Mark Blyth

The author argues that nations which are overburdened by debt cannot ease their situation by tightening the belt on public expenditures. Doing so will only produce more unemployment, not improve competitiveness. He discusses the economic crisis of 2009 in the United States and Europe and argues that it was wrong to make ordinary taxpayers bail out profligate banks and suffer austerity programs. He acknowledges that the decision was difficult but writes that it would probably have been better, at least in Europe, to let the banks fail. He takes a few shots at the euro in the process, but the main message is that states should not expect to reduce their indebtedness by cutting spending. The author favors Keynesian stimulation instead.

The book is written in a reasonably clear manner. A layman can follow the author's explanation of the causes of the financial crisis fairly well, although he does at times steam ahead a bit too rapidly with acronyms that would only be familiar to economic professionals. In any case, as far as I can tell the author makes a good case against austerity measures. I particularly liked his modern intellectual history of academic scholarship in favour of austerity.

However, I would have liked to read something more about the alternatives. The author acknowledges that Greece was over its head in debt and could probably not have spent its way out of that hole without having debts cancelled, but he doesn't give any practical case studies of moderately indebted countries that would have reduced their indebtedness by following the Keynesian strategies which he advocates as the better alternative. It also would have been nice to obtain some other general conclusion from this argument than simply "austerity is a dangerous idea". It seems clear from the author's analysis of the financial crisis that its main cause was the growth of labyrinthine banking instruments where sane economic caution was lost, and that the solution to that problem should be more bank regulation. But I suppose that's a topic for another book.

All in all, this is a good but somewhat one-sided economic analysis of the 2009 financial crisis and the economic policies that were implement soon afterward.… (more)

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.… (more)

I learned about this book from my mother, who heard an interview with the author on NPR.

Blyth grew up in Scotland, and is a professor of political economy at Brown. Oxford University Press published this title in 2015.

You may have heard of the concept if you’ve been following current events in Europe. In short, austerity is the curtailment of government spending, often resulting in large cuts to the welfare state and other social expenditures. It is often justified by the aim of reducing government debt, although this claim is almost always fraudulent in practice (if not in intention).

As the subtitle suggests (“The History of a Dangerous Idea”), austerity isn’t just uncomfortable, but could be blamed (indirectly), for such inhumane incidents as World War II. Blyth meticulously tracks the history of austerity globally, going back to the roots of the concept with Adam Smith and John Locke, tracing it’s evolution over the past century, and then offering a current-day analysis. If anything, his refutation of research done over the past thirty years in support of austerity is too rigorous, verging on obsessive.

Ultimately, this book is an economic text, and you should be prepared for technical literature (although there isn’t any math in the book) if you’re considering picking up this book.

One refrain in the book is that austerity is an ideology too compelling to be dispelled by a century of misery, destruction, and abject failure. Although Blyth repeatedly admits the inability of facts to have any impact to discredit austerity, he blunders on with a relentlessly fact-based rhetoric throughout the text. The book leaves two vital questions unanswered:

1. If austerity fails to accomplish its stated aims so consistency, what affords it such credence?
2. What ideology of superior ethic and utility has the temerity to unseat austerity?

In the book, Blyth valiantly strives to unpack some of the underlying fundamentals that drive a healthy economy. Such a feat is not to be scoffed at; few academics or economists make it this far, tending to fumble about with mechanisms rather than getting to the pattern level. It is a question that has been driving much of my inquiry for many years now. He does so by illustrating relatively simple maxims, rather than getting into the complex metaphysics underlying the social technology we call money (also a fascinating arena, but less approachable).

I’m disappointed that Blyth is so dismissive of Occupy Wall Street and debt forgiveness solutions. Doesn’t he realize that default and bankruptcy are fundamental mechanisms of any healthy economy? He would do well to learn from the work of Andrew Ross at NYU.

Where is the inquisitive reader to go from here? I’m looking forward to reading histories of Japan and China, as well as Yanis Varoufakis’ two most recent books. Unfortunately, I have yet to encounter a paradigm that encompasses ecological economics while preserving a high quality of living. Currently, the faster our economy churns, the more destruction is borne. And yet, depressions more commonly result in fascist dictatorships than socialist anarchies. How we bridge economic and ecological health is one of the existential mandates of our times, and the more I learn, the further I realize we are from a pragmatic solution. Regenerative economics continues to be elusive.… (more)