of course causation is difficult in social science, but these are elements Blyth argues cannot be retrospectively removed from the resulting crash). These causes are: collateral deals in US repo markets, mortgage backed derivative structures, correlation and tail risk, and economic ideas embedded into the ideology of banking and regulation - all things which are "quintessentially private sector phenomena" (23).
The first factor, US repo deals, describes the sale and repurchase of asssets for cash by big businesses. With the 1980s banking deregulation, banks could separate loans, package them up and sell them on. This process lowered the apparent risks, gave borrowers better rates, and transformed banking from the boring career it was, to the exciting job it is today (see my link text).
The second factor, the structure of derivatives, caused the crash due to the way in which credit default swaps "(CDSs) were used as collateral in the repo market"(27). In short, with house prices constantly rising, alongside triple-A ratings (banks required a portion of their investments to be triple A) the tendency was to invest more and more into the housing market.
The third factor, correlation and liquidity, caused the links between investments to be blurred. One main issue with this was Value at Risk models. These models used probability to predict the risk of investments failing. They had one huge problem however, they failed to predict low probability, high impact events (36). Since, capitalists assume that history will repeat itself, these models ignored what Nassim Taleb calls the "Black Swan". The crash, which nobody saw coming, was exactly that, a black swan event. With this event, it "spread globally as investors sought the protection of liquidity but failed to find it... one bank's liquidity depends upon another bank's willingness to be illiquid. And at that moment, no one wanted to be illiquid" (31).
Furthermore, the political power of financial ideas, arising out of embedded neoliberalism, caused bankers and finance gurus to believe that people were "super smart investors" in capitalist society. Therefore, moral hazard and large shocks were ignored as possible causes of a crisis. This is why Fannie Mae and Freddie Mac or state-spending (which was actually on a downward trend) were blamed for the crisis, and not the banks who actually made malinvestments.
Chapter 3 - Blyth explores how the European crisis was caused by market failure, and not state spending. This chapter was difficult to fully grasp, but the simple point is that the private sector caused bubble caused the huge debts, and a "bait and switch" was done. The debt of countries in the Eurozone was now part of the national debt, rather than the localised debt of the private sector.
*I will be rereading this chapter and update this section soon.*
Chapter 4 - Beginning the intellectual and practical history of austerity, Blyth explores the rather shallow genealogy of austerity as a policy proposal. This chapter focuses on the classical liberal and early neoliberal current (1692-1942) which underlies austerity. John Locke, Adam Smith and David Hume all grappled with the state. These liberal figures had a "can't live with it, can't live without it" dilemma vis a vis the state. Hume disliked public debt, fearing that it would destroy the economy; Smith disliked easy credit and supported investment from profit, as well as supporting taxes only on luxuries rather than income; Locke's theory of the state acknowledges it's necessary existence, but despises the forced nature of taxation to uphold it (see Anarchy, State, and Utopia). The irony is that despite David Hume's excessively pessimistic take on debt, Britain went on to conquer and dominate the globe, despite these enormous and destructive debts that skinflint liberals feared.
Following this, David Ricardo, John Stuart Mill and then the Austrian School thinkers such as Ludwig von Mises, Joseph Schumpeter and Friedrich von Hayek (who Blyth labels the original "neoliberals", which is a bit of a simplification) all repeat these classical ideas on the state. Blyth sees an example of this as during Herbert Hoover's liquidationism (119) or Schumpeter's idea of "creative destruction" (120).
Chapter 5 - The intellectual history post-1942 is explored in this chapter. Blyth examines Ordoliberalism in Germany, which pushed for fiscal responsibility, and a state which encourages a proper legal framework for competition to push economic growth. The Freiburg School is behind the economics of ordoliberalism, and they were part of the historical school which, which was politically aligned with the Austrian School, but lacked the absolute laissez faire attitude of folks like Mises and Hayek (seeMemoirs). The Austrian School, or at least that which was politically usable (e.g. through Hayek and Mises' classical liberalism and their opposition to state intervention) gained popularity in the 1980s, through Milton Friedman's monetarism.
"In short, classical liberals produced austerity by default, Austrians and Ordoliberals produced austerity by design, and latter day neoliberals produced Austerity by exclusion: by definition any other policy would fail" (152).
Following this, the 1980s and 1980s saw public choice theory, the Washington Consensus, the IMF and World Bank's policies, as well as the post-socialist transition, all saw a "one-size-fits all! approach to policy across the globe, with austerity being compulsory (163). Faulty papers by public choice and the Bocconi School of economics argued that you could cut your way to growth. These, scrutinised papers became embedded in the European Central Bank, the UK Treasury and ECOFIN, who all cited them. However, critics of the paper have noted that the econometrics were faulty, and austerity only worked as special cases. In other words, if you shoot a gun 100 times blindly, you'll eventually hit a target. For Blyth, successful austerity is the bullet which eventually hits something.
Chapter 6 - Blyth then moves from the intellectual history to the natural history of austerity. Exploring Denmark, Ireland, Sweden, Australia, Sweden, UK, US, Germany, Japan, France and the REBLL countries, Blyth shows that austerity failed in each and every of these countries, with the gold standard being an amplifier for these issues. In summary, except for a few temporary expansions when countries were not on gold, austerity in the early 20th century failed and provided the ground for the instability which lead to WW2 (204).
In Britain, for example, Churchill putting Brits back on the gold standard saw unemployment rise from 10% to 22%, with debt increasing from 170% of GDP to 190%. It was only until Britain got off gold and then underwent rearmament that the economy grew, in other words, due to mass government spending and fiat money. Similarly, the US saw a similar rise in unemployment after getting on gold, a tide reversed by Roosevelt increased spending and debt.
In the case of Germany, Blyth argues that it was austerity which brought Hitler to power. Austerity didn't actually come from the political right, but the Marxist left, through the SPD. This was because the SPD let business cycles run, after the deliberate hyperinflationary policies which preceded them. "By 1933, the lesson should have been clear. You can't run a gold standard in a democracy. Eventually people will vote against it" (197).
In Japan, perhaps the most interesting case in this book, Blyth notes how the countries went from negative growth rates (-2%, -9.7 in the 1920s) to being one of the best growing economies in the twentieth century, after increasing government spending, with a growth rate of 4% and a falling debt burden (199). "Austerity created the worst depression in Japanese history, provoked an assassination campaign against bankers, and empowered the wonderful folks who brought you Pearl Harbour" (200).
In France, austerity lead to France's defeat in WW2. With France's austerity policies leading to France spending 10% of what Germany spent in military expenditures. Hitler knew that France would defend its currency and avoid any Keynesian spending, something Hitler didn't care about (seeA History of Economics: The Past as the Present).
As for the REBBL countries which were praised in the literature cited by the UK Treasury and ECB actually demonstrated that austerity worked well! No, I'm joking of course, the REBLL countries ended up in more debt than they began with (226). As well as this, the IMF, as well as many members of the Bocconi School, began to "lose faith in austerity" (216). Despite Latvia being raised as an exemplar of successful austerity, 79% of Latvians argued that the economy was "bad" (222-223).
Chapter 7 - In the final chapter, Blyth explains his take on what we should do moving forward. For Blyth, a serious approach to raising tax revenue (e.g. getting offshore taxes, and a one-off tax to avoid capital flight), financial repression and he regrets his agreement with the TINA logistics of bailing out the banks after 2008. Summarising his views, he uses the twin examples of Iceland and Ireland, noting how Irish debt:GDP has more than tripled after 3 years of austerity, whereas Iceland's policies of increasing welfare and allowing banks to go bankrupt has shown a high growth and has not contracted at the level the IMF estimated.
