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on 8 April 2016
Brilliant, challenging, passionate, myth busting!

Little bit repetitive and uneven in its analysis but a right riveting read.
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on 25 June 2013
Excellent account of how the world economy got into this hole and its leaders responded by digging deeper. Nice demotic style, with some great one-liners: "Smith's invisible hand had just given the public the finger". Lots of fascinating information, e.g. on German 'ordoliberalism' and the too-sensational history of Japanese monetary policy in the 1930s. The book has its faults, including signs of hasty writing and some garbling of the more theoretical material. More seriously, the author has a tendency to define his subject too broadly, mixing it up with other things he doesn't like such as neoliberalism and the Washington Consensus, and I don't think he makes quite enough effort to persuade readers who aren't already sympathetic to his point of view. I hope Blyth does succeed in changing minds, as the topic is massively important and he says the right things about it.
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on 15 April 2016
An alternative view on Public Financing that many ought to take seriously into consideration...
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on 20 April 2013
Fantastic critique of right wing ideology dressed up as economic fact.It shows why little boy osbourne has made a right mess of the economy.They say you cannot spend your way out of debt but you certainly cant grow by spending less,when everyone else is doing the same.Explains quite complex economics so even I could sort of understand it.Maybe they could bring out an idiots guide and then the tories could read it too.
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on 14 February 2014
Mark Blyth's "Austerity: The History of a Dangerous Idea" is an invaluable contribution to the debate on what direction policy should take post Credit-Crunch. In a civilised society, where ideas were debated on their merits and not on how useful they are to those with power and influence, it would minimally be a large part of the debate and in my opinion form the backdrop to a set of policies aimed at maintaining the welfare state, and bringing growth back to the economy.

Blyth includes the best short account of the credit crunch that I have read, and makes crystal clear where the sovereign debt came from: not over spending in the Public sector, but the costs of dealing with a massive private sector failure in the financial sector in terms of lost growth, bail-outs, and the rising welfare payments & tax shortfalls that accompany an economy which for the UK, in terms of GDP growth, has performed worse than it did during the Great Depression of 1929 onwards.

He looks at the theory behind the austerity idea and finds it to be somewhat threadbare, in short there is not much in the way of intellectual theory to back it up. It is more like a knee jerk reaction from central bankers (in particular the European Central Bank) and anti-state right wing politicians (among which one could include a substantial number of Labour politicians). What little theory there is, ie. the paper the Italian Alberto Alesina peddled at the ECOFIN meeting towards the end of the brief burst of Keynesian style expansion in 2008-09 is comprehensively debunked by Blyth for being decontextualized from actual political and economic events, and for setting time frames to produce results as favourable as possible for the pro-Austerity case. No matter, the media and the political right with their usual regard for facts, sang its praises to the sky!

As far as the "natural history" of Austerity goes, the record is miserable. Blyth makes the point that it only has a chance of working in a fairly narrow set of conditions, eg. one country does it in a context where neighbouring countries/trading partners economies are expanding, its not carried out in the middle of a recession, and its done gradually. None of these conditions apply, neither in the UK, the Eurozone (the main but by no means the main focus of Blyth's book) or the United States.

Austerity was also supposed to give the private sector the confidence to invest, on the basis that they knew public spending was being decreased and their future profits will thus not be highly taxed. But in the UK, according to even the Daily Torygraphs assistant editor Jeremy Warner: "UK corporates have cash sitting on their balance sheets of £754bn [2012 or 2 years into austerity], or around a half of annual GDP. These sums have doubled over the course of the past decade, with much of the growth having taken place during the financial crisis of the past four-and-a-half years." So much for that. Cameron/Clegg/Osborne now seem set on having another housing boom by insuring 15% of mortgages up to £600,000 thus reducing the deposits required from 20% to 5% of the house value. Doesn't seem particularly wise to me, or compatible with talk of rebalancing the economy, though not altogether different from Thatcher's policy of making consumer credit easier during the last bout of austerity during the early 1980's.

