Jan 27, 2023
Author and political economist Mark Blyth visits Google to discuss
his book “Austerity: The History of a Dangerous Idea.”
Politicians in both Europe and the United States have succeeded in
casting government spending as reckless wastefulness that makes the
economy worse. As a remedy, they have advanced a policy of
draconian budget cuts--austerity--to solve the many financial
crises of the early 21st century. Pro-austerity voices tell us that
we have all lived beyond our means and now need to tighten our
belts. But according to author Mark Blyth, this view conveniently
forgets where all of that debt came from. Not from government
spending, but as the direct result of bailing out, recapitalizing,
and adding liquidity to the collapsing banking system. Through
these actions private debt was remade into government debt, while
those responsible for causing the crisis 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 government spending to restore competitiveness
and balance the budget. The problem, according to Blyth, is that
austerity is a very dangerous idea that he claims does not 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. Blyth argues that the arguments for austerity are
tenuous and the evidence thin. Rather than expanding growth and
opportunity, austerity has almost always led to low growth along
with increases in income inequality. With his book, Blyth
challenges conventional wisdom by marshaling an army of facts to
demand that we recognize austerity for what it is, and what it
costs us.
Originally published in June of 2013.
Visit YouTube.com/TalksatGoogle to watch the video.