tag:blogger.com,1999:blog-1331441403058020963.post6767317301867122008..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: Defining Austerity DownThomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-1331441403058020963.post-41322964525803970492013-03-17T19:10:30.843-04:002013-03-17T19:10:30.843-04:00Yes I read your book, although I didn't take t...Yes I read your book, although I didn't take the time to go back and re-read that chapter before writing this since my focus was on others. I'll try to carve out some time to revisit it this week, but I don't recall having any objections to that chapter.<br /><br />I'm sorry if you thought I was taking a cheap shot at you. Really what I am trying to stress is that Alesina's argument is qualitatively different from previous conceptions of austerity in such an important way that the same term really shouldn't be used for both. I plan another post expanding this claim. Hopefully it will be done this week sometime.<br /><br />The reason why I am splitting these hairs is because I'm mostly interested in the politics of the thing. And the political dynamic in Alesina-austerity is completely different from the political dynamic in Schumpeter-austerity. Almost the opposite in fact. And the political side of this is what seems to have motivated Alesina in the first place (this will also be discussed in the upcoming post).<br /><br />Possibly Blyth makes the necessary distinctions in the book. I hope so. What I'm suggesting is that conversations about the book, Alesina, and the political situation more generally should be similar clear on the concepts. When I read folks on austerity I sense a lot of vagueness and "mood affiliation" which doesn't really add up to any substantive argument. This is what I try to point out in the discussion of the UK in this post.Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-23352808625208915592013-03-17T18:47:51.925-04:002013-03-17T18:47:51.925-04:00Have you read my book? It certainly doesn't se...Have you read my book? It certainly doesn't seem so. The chapter on austerity (in the US paperback edition) makes all these distinctions (Treasury View vs Alesina vs austerity to meet external balance constraint) quite clearly, drawing on Blyth, whose book I read in manuscript.<br /><br />But obviously my 50-word blurb fell a bit short in this respect. Thanks for pointing that out.John Quigginhttps://www.blogger.com/profile/10830215234726229924noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-38594841380767964742013-03-16T13:06:29.658-04:002013-03-16T13:06:29.658-04:00JR,
I think that's probably right. Germany w...JR, <br /><br />I think that's probably right. Germany was known as the "sick man of Europe" for a long time, because it was undergoing structural reform. It was quite costly but it did put them on a path for later growth. And, as you say, many other European countries went through somewhat similar processes during the 1990s/2000s. <br /><br />But this is more like the old definition of austerity: make structural reforms which will HURT now, in the hopes that you will benefit LATER. Alesina is arguing that with a sufficiently large set of cuts now you will gain today, not sometime down the line. So it's a very different.<br /><br />My guess is that the EZ policymakers are thinking more like you, with the add-on that it's one thing for you to decide you want to adjust structurally in your own country; it's another when some other country doesn't really want to do that but wants your money. And so Germany is acting like the IMF because they have been in the position of the IMF: there's a huge dynamic consistency problem which is exacerbated by the fact that southern European democracies *do not want structural reform*.Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-22079209644521776242013-03-15T22:22:08.185-04:002013-03-15T22:22:08.185-04:00" I guess it's possible that the German f..." I guess it's possible that the German finance ministry actually believes that Greece's economy will grow following massive public sector cuts, but it is not necessary to believe that in order to explain Germany's actions."<br /><br />I would argue that the German finance ministry more than likely believes this because simply because - in their estimation - a form of "austerity" actually did work and bear fruit in Germany 10ish years ago. The Hartz/Agenda 2010 labor and social reforms did cause immediate, short-term hardship in Germany, but were largely a success (http://www.spiegel.de/international/business/fixing-the-labor-market-schroeder-reforms-bear-fruit-in-german-recovery-a-528757.html - yes, I know it's out of date, and most of the predictions in there are laughably rosy, but the main point remains intact). These reforms were political suicide for Schroeder and the SDP, and were wildly unpopular at the time. However, as things stand now, I heavily suspect that broad swathes of the German electorate do believe there is a connection between these reforms and Germany's economic resilience of the past 4 years (I have no real evidence/polling data to back this claim up - but it seems pretty plausible given the unpopularity of eurobonds, debt-pooling, sovereign bailouts in general, high inflation, etc...).