One alternative to Austerity which Blyth flags up, is to collect taxes. Richard Brooks (in his The Great Tax Robbery suggest that around £25bn could be raised not by introducing new taxes but in closing in on those who avoid taxes, and by closing loopholes with regard to existing taxes.

Overall this is an excellent book, that manages to be intellectually thorough as well as a well written, dryly witty, introduction to the arguments that is ideal for the general reader. Worth reading also on the subject (although their account of the credit crunch is confused and unsatisfactory) is Barry and Saville Kushner's Who Needs the Cuts?: Myths of the Economic Crisis which is particularly excellent on the media's handling of Austerity. On the tax side of the public finance equation Nicholas Shaxson's Treasure Islands: Tax Havens and the Men who Stole the World is priceless, as is Richard Brooks book cited above.
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on 11 July 2013
I have always known that George Osborne's policies were wrong - it just seemed so obvious: how is it possible to force contraction on an economy, increase unemployment, scrap public services (then be forced to pay unemployment benefit), bring in consultants at a much higher price to replace the sacked public service workers and expect the economy to grow when all of this country's major trading partners are doing the same thing? The public debt was not created by spending on the public, it was created by bailing out the private sector (Banks) but, as yet, there is no legislation following the Vickers Report and the Tyrie, Parliamentary Commission report has been all but rejected. So in the UK we have austerity, wrecked public services and all to support bankers' bonuses and failed, reckless governance, which is left as it was ready to replicate moral hazard and pass the bill onto the state. However this book, which is quite academic, shows why austerity cannot work and how it has failed time and time again - even where it may have 'appeared' to work. We need rid of the current treasury team - send them back to the Bullingdon Club - after all it is a club dedicated to wrecking but at least the real culprits pick-up the tab.
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on 6 June 2013
Austerity is a superb and timely book. There are many books on the financial crisis and on Europe, but none have dissected the policy response as comprehensively as Blyth. His central argument that austerity is self-defeating when implemented by many countries simultaneously is supported by logic and evidence. All presented, here, in detail, and balanced with entertaining stories and quips.

Also unique is Blyth's archaeology of the idea. Nowhere else is the origin of German and Italian thinking on the subject explained so thoroughly.

This is no naive or fanciful history of ideas. Repeatedly, Blyth explores the issue of who benefits most from the ideas expounded by thinkers and taken up by policy makers. This is eye-opening and devastating. Austerity is not just a failed policy, but a punitive redistribution from the weak to the affluent. After reading Blyth, it is hard to believe this is coincidence.

No one else writing in economics can capture so much so succinctly, and so humorously. I hope the German translation sells well.
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on 27 May 2015
This is a compelling and witty book that drives a coach and horses through the harmful ideology that austerity is what is going to save us from the effects of banking collapse. I agree with the author that it would be really nice to have more people like him around who have come from working class backgrounds and appear to have benefitted from state resourced health and social care mechanisms in future. Why is the state so vilified and abused while being such a willing helpmeet of the private sector when it fails? Is it time for Karl Marx to ride again, perhaps? Blyth is wittier, sometimes inclined to jargon, and in a way, this a book of 2 halves, one of which shows that the banking crisis was a private sector issue picked up by the public sector (for reasons that are still not quite clear to me, I think there were probably moments when I stopped paying close enough attention, for this is a demanding piece) and the other of which shows that austerity should not be strategy adopted by the public sector in addressing (or really not addressing) the crisis. What a pity that the Labour party was not able to get across the message of this book that the financial collapse was not the result of excessive public spending in spring 2015 - but then, nor was it the result of the depraved morality of bankers as individuals. So this work poses the question to all of us, how are we all so easily deceived by economic clichés? Well worth a read.
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on 7 March 2014
A very clearly written book on a widespread misunderstanding among most European politicians about how to deal with the recession. The suffering of tens of millions of people, especially in the Southern European countries, has been aggravated by bad policies, that have deepened the economic recession. Even though the IMF now acknowledges that the policies of austerity have had an adverse effect, hardly any European politician can get their mind around the fact that they have been collectively wrong. "Everybody" agreed on this, they will say. The most amazing thing for me is how they seem not to be aware how groupthink can be pushed in a certain direction, a wrong direction in the case at hand, by a small number of influential people, who were wrong -- even though their profession is based on the skill of pushing public opinion in order to change the way reality is seen. How can they believe that they themselves are not susceptible to this kind of perception manipulation, while they believe everyone else is?! This book does the public a great service by setting things right.
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VINE VOICEon 29 August 2013
Format: Hardcover|Vine Customer Review of Free Product( What's this? )
A concise and accessible run through of the economic history of austerity, and an essential primer for anyone still under the (mis)apprehension that the current `sovereign debt crisis' is the cause, rather than effect of our economic malaise.

