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.Austerity When It Works and When It Doesn't

In the midst of this downturn, three economists believe they have found the explanations for when austerity policies work. However, they are cleverly ignoring the question of who it works for.

(PS. This article is machine-translated from Norwegian)

As a child of the 1980s, I remember the strange words like kartoffelkur, samfundssind og afregulering. I also remember that my older sister – who graduated from high school "into youth unemployment" – took me with her when she was going "up to the municipality," which we call where I grew up. Later I learned that people who are located elsewhere in sociogeography call it "down to the municipality".

We were happily unaware at the time that, after all, the poor eighties were still honorable. It was not that difficult to "get on the support" and my big sister found paid work after a very short time. What was once called aid assistance is now called cash assistance, and there is significantly less cash to collect, and with substantially more restrictions. For example, you are willing to take non-jobs where you contribute to someone else's earnings, without even getting one. It has become a condition of working (free) to get unemployment benefits. After all, we must all be socially minded.

If the companies were to pay (properly) for the labor force, and if the workers could even get their tax dollars back in the form of support when there is no work to take, where could it not end in these times of crisis?

When it (doesn't) work

What was new and controversial and potato-like in the 1980 has become the order of the day. austerity it is called in international economics lingo, which may well translate into restraint. A new book on this kind of government control of the state budget – about "when it works and when it doesn't", as it is freshly called in the subtitle – explains that there are two types of austerity: to cut government spending or raise taxes, possibly a combination.

The "market" and "investors" must, it is understood, be kept harmless and satisfied and full of future faith, regardless of the calamities they have caused for all of us.

One of the main conclusions of Austerity. When It Works and When It Doesn't is that – contrary to what Keynes and Keynesians think – it is best for the macro economy when the state cuts its spending. For example, by cutting the number or wages of government employees. It often has the blessing effect for the macro economy that wages in the private sector decline and vupti increases corporate profits and the mood of business owners. The fact that workers lose purchasing power is a lesser evil than if investors lose the desire to invest.

The only form of increased taxation the book deals directly with is income and labor, while taxation on corporate profits, stock dividends, property, inheritance, currency speculation and goods and more are bypassed. Through this selective and biased objective focus, the book's argument builds around the fact that it provides a better "output" when states cut back than when they increase the revenue base.

Decades of austerity

The authors – three economics professors from Harvard University and Bocconi University, respectively – have analyzed hundreds of austerity programs from the 1980s to the post-financial crisis in 16 OECD countries, including Denmark and Sweden. By bringing one mulityearperspective examines economists the effect of economic recovery.

In this photo made on Saturday, June 20, 2015, a man walks past graffiti titled “0 Euro” by street Artist Achilles in Athens. (AP Photo / Petros Giannakouris)

They also look at the political implications in the narrow sense: Whether governments implementing austerity programs have less chance of being re-elected. And those in power can breathe relief – there is no direct link between austerity and voter turnout. And when someone, such as trade unions, makes organized protests against austerity, such as strikes, then it is – more than the authors suggest – an expression of selfish and privileged behavior that creates "many problems for society".

The ideology of the models

Austerity. When It Works and When It Doesn't is rather technically landscaped, although the authors also have ambitions to approach other than nerds in economic models. But one message that clearly goes through to anyone is that it is strenuous and oblivious when someone criticizes austerity as such, especially in the downsizing version. The criticism often takes place in a "very ideological, hard and unproductive tone", which does not seem "convincing" in the "markets" at all. The markets need "security" and feel far more secure in depriving citizens of rights than in the prospect of increased taxation.

Even when I was in the early 00's for two months without a job before university, the pipe had a different sound in the municipality. There was nothing to come after. I first had to spend my hard earned savings from three underpaid jobs like bicycle bids, grocery shopping and unskilled social educator before I could get a penny. In fact, I also had to sell my little cheap condo. When I was both homeless and unemployed, it could be that they could look at my case. So there was the savings that should have kept me debt free during my studies.

What was once called aid assistance is now called cash assistance

My friends, who had instead spent the money from their underpaid jobs on flat screen TVs and other last year, would have been able to get cash help. For they had exhibited more social minds in the logic of the '00s, where it was about consuming at least everything that was earned and preferably more. It seemed weak and unjust at that time. It still does. And the most faint-hearted and unjust was, and is, that none of us – neither the frugal nor the (over) consuming – will ever benefit from the austerity programs. Our debt continues to rise as our labor is compensated less and less.

But there it is, obviously, that one must rise up into the macroeconomic air strata and see things in a larger perspective.

Accumulation and erosion

One point of the book, which it is difficult to disagree with, is that the so-called necessity of austerity is always due to the erroneous or irresponsible politics of the past. Sometimes in combination with sudden crises. The jumping-off point, however, is what one thinks of the mistakes of the past.

The self-proclaimed anti-ideological economists reveal their deep ideological business through everything they do not mention: where values ​​accumulate and who benefits from the renewed growth that "successful" austerity programs create. Indeed, it is neither states like this nor even smaller workers that are enriched. Real income and access to collective goods have been steadily eroding in virtually every OECD country since the 1970s, which was, funnily enough, the transition to today's austerity order.

Fortunately, the writers have apologized all the time for not relating to it. Those who accumulate wealth are described only with faceless terms like "the market" and "the investors" – and they must, you understand, for everything in the world is kept harmless and satisfied and full of future faith, no matter what misfortunes they have caused to all of us .

And that with inequality
- writes the authors and passant – a completely different discussion that needs to be addressed in another book, another day.

Nina Trige Andersen
Trige Andersen is a freelance journalist and historian.

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