May 16, 2013
Mark Blyth has written this terrific book as a history of a policy choice, The choice is austerity, which involves financial belt-tightening during times of recession or depression, including raising taxes, cutting social transfer payments, raising interest rates, and other related actions.
The choice of austerity has always struck me as an odd one. Why cut welfare payments just at the time when people are more likely to be out of work and in need of them? Why raise taxes when times are bad and businesses and people are struggling and making less, if anything? It just seems so counter-intuitive.
What makes the book especially timely is that austerity is actively under consideration in both the US and Europe. It is laced throughout the fiscal cliff arguments about taxes and government spending. It is at the heart of current EU policies for bringing about fiscal stability and relieving the plight of the PIIGS countries.
How does one provide a history of a policy choice? Well, you start by outlining the importance of the idea in current policy debates in the US and Europe. Blyth then goes back to show the intellectual history of the idea, beginning with Locke, Hume, and Smith and moving up to current post-war European economic theorists. After he traces the intellectual history of the idea, he traces the evidence of how austerity has worked in practice -- where it has been tried and what the results were. In doing so, he goes over the latest econometric work purporting to show the effectiveness of austerity in the current European context around the 2008 financial crisis.
So what does he find out? Well, you can guess from the title that Blyth is not a fan of austerity as a macroeconomic policy option. The details of the entire case he presents are fascinating and I found the book to be extremely well done. It will even be interesting for those used to going directly to the research, since copious references are provided. Blyth does a very good job of translating very involved research into an informative narrative that is accessible to a broader public. The story does get involved, however, and even with the author's communication skills, there are sections that may be tough sledding for some. Recall, however, that this is an argument and a case is being made. If you buy the case, some stridency is acceptable I suppose. But the Blyth does admit that sometimes austerity may be defensible. As to his recommendations, it is not necessary to accept them to buy the argument. ... But is Iceland really a model for how to handle a crisis? That requires more processing. Perhaps the last chapter is too much.
This is a wonderful way to write about social and economic policy in a way that is valuable to many readers. I hope more authors follow this example.
The choice of austerity has always struck me as an odd one. Why cut welfare payments just at the time when people are more likely to be out of work and in need of them? Why raise taxes when times are bad and businesses and people are struggling and making less, if anything? It just seems so counter-intuitive.
What makes the book especially timely is that austerity is actively under consideration in both the US and Europe. It is laced throughout the fiscal cliff arguments about taxes and government spending. It is at the heart of current EU policies for bringing about fiscal stability and relieving the plight of the PIIGS countries.
How does one provide a history of a policy choice? Well, you start by outlining the importance of the idea in current policy debates in the US and Europe. Blyth then goes back to show the intellectual history of the idea, beginning with Locke, Hume, and Smith and moving up to current post-war European economic theorists. After he traces the intellectual history of the idea, he traces the evidence of how austerity has worked in practice -- where it has been tried and what the results were. In doing so, he goes over the latest econometric work purporting to show the effectiveness of austerity in the current European context around the 2008 financial crisis.
So what does he find out? Well, you can guess from the title that Blyth is not a fan of austerity as a macroeconomic policy option. The details of the entire case he presents are fascinating and I found the book to be extremely well done. It will even be interesting for those used to going directly to the research, since copious references are provided. Blyth does a very good job of translating very involved research into an informative narrative that is accessible to a broader public. The story does get involved, however, and even with the author's communication skills, there are sections that may be tough sledding for some. Recall, however, that this is an argument and a case is being made. If you buy the case, some stridency is acceptable I suppose. But the Blyth does admit that sometimes austerity may be defensible. As to his recommendations, it is not necessary to accept them to buy the argument. ... But is Iceland really a model for how to handle a crisis? That requires more processing. Perhaps the last chapter is too much.
This is a wonderful way to write about social and economic policy in a way that is valuable to many readers. I hope more authors follow this example.
January 8, 2019
Why are bad ideas so popular? This book does a really good job at explaining how the bad ideas of austerity proliferated and also it does a wonderful job at explaining why austerity and an obsessive focus on public debt is foolish (though on the latter count, I wish he had gotten more into MMT or other money theories that really talk about that). His solutions were taxes, which is a good start I think but not nearly enough to counter the austerity dogma worldwide. Still, this is an essential must-read for everyone. Especially for everyone who will not pick up this book. Sigh.
May 27, 2015
10 pages in and I'm already pissed off. Imagine the richest people in your town had a party and it cost a huge amount of money, now imagine these partying people got a bit carried away and caused some damage costing another few million. Who would you expect to have to pay for the party and the damage? The people who hosted the party, and those who attended and who caused the damage - that is what you'd expect. No, it's you and the rest of the people in your town, everyone except those who were actually at the party. You all get a letter and a bill informing you that even though you weren't at the party, even though you didn't cause any damage at all - you are expected to pay your ''fair share''.
It doesn't stop there. The people who held the party haven't been punished in any way, they've not been told they can't have any more parties, they've had no restrictions placed on their actions so they are now gearing up for another big party. Because of this, we, the ordinary towns people, will continue paying even more, so that when this next party happens, and it will happen, there will be money available to bail out the party goers.
It doesn't stop there. The people who held the party haven't been punished in any way, they've not been told they can't have any more parties, they've had no restrictions placed on their actions so they are now gearing up for another big party. Because of this, we, the ordinary towns people, will continue paying even more, so that when this next party happens, and it will happen, there will be money available to bail out the party goers.
August 9, 2020
إن التقشف هو الثمن الذي ندفعه جميعاً تكلفة حفلة لم نكن مدعوين إليها
هكذا يمكن تلخيص الفكرة المتعلقة بخضوع الحكومات لسياسات التقشف والتي كانت ناتجة عن الأزمة الاقتصادية العالمية التي تسببت فيها سياسات المصارف التي كانت مستقلة فى عملها إلي حد كبير وقامت بادارة مخاطرات غير مأمونة وكان جشع النخب الذي جعلهم يقودون الاقتصاد العالمي إلي أكبر ركود له منذ قرن.
يوضح الكتاب أن الحجة الأساسية لمروجي التقشف هو أن الحكومات بشراهتها واسرافها فى الانفاق قد جعلت الركود أعمق ويوضح أن هذه الدعاية تحاول حجب حقيقة مهمة وهو أنه فى تلك الحالة فان هذا الانفاق ذهب لانقاذ تلك البنوك التي تسببت بتلك الأزمة والتي اعتبرت لضخامتها أكبر من أن تترك لتنهار لأنها ستأخذ معها اقتصاد البلاد المختلفة إلي الانهيار الكامل. ويأخذنا الكاتب فى جولة تاريخية حول نشاة التقشف والأفكار المتعلقة به ويفند الادعاءات المختلفة لمناصري التقشف والنماذج المختلفة التي طرحوها منذ الكساد العظيم حتي أزمة 2008. كتاب قيم للغاية وليس بتلك الصعوبة وكان ممتع أثناء القراءة وسلس بعكس عادة الكتب التي تتحدث عن مفاهيم اقتصادية
January 4, 2019
Very useful book, among other reasons because of the discussion of how ordoliberalism, neoliberalism, monetarism and Keynesianism relate to one another, and how a mixture of the former ended up dominating the thinking of policymakers everywhere, but especially in the EU. The most shocking, and in some ways most important, contribution of the book is that he shows that the hyperinflation of the Deutschmark happened because of a deliberate policy choice made by the Germans (they wanted to shaft their foreign creditors), not because of stupidity, greed, or what have you that the Austrians (among others) would have us believe. And that that's part of a far more general trend of (central) banking / finance elites promoting monetary stability at whatever cost to the population, of which the EU's treatment of Greece, Ireland and Italy are just the most recent examples.