One might think that debunking the idea of `expansionary fiscal contraction' is rather like shooting fish in a barrel, but a lot of money has been poured into shoring up the ideology that it supports, so any ammunition expended in its refutation is never wasted.

Mark Blyth comprehensively demolishes the real world examples given for the efficacy of the economic equivalent of blood-letting, while detailing the genesis of the theories underpinning the practice, from Locke, Hume and Smith, through Ricardo and on to the Austrian and Italian schools of `Austerianism'.

The big question of how such an absurd theory could have captured the discourse so comprehensively is easily answered by looking at the beneficiaries of `the project' - the mobile elite who, to coin a phrase, have `never had it so good'. When the rocket-fuelled gains of the securitisation process inevitably fell back to earth, the only way those with their hands on the policy levers could protect the positions of those they served was to impose financial repression on the masses through cuts in wages and pensions and the privatisation of health and education. It is no surprise that the last 5 years has seen some of the biggest rises in recorded income and wealth inequality in history - and that's before taking the massive expansion of tax havens into account (see: Nicholas Shaxon'sTreasure Islands: Tax Havens and the Men who Stole the World.

At root of the problem is the fact that much orthodox economic theory, from the Wealth of Nations (Wordsworth Classics of World Literature) on lays its foundations on the sand of the fallacy of composition - the idea that individual self-interest must inevitably lead to the optimum allocation of resources, that the outcomes of the choices of individuals and firms will always negate the negative externalities that fall on other individuals and firms. Without that essential building block much of the facade of liberal economics begins to crumble.

Although touching on the tenet that endures across the orthodox economic spectrum, from Krugman to Mankiw, that banks are merely intermediaries between `patient' lenders and `impatient' borrowers, Blyth could have said more about the monetary system in a fiat, post-gold, system wherein lies the capacity for private commercial banks to endogenously create credit without having to draw on deposits - thus facilitating the massive multiples of leverage that broke the banks and landed the debt on the public balance sheets.

The author also has little to say about the outright, state-sponsored fraud that became endemic to the system as it went off balance sheet (as highlighted by Robert Sherrill in his savage indictment of the `looting decade' of the 1980s, and Satyajit Das's more recent expose of the banking world in Traders, Guns and Money: Knowns and Unknowns in the Dazzling World of Derivatives (Financial Times Series)).

Sadly, Blyth's final conclusions are not that convincing - it's unlikely that, short of revolution, any real reversion to the tax policies that accompanied the growth periods of the post-war years is on the horizon - even if the alternative is a dystopian Robocop future. Never have so many been shafted so much by so few - and yet, like the frog on simmer, the apathy and inertia grows.

The message one is left with is the one the author begins with: the social mobility that he benefited from growing up in a period of social democracy is already a thing of the past, with student debt levels ensuring that places at the best universities once more become a badge of privilege, while low income graduates enter a lifetime of debt servitude. Ironically, many of those who engineered the brave new world of financial weapons of mass destruction had benefited from that era of social mobility that saw them move from blue-collar obscurity to become Masters of the Universe, and are now busily kicking away the ladder.

Also recommended: John Cassidy's excellent history of economic ideology: [How Markets Fail: The Logic of Economic Calamities] [by: John Cassidy]
Naomi Klein on the political underpinning of the Chicago School: The Shock Doctrine: The Rise of Disaster Capitalism
David Harvey: A Brief History of Neoliberalism
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