Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts - austerity - to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer. That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget.
The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us.
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This book explains the history of economic austerity and how it has never worked and why it will never work. The author uses in-depth and sometimes complicated economic rationale to explain why but I think that is what lends so much legitimacy to his argument. I will admit it is not for the feeble minded but it is also not so complicated that the average concerned person can’t understand.
He gives the reader a complete analysis of why public spending cuts never lead to economic growth and typically fuel rising debt instead of lowering it. He further details how the global financial crisis is really a private crisis of the banking sector and not a problem of public spending run amok. It is glaringly obvious that governments have allowed the finance industry to needlessly gamble and in many cases, have been forced to bail them out with public money.
This book allowed me to finally understand the real reasons behind the European debt crisis and how much of it extends from several structural flaws in the Euro. I have read a number of books on the 2008/2009 financial crisis and I would say this is the best one yet. This really brought everything together for me as it really gets to the "why" behind a lot of the problems we see today.
I like his analysis of Iceland at the end and I wish he had written much more on the topic. My only complaint is that the author quotes a number of economic theorists and sometimes it is hard to determine if he is still talking about their opinion or his own.
Every politician should read this book and understand how cuts to public spending almost never produce the desired economic growth.
"An enlightening read"
This is something that that everyone of the voting public should be aware of. The author pulls no puches ans cites each one of his points with a valid reference. His conclusions are logical and feasible and delivered in plain and explained language.
Was expecting quite a dry factual story. Found the whole book hugely enlightening with excellent cross referenced examples to prove thesis. Very well narrated keeping my attention through some very complex issues throughout.
"politicians should hang their heads in shame"
very good content, dubious delivery but not distracting enough to stop you listening.
book has an obvious bias but then so does the policy of austerity
"Not for the layman"
This book may be interesting to specialists in the field but for a layman with a general interest in economic theory, this book is way too technical and complicated, and I got completely lost. It is filled with too much detail and facts and figures used to evidence the points being made, which made it hard for me to grasp the core thread of the arguments. About three hours from the end I gave up, having learned almost nothing.
I gave this book a go, as I was interested in the subject matter. I would only recommend to a serious follower of economic theory as it is too in depth and jargon heavy for the dabbler like myself.
"Really interesting but definitely not entry level."
The content is very enlightening and well thought out. However, as someone who hadn't read much on economics before the learning curve was rather steep.
"Best book on the Crisis"
Best book on the crisis in Europe and the US. And the policies implemented to deal with it. Amazingly written and masterfully narrated.
Really enjoyed this book. The technical explanations are aimed at economics students, but were well explained for the uninitiated (me). Chapters 1-3 are breath taking. Mark Blyth has lectured on this topic at the RSA which is an excellent synopsis of his theory on Austerity do check it out,
"Fiscal Common Sense"
The apparent bankruptcy of the Austerity ideology is played through in some detail here, but with a sound sense of an audience who are not economists. Ideological, theoretical and historical perspectives are examined along with explanations of why it hasn't worked in the past, isn't working now and won't work in the future. Interesting and stimulating.
"Excellent history of the concept of austerity as an economic and political objective."
Very relevant to today's debate about what governments and central bankers should do to best manage the aftermath of the financial crisis. A powerful argument as to why austerity in general doesn't work...
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