I would've preferred it if Blyth had been more familiar with Marxism (especially David Harvey's and Michael Hudson's work), because that would've given him a somewhat different perspective on these developments; nevertheless, it's well-written, and worth reading.
I would've preferred it if Blyth had been more familiar with Marxism (especially David Harvey's and Michael Hudson's work), because that would've given him a somewhat different perspective on these developments; nevertheless, it's well-written, and worth reading.
June 19, 2015
The most important things I learned from "Austerity" were: (1) the case for austerity policies rest on very weak theoretical and empirical foundations; (2) economics is a BS discipline; and (3) only Greece was already chronically ill before the economic crisis hit Europe. The first point is the most original, but is unfortunately presented in an very long-winded, pedantic, repetitive and (unnecessarily?) complex manner. Consequently, I found this book extremely hard to get through, despite the fact that I was very sympathetic to its main claim. In fact, I doubt many non-economists will really enjoy this nevertheless important book. I would advice most people to look for a shorter version, such as an article or a talk, by Blyth on the same topic.
August 19, 2017
I found this book the same as many other people did - first I happened upon a video of the author talking against Austerity (quite compellingly) and then looked him up and found there was a book. I think along with Debt: The First 5,000 Years by David Graeber, it is the most important recent book on economics that I've read.
While I started reading this book back in May (5 months ago), shortly after I was impressed by the video, I struggled to make progress in reading it. It wasn't until I girded myself and read it without distraction in the last few days that I got anywhere with it. This is not because it's a bad book, or that it's badly written, but simply because in the roughly 300 pages it packs more important, conceptual information than your average text-book. I often paused and went off to read some of the references, or just sat and thought through some of the logic. That this proved rewarding makes it worthwhile.
What I found refreshing was that this is more than just a book that talks in terms that are in vogue in the public discourse. Instead, it takes a holistic approach.
The author starts in the first three chapters by recapping the Financial Crisis in the US and the Eurozone Crisis, and exposing the 'moral play' behind the public discourse about it as patently false.
To wit, both were purely crises within the Financial Sectors, but with banks having become systemically important, when the mortgage/ asset bubbles burst, governments were left holding the bills. The author points out quite acidly that what is today being called a "Sovereign Debt" crisis on both sides of the Atlantic actually wasn't - and critically, still isn't that. It is a crisis whose descriptions suffer from a fallacy of composition - in a nutshell, the people that made the mess are not the ones cleaning it up; we are all instead berating governments (who didn't make it) to clean it up, not realizing that we will be the ones settling the bill!
The next three chapters summarize the history of Austerity, beginning with the times when nation state concept was itself young, and the "State" meant actually the "King", and had to be tied down and was not to be trusted with spending public money. The author starts by talking about the work of John Locke, David Hume, and Adam Smith - the dawn of the idea of private property and capitalism, and traces a line from them to both John Maynard Keynes, and Joseph Schumpeter, as well as the Austrian school exemplified by Hayek and Von Mises. In so doing, he exposes the intellectual roots of not only the Angela Merkels and Paul Ryans of the world, but also of the IMF's "Washington Consensus" that has driven liberalization in India (credited incorrectly to Manmohan Singh). Interestingly, he also shows why he thought Austerity was "Dangerous" - he draws a dotted line from Austerity in post WW1 Europe to the opening of political doors for Fascism and Nazism.
I found this to be the most illuminating portion of the book, especially when it points out that although Austerity ideas were completely discredited by the end of the Second World War (having been a contributory cause to the extension of the Great Depression) they made a comeback through what are called the "Enablers of Austerity" - Milton Friedman's Monetarism, Neo-liberalism with its independent Central Banks, and the IMF and the aforementioned Washington Consensus. This is the best explanation I've seen for the complete disconnect between reality and the American and European ideologues currently peddling the conservative agenda.
The author delves then into the case studies that are cited in support of Austerity - various historical instances worldwide, and the delightfully named "REBLL" alliance (Romania, Estonia, Bulgaria, Latvia, and Lithuania) that blew up their "Debt Stars". He proceeds to demolish each case, or (to use terminology picked up from police procedurals) definitely, convincingly introduces reasonable doubt against these poster children of Austerity.
Only at the very end does the book go from descriptive to prescriptive, where the author suggests that higher taxes on the (infamous) 1% and others in the high income bracket, along with "financial repression" defined as mandated holding of inflation-susceptible government bonds by the Financial Industry are potential ways to cure the ballooned Sovereign Debt (which the latter caused) without fiscal contraction. This prescription is beyond my ken to qualify as good or bad, but hey - the other guys are clearly not helping any, so I say it's worth a shot!
A brilliant book, all told, and a must read for anyone that is following the macroeconomic discourse and thinks something about it is just off.
While I started reading this book back in May (5 months ago), shortly after I was impressed by the video, I struggled to make progress in reading it. It wasn't until I girded myself and read it without distraction in the last few days that I got anywhere with it. This is not because it's a bad book, or that it's badly written, but simply because in the roughly 300 pages it packs more important, conceptual information than your average text-book. I often paused and went off to read some of the references, or just sat and thought through some of the logic. That this proved rewarding makes it worthwhile.
What I found refreshing was that this is more than just a book that talks in terms that are in vogue in the public discourse. Instead, it takes a holistic approach.
The author starts in the first three chapters by recapping the Financial Crisis in the US and the Eurozone Crisis, and exposing the 'moral play' behind the public discourse about it as patently false.
To wit, both were purely crises within the Financial Sectors, but with banks having become systemically important, when the mortgage/ asset bubbles burst, governments were left holding the bills. The author points out quite acidly that what is today being called a "Sovereign Debt" crisis on both sides of the Atlantic actually wasn't - and critically, still isn't that. It is a crisis whose descriptions suffer from a fallacy of composition - in a nutshell, the people that made the mess are not the ones cleaning it up; we are all instead berating governments (who didn't make it) to clean it up, not realizing that we will be the ones settling the bill!
The next three chapters summarize the history of Austerity, beginning with the times when nation state concept was itself young, and the "State" meant actually the "King", and had to be tied down and was not to be trusted with spending public money. The author starts by talking about the work of John Locke, David Hume, and Adam Smith - the dawn of the idea of private property and capitalism, and traces a line from them to both John Maynard Keynes, and Joseph Schumpeter, as well as the Austrian school exemplified by Hayek and Von Mises. In so doing, he exposes the intellectual roots of not only the Angela Merkels and Paul Ryans of the world, but also of the IMF's "Washington Consensus" that has driven liberalization in India (credited incorrectly to Manmohan Singh). Interestingly, he also shows why he thought Austerity was "Dangerous" - he draws a dotted line from Austerity in post WW1 Europe to the opening of political doors for Fascism and Nazism.
I found this to be the most illuminating portion of the book, especially when it points out that although Austerity ideas were completely discredited by the end of the Second World War (having been a contributory cause to the extension of the Great Depression) they made a comeback through what are called the "Enablers of Austerity" - Milton Friedman's Monetarism, Neo-liberalism with its independent Central Banks, and the IMF and the aforementioned Washington Consensus. This is the best explanation I've seen for the complete disconnect between reality and the American and European ideologues currently peddling the conservative agenda.
