Austerity: The History of a Dangerous Idea

Paperback | December 10, 2014

byMark Blyth

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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 alllived 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 privatedebt 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. Asthe 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 worsenedthe 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 andopportunity, 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.

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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...

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

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Format:PaperbackDimensions:304 pages, 8.5 × 5.5 × 0.68 inPublished:December 10, 2014Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199389446

ISBN - 13:9780199389445

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Table of Contents

PrefaceAusterity, a Personal History1. A Primer on Austerity, Debt, and Morality PlaysPart One: Why We All Need to Be Austere2. America: Too Big to Fail?Bankers, Bailouts, and Blaming the State3. Europe-Too Big to BailThe Politics of Permanent AusterityPart Two: Austerity's Twin HistoriesIntroduction to Chapters 4, 5, and 6Austerity's Intellectual and Natural Histories4. The Intellectual History of a Dangerous Idea, 1692-19425. The Intellectual History of a Dangerous Idea, 1942-20126. Austerity's Natural History, 1914-2012Part Three: Conclusion7. The End of Banking, New Tales, and a Taxing Time AheadNotesIndex

Editorial Reviews

"Among all the calamities spawned by the global financial crisis, none was as easily avoidable as the idea that austerity policies were the only way out. In this feisty book, noted political scientist Mark Blyth covers new territory by recounting the intellectual history of this failed ideaand how it came to exert a hold on the imagination of economists and politicians. It is an indication of the sorry state of macroeconomics that it takes a political scientist to expose so thoroughly one of the economics profession's most dangerous delusions." --Dani Rodrik, Rafiq Hariri Professor of International Political Economy, The John F. Kennedy School of Government, Harvard University