8 of 8 people found the following review helpful
Erudite, well argued and empirically solidly supported case against the current austerity mantra,
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This review is from: Austerity: The History of a Dangerous Idea (Kindle Edition)
If this book is representative of his other work, Mark Blyth possesses that rare quality in an economist of being able to distill the concepts of his field into an easy to read and comprehend format. In the current book he focuses on austerity, the poster child economic ideaof our post 2008 time and takes the reader on a journey of its intellectual / theoretical background, covers the factual support for its success from prior real life applications and finally offers both some conclusions on the likelihood of it succeeding, as well as on possible alternative futures.
As is apprent from the title, there is not a neoliberal bone in the author's body. While some may call him an unashamed Keynesian, he has the (to some) annoying characteristic of working both the economic literature and the real life factual examples down to the bottom line, which often leaves the austerity arguments severely wanting. He also clearly points out the redistribution aspects of the austerity message - and not in a Marxist manner - and how those affect the popularity of the policy.
The book is built up around several main facets. The first one being that the current predicament came about as a result of a banking crisis and not of public spending running amok (with the exception of Greece). This then led to the 'too big to fail' meme in the US and the consequent state bailout. In Europe some countries drew the same conclusion, however the banking sector is different - being accoridng to the author very much in the 'too big to bail' category. The moral hazard that played out is covered next - but make no mistake - the author by no means attacks the integrity or morality of bankers, just points out how the structure of the system encouraged certain behaviour, which turned out to be very counterproductive for society as a whole in the long run.
Following that the intellectual history of the austeriy idea is covered from Hume, Hobbes, Smith and Ricardo to the present day, with the Austrian school, the German ordoliberal thinking and the Bocconi support all getting appropriate air time. The author is openly critical of most of their approaches from both a theoretical and empirical point of view but makes a good case for a reasonable debate (as in not being uniformly and rabidly against on ideological grounds).
All the real life poster children for austerity working are examined next, including a short rerun of the austerity approaches in the post WW1 world (US, UK, Sweden, France, Germany and Japan being amongst the cases), the 1980s, where the standard cases of Ireland, Sweden, Denmark and Australia are examined and the currently popular Irish case and the REBLL alliance. As a counterpoint from today's world he brings the case of Iceland, a rare example of banks being allowed to fail and which alone amongst the examples has a truly positive development to show post crisis.
Where I find the book earns the last star is in the author doing an excellent job in distinguishing the cases, where austerity may work from those, where we only have rhetoric at play. Another reason for the high score in my opinion is that the author manages to pull off something of a Heilbroner (famous for his The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (Penguin Business Library)) here - namely ensuring that complex concepts are broken down to be both understandable to the regular reader, while at the same time not sounding inane to someone familiar with the topic.
The only slight fly in the ointment is the relative paucity of advice how alternative solutions could look like. Sure enough, the author presents some plausible next steps but these are nowhere as comprehensively covered as the subjects in the rest of the book.
Irrespective, this is a very important book and one would do well to read it and understand the consequences of where current policies are likely to lead the countries implementing the austerity mantra. Not perhaps for the hardcore neoliberal but thoughtful enough to let the other readers seriously reconsider the current path the world is following.