The author delves then into the case studies that are cited in support of Austerity - various historical instances worldwide, and the delightfully named "REBLL" alliance (Romania, Estonia, Bulgaria, Latvia, and Lithuania) that blew up their "Debt Stars". He proceeds to demolish each case, or (to use terminology picked up from police procedurals) definitely, convincingly introduces reasonable doubt against these poster children of Austerity.
Only at the very end does the book go from descriptive to prescriptive, where the author suggests that higher taxes on the (infamous) 1% and others in the high income bracket, along with "financial repression" defined as mandated holding of inflation-susceptible government bonds by the Financial Industry are potential ways to cure the ballooned Sovereign Debt (which the latter caused) without fiscal contraction. This prescription is beyond my ken to qualify as good or bad, but hey - the other guys are clearly not helping any, so I say it's worth a shot!
A brilliant book, all told, and a must read for anyone that is following the macroeconomic discourse and thinks something about it is just off.
March 30, 2020
(This is the first in a series of books that I intend to read in 2020 that focus on how the current global economic system came to be, why there's an element of bait and switch between it's stated ideals and actual outcomes, and how we can go from here in reforming that system as well our selves that are, to a large extent, inextricable from it.)
We live in interesting times, enmeshed within economic forces that alternatively benefit or harm us, either still seemingly beyond our control. However, when the economic juggernaut screeches to a halt, the way out is often presented, quite accurately, as a trolley problem between profligate companies and vulnerable individuals. To push this metaphor, it's the individuals that are made to pull the lever for the trolley because the companies pose a 'systemic risk' , and if not saved the fragile prosperity we have accrued since the last downturn will evaporate. That these companies and their executives got even wealthier in this duration is, we are told, completely besides the point.
This is more less what happened in the aftermath of the economic meltdown in 2008. In the recession that followed, massive economic stimulus packages were announced to bailout the banks. The same courtesy was not extended to those that the banks evicted by demanding absurd mortgage payments to cover their losses, or to countless other victims of the market crash. When compared to its central bank peers across the world, the US Federal Reserve actually turned out to be an effective economic buffer. If you lived in Greece, though, here's where things got funkier: in order to 'pay' for the insolvent assets owned by German and French banks, the troika (ECB-IMF-EC) forced austerity reforms curtailing the government's spending on wages, pensions, and other essential public services. Similar versions of the austerity program have also been implemented in Spain, Italy, Ireland, and Portugal. Suffice to say that the erosion of local civic life and institutions in these countries on orders of Brussels bureaucrats will not inspire more faith in the already precarious European project.
Mark Blyth's excellent treatise provides a layman version of what he terms as austerity's twin histories -- an intellectual one starting with 18th century British enlightenment, weaving through the 20th century Austrian and Italian schools, along with a natural one about austerity's track record in praxis. Even from a purely historical point of view, it's fascinating to trace the roots of 'get the state out of my business' to the origin of liberal economics, which arose largely in response to the tyrannical monarch/state. Of course, the counter-notion of markets as the ultimate arbiter of (whose? who decides?) economic interests is deeply flawed as well. It was also very helpful, personally, to learn more about the specific historical contexts in which Ordoliberal and Neoliberal ideas were proposed, and how they came to dominate the policy conversation.
Blyth persuasively argues, as much as possible without wielding econometrics, about how austerity works only under a limited set of macroscopic circumstances. He also reveals how its appeal to the 'sensibility' of academic and governing classes has wrecked havoc on just about every economy that implemented austerity measures in times of market failure, often creating far worse socio-political outcomes in tow.
We live in interesting times, enmeshed within economic forces that alternatively benefit or harm us, either still seemingly beyond our control. However, when the economic juggernaut screeches to a halt, the way out is often presented, quite accurately, as a trolley problem between profligate companies and vulnerable individuals. To push this metaphor, it's the individuals that are made to pull the lever for the trolley because the companies pose a 'systemic risk' , and if not saved the fragile prosperity we have accrued since the last downturn will evaporate. That these companies and their executives got even wealthier in this duration is, we are told, completely besides the point.
This is more less what happened in the aftermath of the economic meltdown in 2008. In the recession that followed, massive economic stimulus packages were announced to bailout the banks. The same courtesy was not extended to those that the banks evicted by demanding absurd mortgage payments to cover their losses, or to countless other victims of the market crash. When compared to its central bank peers across the world, the US Federal Reserve actually turned out to be an effective economic buffer. If you lived in Greece, though, here's where things got funkier: in order to 'pay' for the insolvent assets owned by German and French banks, the troika (ECB-IMF-EC) forced austerity reforms curtailing the government's spending on wages, pensions, and other essential public services. Similar versions of the austerity program have also been implemented in Spain, Italy, Ireland, and Portugal. Suffice to say that the erosion of local civic life and institutions in these countries on orders of Brussels bureaucrats will not inspire more faith in the already precarious European project.
Mark Blyth's excellent treatise provides a layman version of what he terms as austerity's twin histories -- an intellectual one starting with 18th century British enlightenment, weaving through the 20th century Austrian and Italian schools, along with a natural one about austerity's track record in praxis. Even from a purely historical point of view, it's fascinating to trace the roots of 'get the state out of my business' to the origin of liberal economics, which arose largely in response to the tyrannical monarch/state. Of course, the counter-notion of markets as the ultimate arbiter of (whose? who decides?) economic interests is deeply flawed as well. It was also very helpful, personally, to learn more about the specific historical contexts in which Ordoliberal and Neoliberal ideas were proposed, and how they came to dominate the policy conversation.
Blyth persuasively argues, as much as possible without wielding econometrics, about how austerity works only under a limited set of macroscopic circumstances. He also reveals how its appeal to the 'sensibility' of academic and governing classes has wrecked havoc on just about every economy that implemented austerity measures in times of market failure, often creating far worse socio-political outcomes in tow.
March 28, 2018
This is very much a book of the moment, though this is partly a matter of luck. While Mark Blyth’s book was written in response to the emergence of austerity policies in 2010, its publication was nicely timed with the contemporaneous undermining of the key study by Carmen Reinhart and Kenneth Rogoff which was used to make the case for the necessity of austerity. Though Blyth’s book was written before the revelation of the study’s flaws, his more broader focus on the origins and development of austerity is no less powerful and damming.
Blyth’s book can be broken down into three parts. The first is an explanation of the recent debt crisis that has plagued the global economy. Here Blyth demonstrates that, contrary to much of the political rhetoric, this did not originate as a sovereign debt crisis but as a private debt crisis in the banking sector, one that became a sovereign debt crisis in a “bait and switch” as European states (and their taxpayers) absorbed the costs of fixing the problems created by the profligate and unwise lending policies of several European banks. Blyth then turns his attention to the history of the idea of austerity, which he sees as born out of a set of assumptions in classical economic theory that remained overly simplistic and underdeveloped. He concludes the book with an examination of the application of austerity as policy in recent history, showing how the examples of the past offer clear demonstration of its failure of austerity as a solution to economic crisis – and often end up making the problems worse rather than better.
All of this makes for a convincing argument against austerity as a response to economic downturns. Its effectiveness is aided by Blyth’s ability to walk the reader through the recent crises and untangle the underlying causes. While his use of economic jargon can make some of his arguments difficult to follow, overall he provides a clear and direct explanation of economic events. The result is a book that should be read by anyone seeking a better understanding not just of the concept of austerity and its misuse, but of the broader economic crisis we face and what brought us to this point.
