Mark Blyth, Professor of International Economics at Brown University, starts off his frightening and important book on economics, Austerity, with a healthy dose of self-awareness. He realizes that to add another book to the litany about the economic crisis demands justification. Why this book? What can he possibly add? Blyth grounds this question in a smart review by Andrew Lo entitled “Reading about the Financial Crisis: A 21-Book Review.” Lo chose 10 books by academic and 11 by journalists, aggregated their theories and attempted to come up with a solid ground of accepted facts or notions about to the crisis. He fails and determines that the crisis is both overdetermined and overexplained.
Lo did not read all of the extant books on the crisis, but still came up with enough books to fill two semesters of college, and wrote a review in the model of The New York Review of Books on steroids. There’s a mild acerbic humor to Lo’s review that Blyth adopts. Both notice that journalists and economists care as much about their version and opinion than about creating a responsible and pragmatic census on the crisis and moving forward. Most of the books easily assert the bulk of the blame on to their chosen culprit, but fail to realize the complexity of the crisis precludes neat narratives.
If so, then what does Blyth hope to add? Blyth wishes to ground his conversation in economics, but with a reach into many different realms. Blyth, more than other intellectuals today, and considerably more than other economists, wants to create a larger conversation that includes the question of politics and morals, a conversation which even questions the nature of economics itself. As much as he desires to explain the economic idea of austerity (because he sees it as so obviously dangerous and idiotic), he is as interested in understanding why economists and politicians stubbornly hold on to discarded idea.
His analysis of austerity and its dangers is eloquent and clear, but he shines in giving a larger context as to why economists, governments, and people all around the world still give the idea credence. His main narrative goes something like this. Common sense and greed lead a person to side with austerity. Both common sense and greed tell a person that if the problem is too much debt, then the solution lies in spending less and paying off the debt. This, he notes, does make immediate sense but fails to look at the larger picture. First off, if the whole world finds itself in debt, as the world does now, then if everyone opts for austerity, which everyone does, then austerity could not work. You can only scale back spending if someone else will pick up that slack and spend more. Second, as the crisis stemmed from and caused a drastic situation of income inequality, austerity will only punish the bottom rungs, depriving them of necessary state care while providing a reprieve to those who actually caused the crisis. Moreover, it will eat away at any sound economic infrastructure, one that rests on a middle class and on the poor.
Why then do apparently intelligent people stick to this awful idea? In a sense, it is opting for ease and comfort over challenging choices. Austerity provides a neat, sweeping answer for all of our economic problems. It’s much easier to cut off “free” services to the “entitled” than to create a fair and balanced tax plan. Furthermore, it’s often hard to see the larger context, and common sense does not carry a lot of weight in knotty policy questions.
Last, Blyth points to plain ol’ greed. How convenient is it for the rich, for the bankers on Wall Street, and for those at the root of the crisis to not only receive a bailout, but then to assign moral blame to the overspending of welfare programs. Austerity not only preserves their place at the top, but let’s them feel good about their misdeeds. What emerges is a horrible situation in which the rich played an integral role in the initial crisis, then the government used the taxpayer money to bail out those people, and now the victims are being forced to pay again for the debt this bailout exacerbated. It amounts to being brutally victimized three times, and then being made to think it’s your fault while you pay for your own hospital bills. As Blyth eloquently puts it, the government has taken a private sector problem and made it a public sector problem.
In the rest of the book, Blyth gives considerable weight and meat to these claims, but this essential foundation remains persistent throughout. In a moment of self-revelation, Blyth tells us that he finds the prevalence and idiocy of austerity personally offensive. Blyth describes his life as a welfare child and expresses gratitude to the welfare state and its subsidiaries, which allowed him to thrive and ultimately jump class rungs. In itself, this admission, this gratitude, is sadly unprecedented in today’s world. That Republicans and conservatives praise the never-ending capabilities of individuality is obvious and a truism, but that most Democrats do so as well must be emphasized. Even someone as progressively minded as Obama consistently falls into this trap of the welfare state creating dependency. To then see Blyth, a person with talent and abundant intelligence, acknowledge his debt to society is in of itself a courageous act.
It is this impulse, this sense of gratitude, that propels Blyth throughout the book. While he cares about the idiocy of austerity, while he provides an elegant and helpful history of austerity as an idea, it is his morality, his sense of the injustice of the idea, that provides the driving force of his passion and this book. Not only does austerity not work, not only can it never work, but even if it could, it is a dangerous idea because it forces the bottom 40 to pay for the sins and mistakes of the top 1 percent. Not necessarily a new idea in this intellectual climate, but that we can already misremember history, a history that happened just a few years ago, a history that unravels before our eyes right now, makes this idea urgent. The book concludes with a definitive declaration:
This book has examined the case for austerity as both a sensible economic policy and as a coherent set of economic ideas, and it has found austerity to be lacking in both respects. Austerity doesn’t work. Period. In general, the deployment of austerity as economic policy has been as effective in us bringing peace, prosperity, and crucially, a sustained reduction of debt, as the Mongol Golden Horde was in furthering the development of Olympic dressage. It has instead brought us class politics, riots, political instability, more rather than less debt, assassinations, and war.
There is a bittersweetness to this book that errs on the side of bitter. What the book describes (the delusions of austerity, the greediness of the rich, the blindness of the government, and the persistence of stupidity because of ideology) should frighten even the most hardened person. Yet, that a young academic cares enough, for moral reasons, to make this effort gives lie to the common notion that our intellectuals curb their more extremist tendencies for the sake of comfort. Looking at our current climate feels like an exercise in cynicism, in the lack of hope, but reading this book brimming with moral clarity and vision ought to revive a little bit of hope in our cynical souls.
