Just Finished Reading: Austerity – The History of a Dangerous Idea by Mark Blyth (FP: 2013) [272pp]

Selected as the Best Book of 2013 by the Financial Times and Bloomberg News this is a well presented, deep and blistering attack on the response to the (fast fading from memory) financial crisis of 2008. Putting the blame where it belongs – in other words NOT with the governments who were forced to use tax payers money to bail out the banks and financial institutions that actually caused the problem – the author looks at two aspects of the financial fall out. Looking first at the USA – ‘too big to fail’ – then moving onto the Eurozone ‘too big to bail’. I was mostly aware of the American response to the crisis so most of it didn’t come with many surprises. What really caught be unaware though was what exactly happened in the Eurozone. I was aware of the bank bailouts (with Iceland being the very notable exception here) and the deepening crisis in Greece but what I failed to appreciate was the total mess within the Eurozone almost completely caused by issues around the single currency (which we never joined) and the dictates of the European Central Bank controlled by the Germans. It almost, emphasis on the almost, made me cheer to fact that we’re no longer IN the European Union. What it did make clear was that fiscal integration within Europe moved MUCH faster than it should have done as was far to in advance of political integration which should have happened first. Despite the real danger that this whole debate could have gone very technical very quickly the author not only managed to make it interesting but I felt that I actually understood a LOT more about European political decisions over the last ten years than I had prior to reading this excellent volume.   

After spending around half of the volume dealing with the US and Europe the author moved onto the history of the idea of Austerity handily debunking theory after theory – which often had either little basis in reality or were actually (and in effect fraudulently) based on manipulated or massaged data sets to arrive at forms of political positions that could be made (or made to sound like) into ideas palatable or at least grudgingly acceptable to the voting public. Of course we all know WHY governments stepped in and bailed out the criminals who caused the Crash of 2008. They had to, or at least they knew that if they didn’t that they would pay the political consequences at the next election. Of course most of those responsible walked away without a scratch and, in too many cases, actually better off. It still astounds me that organisations and individuals supposedly dead set against government intervention of any kind and especially intervention in economic affairs were more than happy accepting government bailouts – from institutions that many of them believed did not need to exist nor should exist. Hypocrisy just doesn’t cover it. If they’d had an atom of honour (yeah, right) they would have admitted that they’d fucked up, refused the bailout and fallen on their collective swords. Personally I would have stopped the economic collapse, arrested those involved and thrown the lot of them in jail (if they were lucky) and then asset stripped their companies to pay back as much as they could.

Unfortunately austerity is one of those toxic ideas that refuses to do the right thing and slink off into the woods to die alone. Despite failing time and time again it is brought out as a ‘solution’ to the problem of recession or depression despite the fact that throughout recorded history it has made recessions longer, deeper and more painful. If you’re of an economical mind-set and wonder exactly why the financial fallout from the Crash of 2008 played out the way it did across the world this is definitely the book for you. Definitely recommended.