Blyth’s book can be broken down into three parts. The first is an explanation of the recent debt crisis that has plagued the global economy. Here Blyth demonstrates that, contrary to much of the political rhetoric, this did not originate as a sovereign debt crisis but as a private debt crisis in the banking sector, one that became a sovereign debt crisis in a “bait and switch” as European states (and their taxpayers) absorbed the costs of fixing the problems created by the profligate and unwise lending policies of several European banks. Blyth then turns his attention to the history of the idea of austerity, which he sees as born out of a set of assumptions in classical economic theory that remained overly simplistic and underdeveloped. He concludes the book with an examination of the application of austerity as policy in recent history, showing how the examples of the past offer clear demonstration of its failure of austerity as a solution to economic crisis – and often end up making the problems worse rather than better.
All of this makes for a convincing argument against austerity as a response to economic downturns. Its effectiveness is aided by Blyth’s ability to walk the reader through the recent crises and untangle the underlying causes. While his use of economic jargon can make some of his arguments difficult to follow, overall he provides a clear and direct explanation of economic events. The result is a book that should be read by anyone seeking a better understanding not just of the concept of austerity and its misuse, but of the broader economic crisis we face and what brought us to this point.
July 29, 2013
This was not an easy read both in terms of content which was at times a little bit technical and the fact that I'm Irish living through an austerity-supporting government. Before reading this I would have, largely influenced by my upbringing, been in favour of austerity by default. First save, then shop, as Angela would say if she spoke English rather than German.
By the end of this book, I'm somewhat convinced that we might be going down a very very bad road in Ireland. It seems that the evidence says that what we are trying to do in Ireland, to cut our way back to a sustainable growth path, has been tried as nausea previously and has never worked. Ever. Anywhere. Oops. So that would be bad then.
Unfortunately the author lost a tiny bit of credibility with me at the end when trying to prove why Ireland is not reliable as a poster child for austerity working. He says "Google, Apple, Microsoft and Facebook have set up headquarters in Ireland, but most of them have very few employees in the country". That's just not true. Lots of them have lots of employees. There's one or two other statements in there at the end about Ireland that I wonder about too.
But nonetheless, the general evidence in the book seems pretty convincing. Far from being over the worst, we might just be screwed for the next decade or two. Austerity, it seems, never works.
By the end of this book, I'm somewhat convinced that we might be going down a very very bad road in Ireland. It seems that the evidence says that what we are trying to do in Ireland, to cut our way back to a sustainable growth path, has been tried as nausea previously and has never worked. Ever. Anywhere. Oops. So that would be bad then.
Unfortunately the author lost a tiny bit of credibility with me at the end when trying to prove why Ireland is not reliable as a poster child for austerity working. He says "Google, Apple, Microsoft and Facebook have set up headquarters in Ireland, but most of them have very few employees in the country". That's just not true. Lots of them have lots of employees. There's one or two other statements in there at the end about Ireland that I wonder about too.
But nonetheless, the general evidence in the book seems pretty convincing. Far from being over the worst, we might just be screwed for the next decade or two. Austerity, it seems, never works.
July 19, 2013
I had to read this book and I dreaded doing it. Me and economics just don't get along so I was looking forward to reading it like I was looking forward to going in for a mammogram.
But surprisingly, it was really good. Scary because you learn how messed up the economy is but good because I learned not just about 'austerity' but about economics in general. Blyth really takes time to explain in a very clear manner of the economy and how we ended up going to austerity policies and why it doesn't work.
Definitely a keeper for me. And I feel smarter for it.
But surprisingly, it was really good. Scary because you learn how messed up the economy is but good because I learned not just about 'austerity' but about economics in general. Blyth really takes time to explain in a very clear manner of the economy and how we ended up going to austerity policies and why it doesn't work.
Definitely a keeper for me. And I feel smarter for it.
October 4, 2018
Perhaps a dry read for some, this book offers a compelling and detailed argument for why austerity is not a wise economical measure to take. Even for those not necessarily knowledgeable in economic theory, I would assume this book would be useful, because the questions it raises force you to attempt to widen your knowledge on the subject.
October 2, 2016
يقدم الكتاب نقدا منهجيا للفكرة المركزية للفكر الإقتصادي النيوليبرالي وهي فكرة التقشف من خلال استعراض تاريخي لسياسات التقشف على مر التاريخ وبيان فشل هذه السياسات في انقذ الدول المتعثرة اقتصاديا. كذلك تقديم نقد علمي لنظرية التقشف. واضافة بعد سياسي للخطر الإقتصادي وهو خطر وصول القوى الفاشية للسلطة.
July 15, 2015
Easily best thing I've read this year. Immediately started a re-read.
April 5, 2018
Austerity is an idea that has few believers these days. IMF tacitly acknowledged its shortcomings while World Bank released a report showing that austerity is mostly ineffective ( i would say downright harmful) in helping countries stave off a debt crisis and still achieve growth. Bretton Woods guys are the last to join the party. Developing countries have argued for years that austerity is harmful and usually makes the crisis worse. We saw it in Argentina, the Asian Financial Crisis, Mexico crises, but it took developed countries Greece and its less besieged cousins (PIIGS) complaining for the tide to turn. I guess some animals are more equal than others.
Although Mark didn't say it in this book, there are two kinds austerity, the "good" kind which is imposed by countries trying to stop the economy from overheating and the bad kind which is now synonymous with the word austerity. This is the one imposed by IMF, ECB and the alphabet soup of "supranational" lenders as conditions before countries are extended loans. It usually involves the countries facing a sovereign debt crisis slashing state spending and increasing taxes. Sounds absurd! Somehow this toxic idea has been plan A for most countries facing a debt crisis. The results have been catastrophic; recessions, emigrations, increasing suicides and in the 30s, assassinations of financial elite...
In this book, Mark thoroughly debunked the idea. He showed it to be a smoke screen used to transfer private sector generated problems to the public and making the public pay for those mistakes. In my opinion he is right. Why should the public suffer to prop up the bond market? After spending a rather long time proving that austerity is worse than nonsense, Blyth had alternate solution(s). The first one is a capital tax, that is dead in the water, the second one; repressive financing was a bit promising. It talked of capital controls and generally rough housing a captive finance industry until it toes the government line. China seems to be doing this and it is serving them well...
The book was good but had a few shortcomings. Mark was too combative. This made him repetitive and at some point rambling through schools of thought at jet speed. I understand his frustration but he could have toned down a bit, and as much as we can blame the private sector, the public sector shares implicit blame for failing in its regulatory role. Anyone interested in austerity should check this book out but for less combative writing look for Paul Krugman's writing on the subject.
Although Mark didn't say it in this book, there are two kinds austerity, the "good" kind which is imposed by countries trying to stop the economy from overheating and the bad kind which is now synonymous with the word austerity. This is the one imposed by IMF, ECB and the alphabet soup of "supranational" lenders as conditions before countries are extended loans. It usually involves the countries facing a sovereign debt crisis slashing state spending and increasing taxes. Sounds absurd! Somehow this toxic idea has been plan A for most countries facing a debt crisis. The results have been catastrophic; recessions, emigrations, increasing suicides and in the 30s, assassinations of financial elite...
In this book, Mark thoroughly debunked the idea. He showed it to be a smoke screen used to transfer private sector generated problems to the public and making the public pay for those mistakes. In my opinion he is right. Why should the public suffer to prop up the bond market? After spending a rather long time proving that austerity is worse than nonsense, Blyth had alternate solution(s). The first one is a capital tax, that is dead in the water, the second one; repressive financing was a bit promising. It talked of capital controls and generally rough housing a captive finance industry until it toes the government line. China seems to be doing this and it is serving them well...
The book was good but had a few shortcomings. Mark was too combative. This made him repetitive and at some point rambling through schools of thought at jet speed. I understand his frustration but he could have toned down a bit, and as much as we can blame the private sector, the public sector shares implicit blame for failing in its regulatory role. Anyone interested in austerity should check this book out but for less combative writing look for Paul Krugman's writing on the subject.
February 13, 2021
Apparently Austerity is the toxic idea that the Governments should limit how much value they extract to serve minor bureaucratic lords like Blyth. And that is dangerous. What would be next? The nephews hired by people like Blyth would have to get honest jobs instead of taking care of the needs of the sinecured uncle.
August 10, 2015
In Austerity, Mark Blyth dives into what is now a very entrenched belief in American politics. Explained simply, austerity is just scaling back government spending in the form of budget cuts, privatization, and making way for private sector investments. If this sounds familiar it's because this has been the American Republican economic policy for some time now. In his book, Mark Blyth explores both the ideological history and practical applications of Austerity, as well as some brief notes about how it relates to our current crisis. The books is apparently meant to be modular too, so if any of those topics interest you, you'd be able to read one section without having read any of the others. Or so Blyth says. After reading the whole book cover to cover it is pretty obvious that not having read some sections will leave other sections less powerful since Blyth's thesis draws strength in its scope of study on the subject. For example the history of austerity as an idea and the history of its applications combine to make austerity as a concept truly inadequate in any capacity.
And this is essentially what Blyth's book says over and over; no, austerity never 'works'. By works, he means that it fails to pull a state out of economic depression over and over. Some countries like Germany can practice austerity and run a surplus, but Blyth points out that if every country did that it would be short-lived as there would be no one actually spending money. This is precisely why austerity is so dangerous; it seems to make common sense. Left, Right, Center, a lot of people regardless of political affiliation might agree that during a recession the government should spend less, should strive for surplus and growth in an attempt to pull itself out of perpetual unemployment and economic travesty. Yet, historically speaking, Blyth shows us it is impossible to cut one's way to growth. Every country that has tried to do so has either failed or forced its citizens through grotesquely long bouts of unemployment and poverty before the economy righted itself after some sort of bailout. Currently, austerity is halving practicing country's demand and subsequently growth. The more countries that practice it the worse off export and import markets become too. Wages take a hit, social programs become broken or profit driven, productivity becomes stagnant, and despite all of this the debt rarely corrects itself. Blyth explains that the ideological stance for austerity began with libertarian/anti government thinkers who, lamenting that the government was necessary if only to protect property rights, didn't want to pay for an expanding state, believing that it interferes with markets. The problem with this is that if you don't properly fund the state it won't do what it necessarily needs to do properly. It seems the reason for austerity now is that politicians are convinced that the market alone, with limited if any help from the government, will take care of itself. The problem that this book highlights is that it won't and it never has.
Blyth is fun to read in some part because he isn't a partisan extremist. He doesn't use words like "austerity jihadists" as Krugman might and he doesn't believe in some corrupt republican party agenda like mass privatization in return for kickbacks. He rather casually posits that the ideology, uses, and justification of austerity are flawed, but given its intention it remains used despite a distinct lack of results. On that same note, Blyth can get intensely over dense when talking about economic theory or history and the book has one of the biggest shit show post-scripts I've ever read. It's definitely worth picking up if you're interested, for example, in why schools historically keep getting their budgets gutted, but it might not be the most riveting thing you'll read all summer.
And this is essentially what Blyth's book says over and over; no, austerity never 'works'. By works, he means that it fails to pull a state out of economic depression over and over. Some countries like Germany can practice austerity and run a surplus, but Blyth points out that if every country did that it would be short-lived as there would be no one actually spending money. This is precisely why austerity is so dangerous; it seems to make common sense. Left, Right, Center, a lot of people regardless of political affiliation might agree that during a recession the government should spend less, should strive for surplus and growth in an attempt to pull itself out of perpetual unemployment and economic travesty. Yet, historically speaking, Blyth shows us it is impossible to cut one's way to growth. Every country that has tried to do so has either failed or forced its citizens through grotesquely long bouts of unemployment and poverty before the economy righted itself after some sort of bailout. Currently, austerity is halving practicing country's demand and subsequently growth. The more countries that practice it the worse off export and import markets become too. Wages take a hit, social programs become broken or profit driven, productivity becomes stagnant, and despite all of this the debt rarely corrects itself. Blyth explains that the ideological stance for austerity began with libertarian/anti government thinkers who, lamenting that the government was necessary if only to protect property rights, didn't want to pay for an expanding state, believing that it interferes with markets. The problem with this is that if you don't properly fund the state it won't do what it necessarily needs to do properly. It seems the reason for austerity now is that politicians are convinced that the market alone, with limited if any help from the government, will take care of itself. The problem that this book highlights is that it won't and it never has.
Blyth is fun to read in some part because he isn't a partisan extremist. He doesn't use words like "austerity jihadists" as Krugman might and he doesn't believe in some corrupt republican party agenda like mass privatization in return for kickbacks. He rather casually posits that the ideology, uses, and justification of austerity are flawed, but given its intention it remains used despite a distinct lack of results. On that same note, Blyth can get intensely over dense when talking about economic theory or history and the book has one of the biggest shit show post-scripts I've ever read. It's definitely worth picking up if you're interested, for example, in why schools historically keep getting their budgets gutted, but it might not be the most riveting thing you'll read all summer.
October 5, 2015
Austerity: The History of a Bad Idea, by Mark Blyth, is an (obviously) anti-austerity text. It recounts the history of austerity as an economic idea, touching on the work of classical economists like Locke, Smith and Hayek, to name a few. Blythe touches on austerity mentality in past economic crises such as the Great Depression, and examines modern data on austerity measures implemented during the recession of 2008 to get his point across. Blythe also recounts the fascinating history behind some of modern economic theories various schools, including German Ordoliberalism and the Austrian school of economic thought. Blythe also recounts a history of the 2008 banking crisis/recession, starting with the US mortgage backed securities failure, and the subsequent and related downswing in the Euro.
Blythe's point is simply: Austerity doesn't work the way it wants to work. He is very blunt about it in this text. Blythe shows that austerity measures have never been fully successful, and have rarely benefited the economy said measures target. Blythe looks at the PIIGS of Europe (Portugal, Ireland, Italy, Greece and Spain) and shows the detrimental effects austerity has had on these nations, and the complete falsehood that austerity measures reduce debt-GDP ratios (austerity seems to raise debt instead). He also examines the REBLL alliance (Romania, Estonia, Bulgaria, Latvia and Lithuania), the poster states of IMF/World Bank austerity policy, where tight fiscal policy has had success in helping these economies recover from the 2008 crisis, but at a huge cost to each nation, up to and including massive emigration, political shifts and the like.
This is a shorter read for sure, but still packs a lot of depth and introductory information on economic theory and austerity policies both from the theoretical and the application side. Blythe tolerates no mistakes, and gleefully tears chunks out of the weaknesses that some of economics base theories exhibit. Blythe has a clear agenda against austerity thinking, both from an economic theory perspective, and from a social progression perspective. He pulls no punches in this regard, and this may put off some. Indeed, I personally found Blythe's arguments engaging, but his attacks on economics base theories and scholarly background, from Keynes to Smith to Hayek, is less than informative, as it often criticizes in place of offering good explanations. This text is also economically technical, so a basic knowledge of macro/micro economics would be useful for a reader to better understand the concepts here.
All in all though, this was an engaging read on austerity, and an excellent primer on economic history and the theories that surround modern economic thought. Blyhte has a highly readable and interesting work here with Austerity: The History of a Bad Idea, and I would recommend this text to anyone interested in economics and their political characteristics.
Blythe's point is simply: Austerity doesn't work the way it wants to work. He is very blunt about it in this text. Blythe shows that austerity measures have never been fully successful, and have rarely benefited the economy said measures target. Blythe looks at the PIIGS of Europe (Portugal, Ireland, Italy, Greece and Spain) and shows the detrimental effects austerity has had on these nations, and the complete falsehood that austerity measures reduce debt-GDP ratios (austerity seems to raise debt instead). He also examines the REBLL alliance (Romania, Estonia, Bulgaria, Latvia and Lithuania), the poster states of IMF/World Bank austerity policy, where tight fiscal policy has had success in helping these economies recover from the 2008 crisis, but at a huge cost to each nation, up to and including massive emigration, political shifts and the like.
This is a shorter read for sure, but still packs a lot of depth and introductory information on economic theory and austerity policies both from the theoretical and the application side. Blythe tolerates no mistakes, and gleefully tears chunks out of the weaknesses that some of economics base theories exhibit. Blythe has a clear agenda against austerity thinking, both from an economic theory perspective, and from a social progression perspective. He pulls no punches in this regard, and this may put off some. Indeed, I personally found Blythe's arguments engaging, but his attacks on economics base theories and scholarly background, from Keynes to Smith to Hayek, is less than informative, as it often criticizes in place of offering good explanations. This text is also economically technical, so a basic knowledge of macro/micro economics would be useful for a reader to better understand the concepts here.
All in all though, this was an engaging read on austerity, and an excellent primer on economic history and the theories that surround modern economic thought. Blyhte has a highly readable and interesting work here with Austerity: The History of a Bad Idea, and I would recommend this text to anyone interested in economics and their political characteristics.
January 3, 2014
So are we all Keynesians now? Blyth makes a convincing case that austerity as a policy is doomed to failure and he backs up his claims with a walkthrough of the major historical episodes where austerity was previously pursued as a solution – as a preview: the Nazi party’s rise in Germany and Japan’s imperialism were preceded by bouts of austerity induced deflation. In addition, Blyth methodically picks apart the academic papers, which the ECB has cited as the support for its current policies in the Eurozone periphery, which have described cases of growth inducing austerity.
A couple of Blyth’s axioms that struck a chord with me are:
(I) The four ways to solve a sovereign debt crisis are (i) inflation, (ii) deflation (austerity), (iii) devaluation, and (iv) default.
o Notably in the Eurozone’s periphery (PIIGS): inflation is off the table due to the ECB’s single mandate, devaluation is not an option for the single currency, and the ECB, until recently with haircuts on Greek debt, has kept the option of default out of play mainly due to bank solvency and contagion concerns. So deflation (austerity) and all the pain it entails is the option pursued.
(II) You can’t run a gold standard in a democracy
o Many goldbugs and hard-money types may object to such a blanket statement, but Blyth points out voters are unlikely to endure the pain of deflation that is inevitably required with a gold backed currency. The election of a government that will take the currency off the gold standard will be the typical result. While not addressed in Austerity, cases in point would include the populist movements in the US in the 1890’s and 1930’s whose advocated the US leaving the gold standard.
Even if one doesn’t buy in to Blyth’s arguments against austerity as a policy, this book is still a very worthwhile read as it covers the historical progression of macro-economic theory including the economic liberalism of Adam Smith, David Hume, and John Locke, Keynes’ General Theory, the Austrian school, and most everything in between [I’ve left out plenty].
So what does Blyth advocate rather than Austerity – well that is not really the focus of the book but in his conclusion he does suggest financial repression (the repression of interest rates combined with forcing banks to hold that sovereign debt) and soaking the rich including one time wealth taxes as alternatives worth exploring.
March 12, 2022
I devoured the first half of this book and slogged through the second.
This is one of those books where the general idea it's trying to convey is simple and easy to understand, but the history and details of that idea are beyond my level of expertise. A lot of books of that sort are about boring things, or by boring people, so I never finish them. This one isn't.
Mark Blythe argues in it essentially two things:
1. Austerity as a policy package is mostly disastrous and yet people in power keep doing it to us. The case for austerity is sus as hell, supported primarily by shoddy, ideologically driven research in academia and historical myopia on the part of Western economic decision makers. It has been tried again and again and failed almost every time. However,
2. Austerity is often a wealth transfer from poor people to rich people and from financially troubled but not entirely unhealthy countries to the richer and more powerful countries that caused the trouble in the first place. So no matter how bad the case for austerity is, and no matter how many times it ends in disaster, the idea is going to stay attractive.
Both of these assertions are novel and fascinating!
The way Mark Blythe conveys them is dry as hell and kinda digressive.
Still, I soldiered on because whenever this book threatened to become unreadable, Mark deployed his secret weapon: academic beef. You ever read the abstract for a white paper or listen to the keynote at a conference and half that shit is a really smart dude politely explaining why another really smart dude who wrote a thing they disagree with is actually maybe dumb and certainly incompetent? I love that shit!
Mark does it constantly.
Mostly to two Austrian dudes who made their careers off a heavily cited but maybe not particularly well thought through economic paper in the nineties. But also to basically every mainstream economic pundit in the United States in the early two-thousands. And then also again to the entire Ordoliberal/libertarian/neoliberal socioeconomic project. And probably finally to his editor's legal team, who I'm sure had fun libel clearing this thing.
I'm a messy bitch who loves drama. I live for this.
A-plus book bro.
Unironically, write another one.
This is one of those books where the general idea it's trying to convey is simple and easy to understand, but the history and details of that idea are beyond my level of expertise. A lot of books of that sort are about boring things, or by boring people, so I never finish them. This one isn't.
Mark Blythe argues in it essentially two things:
1. Austerity as a policy package is mostly disastrous and yet people in power keep doing it to us. The case for austerity is sus as hell, supported primarily by shoddy, ideologically driven research in academia and historical myopia on the part of Western economic decision makers. It has been tried again and again and failed almost every time. However,
2. Austerity is often a wealth transfer from poor people to rich people and from financially troubled but not entirely unhealthy countries to the richer and more powerful countries that caused the trouble in the first place. So no matter how bad the case for austerity is, and no matter how many times it ends in disaster, the idea is going to stay attractive.
Both of these assertions are novel and fascinating!
The way Mark Blythe conveys them is dry as hell and kinda digressive.
Still, I soldiered on because whenever this book threatened to become unreadable, Mark deployed his secret weapon: academic beef. You ever read the abstract for a white paper or listen to the keynote at a conference and half that shit is a really smart dude politely explaining why another really smart dude who wrote a thing they disagree with is actually maybe dumb and certainly incompetent? I love that shit!
Mark does it constantly.
Mostly to two Austrian dudes who made their careers off a heavily cited but maybe not particularly well thought through economic paper in the nineties. But also to basically every mainstream economic pundit in the United States in the early two-thousands. And then also again to the entire Ordoliberal/libertarian/neoliberal socioeconomic project. And probably finally to his editor's legal team, who I'm sure had fun libel clearing this thing.
I'm a messy bitch who loves drama. I live for this.
A-plus book bro.
Unironically, write another one.
October 20, 2016
Professor Blyth guides us through a whirlwind examination on the intellectual and practical origins of Austerity. Presented with clarity, humour and impeccably researched, he shows how this dangerous idea came to dominate the minds of many economists and political figures again and again, especially in the last hundred years, despite the fact that it never - aside from some very specific instances - delivered on its promises of growth through painful contraction. This work is particularly important in light of the fiscal waterboarding taking place in countries like Greece, but also relatable to the earlier torturous ordeals inflicted on Africa and South America in the form of neoliberal IMF and World Bank structural adjustments. A kind of 'thought-virus' (to paraphrase the late Ulrich Beck), Blyth shows the lineage of austerity emanating out of what he terms liberalism's dilemma of the state; can't live with it, can't live without it, and brings it all the way to the current day in its strongholds on the ECB and global IFIs. A must read.
Read
March 9, 2021الكتاب جيد من منظور غربي خاص، ولكن لو نظرنا للموضوع من زاوية بسيطة كنظرة مواطن عادي يرى ارتفاع في معدل الضرائب من جهة، و سيطرة الدول العظمى على غيرها ، وامتصاص مقدراتها عن طريق حجز أموالها الصادرة من التنقيب عن النفط وغيرها المودعة في البنوك الغربية، وعدم حيازة الدول المحتاجة لشركات التنقيب الغربية على حصتها كاملة من المردود المالي من جراء شراء النفط واستثماره،، أمرفيه نظر..فهل هذا يعني شيئا هنا؟
من هذا المنظور ستبدو المعالجة مختلفة تماما.وربما ناقصة..
إن قضية الغرب : مصروف كبير غير مسؤول، وتوسع الأعمال على حساب أموال الدول الأخرى. ليست قضيتنا..
تحتاج وقفة جدية بضمير.
روابط هامة:
http://www.all2books.com/2016/11/kita...
http://elbadil.com/2016/12/06/%D9%82%...
من هذا المنظور ستبدو المعالجة مختلفة تماما.وربما ناقصة..
إن قضية الغرب : مصروف كبير غير مسؤول، وتوسع الأعمال على حساب أموال الدول الأخرى. ليست قضيتنا..
تحتاج وقفة جدية بضمير.
روابط هامة:
http://www.all2books.com/2016/11/kita...
http://elbadil.com/2016/12/06/%D9%82%...
December 2, 2016
"لقد دُعي البعض للحفلة - و لكننا مدعوون جميعا إلى سداد الفواتير " مارك بليث من كتابه (التقشف:تاريخ فكرة خطرة)
ثلاث نجمات للترجمة العربية ، أما الكتاب في نسخته الأصلية أعتقد أنه يستحق الأربع نجمات لغزارة الأدلة والمنطلقات التي بني عليها المؤلف طرحه لتفنيذ سياسة التقشف من خلال استحضار التاريخ الفكري والطبيعي لفكرة التقشف ، أشار المؤلف للنقاط المهمة التي التي تظهر خطورة التقشف وعدم فاعليته من بينها
تضرر الطبقة الوسطى فما دونها على اعتبار أنها المستفيدة من الانفاق التنموي والخدمات التي تقدمها الدولة والتي ستتقلص وتضعف ، إ��افة إلى أن سياسة التقشف تؤدي إلى تخوف عام من الانفاق ما يدفع الجميع إلى الادخار ما يؤدي بدوره إلى إنكماش اقتصادي
على العموم الكتاب في مجمله مثير للاهتمام وحديث الصدور ، لكنه متعب في بعض أجزائه لكثرة احتوائه على الأرقام والإحصاءات الاقتصادية التي تدخل القارئ في نوع من الرتابة ..
ثلاث نجمات للترجمة العربية ، أما الكتاب في نسخته الأصلية أعتقد أنه يستحق الأربع نجمات لغزارة الأدلة والمنطلقات التي بني عليها المؤلف طرحه لتفنيذ سياسة التقشف من خلال استحضار التاريخ الفكري والطبيعي لفكرة التقشف ، أشار المؤلف للنقاط المهمة التي التي تظهر خطورة التقشف وعدم فاعليته من بينها
تضرر الطبقة الوسطى فما دونها على اعتبار أنها المستفيدة من الانفاق التنموي والخدمات التي تقدمها الدولة والتي ستتقلص وتضعف ، إ��افة إلى أن سياسة التقشف تؤدي إلى تخوف عام من الانفاق ما يدفع الجميع إلى الادخار ما يؤدي بدوره إلى إنكماش اقتصادي
على العموم الكتاب في مجمله مثير للاهتمام وحديث الصدور ، لكنه متعب في بعض أجزائه لكثرة احتوائه على الأرقام والإحصاءات الاقتصادية التي تدخل القارئ في نوع من الرتابة ..
July 12, 2019
Geez, a very early note: too bad the author didn't see the whole story behind Reinhardt and Rogoff's article, which was basically garbage.
Note after I finished reading this book:
Although a few sections needed some effort (well worth it), the book is well-researched, has good depth, and conclusions are convincing. What can I say, some (or a lot? especially among the policy-makers) just refused to let facts getting in the way of their ideology. This also reminded me of a story of Eugene Fama, whose face turned red when he heard the word "bubble".
I always believe that a bailout was needed in 2008 (but done differently), now this book definitely makes me revisit the position.
The only thing I don't agree with the author is about his left-right label. In my mind, on the economics side, both the Democrats and Republicans were right wing parties, and the latter extreme right.
Note after I finished reading this book:
Although a few sections needed some effort (well worth it), the book is well-researched, has good depth, and conclusions are convincing. What can I say, some (or a lot? especially among the policy-makers) just refused to let facts getting in the way of their ideology. This also reminded me of a story of Eugene Fama, whose face turned red when he heard the word "bubble".
I always believe that a bailout was needed in 2008 (but done differently), now this book definitely makes me revisit the position.
The only thing I don't agree with the author is about his left-right label. In my mind, on the economics side, both the Democrats and Republicans were right wing parties, and the latter extreme right.
April 28, 2014
Oh what a ripper. This is a resonant and relevant book. It answers all those politicians and policy makers who assume that the answer to economic 'crisis' is austerity.
This book offers a remarkable critique of the global financial crisis and shadow banking, but also demonstrates why it is ridiculous to assume that a cut in services can address the injustices of finance capitalism.
If you have ever asked, "what caused the Global Financial Crisis?" this book provides your answer. Read it. It is brilliant.
This book offers a remarkable critique of the global financial crisis and shadow banking, but also demonstrates why it is ridiculous to assume that a cut in services can address the injustices of finance capitalism.
If you have ever asked, "what caused the Global Financial Crisis?" this book provides your answer. Read it. It is brilliant.
January 6, 2017
This book was way too technical for me, it seemed like it was written for people who had a deep understanding of economics and policy. I picked it up thinking it would be a lay-man's introduction to the 2008 financial crisis, but half the time I didn't even know what I was reading. I would have rated it higher, it's pretty well written, but definitely not for someone who's just getting started in learning about world finance. I'll probably re-read the book in a few years when I have a better understanding of these issues.
March 6, 2018
Lettura chiara e al contempo super-documentata (metà ebook è formato da note, rimandi e citazioni) che attesta ciò che è ovvio ed evidente da troppo tempo: curare con gli stessi elementi che hanno provocato/esarcebato il male è demenza pura, o meglio è far pagare la crisi a tutti, tranne che a quelli che l'hanno causata.
Sfuggire ai meccanismi anti democratici che impongono una ricetta fallimentare è d'obbligo, e a questo servirebbe la politica, che invece nelle questioni fondamentali come questa è un "tutti insieme appassionatamente".
Altro che matrimoni gay sì matrimoni gay no.
Sfuggire ai meccanismi anti democratici che impongono una ricetta fallimentare è d'obbligo, e a questo servirebbe la politica, che invece nelle questioni fondamentali come questa è un "tutti insieme appassionatamente".
Altro che matrimoni gay sì matrimoni gay no.
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