<br /><br />In my cursory glances at the austerity debate, I have yet to see it mentioned that deficit reduction and labor market/social system reforms have been a prominent strain in the politics of Germany, Austria, the Netherlands, and Finland for the past two decades (among others - keeping it in the eurozone for now). It's worthy to consider that the origins of current European "austerity" could be a lot closer to home than the East Asian or Latin American financial crisis, a lot closer in time than Weimar-era hyperinflation, and a lot less arcane than a handful of recent papers by a somewhat obscure Italian economist. In addition to the distributional "materialist reality", these origins could also be found in the internalized "lessons" of RECENT economic history in many of the creditor states.JRnoreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-81153831437632059332013-03-15T15:31:00.751-04:002013-03-15T15:31:00.751-04:00(That was me above, I’ll use a username from now o...(That was me above, I’ll use a username from now on so it’s easier to tell the anons apart)<br /><br />On this:<br /><br />“Given that, how is it helpful to use the same word to refer to very different things?”<br /><br />I really don’t know. (Not without having read the book anyway..although I’m not sure even that will clarify a whole lot – a lot will depend on how he builds his argument in the book, I guess.)<br />It might be the case (probably) that he adopted to wide a purview (Farrell hinted at that in the review, that it was too dense in places) and tried to fit too much into the narrative. (To give it contemporary relevance) I guess it lives or dies on how convincing the argument about Alesina’s influence is. If he makes that case somewhat convincingly/coherently, then the other flaws (conflating too many different ideas/policies etc under one banner) can be overlooked, to a degree.<br />Or maybe not. I really don’t know. I’m inclined to be sympathetic towards his argument, I think, so this post has been a useful corrective to my prejudices <br />Ronannoreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-64369102966164926412013-03-15T13:15:36.843-04:002013-03-15T13:15:36.843-04:00Anon,
thanks for your thoughtful comments. I'...Anon, <br /><br />thanks for your thoughtful comments. I'd written this post a week or more ago, and have revised it several times sense. I find this whole conversation to be a bit confusing. (I'm even more confused than others, I think... I have a post planned which makes that case that Keynesians actually believe in expansionary austerity!)<br /><br />The way I see it is that "austerity", as a concept, has historically had such a different meaning and served such a different purpose from Blyth's usage that using the same term is misleading. Austerity means impoverishment, not growth. Phrases associated with it -- "tighten the belt" etc -- mean that hard times are here, "tough choices" have to be made, etc. In the history of thought it has taken on a moral element: the purge after the binge, a necessary correction after years of exuberance. That sort of thing.<br /><br />This isn't ancient history, either. This is how the word was used during the Latin American debt crises and East Asian currency crises. This is how Farrell seems to be using it in his review. This is how Krugman and Stiglitz and others commonly use it now. <br /><br />To restrict "austerity" to Alesina's version (inappropriately, actually, as I'll spell out in the next post) misses all this. To use an analogy I'm sure I'll regret, it would be as if someone referred to affirmative action programs as "slavery". Well, okay, you could probably trace a line of thought from one to the other, but in the end they are still very different things.<br /><br />My point about the UK is simply that their situation is not really analogous to Greece, or to austerity programs in E Asia/L America, etc. Basically all I'm doing is agreeing with those who criticize neoliberals for advocating austerity during peripheral crises but Keynesianism when crisis hits closer to home (although I don't actually think there's a disjunction here, for reasons I won't elaborate right now). Given that, how is it helpful to use the same word to refer to very different things? Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-88795050717675619702013-03-15T11:06:11.582-04:002013-03-15T11:06:11.582-04:00Actually ignore the points on the UK..I see what y...Actually ignore the points on the UK..I see what youre saying Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-62433747218061829522013-03-15T10:56:46.060-04:002013-03-15T10:56:46.060-04:00(Continuing from above)
Your arguments vis a vis t...(Continuing from above)<br />Your arguments vis a vis the UK are pretty convincing (but as you note Blyth probably isn’t speaking about the UK in the book). I have one or two queries in general though.<br /><br />On this:<br /><br />“Cameron has courted the U.K.'s business community using naked language to this effect, and prominent business leaders have supported the cutting programs. They'd rather keep the future bill low, if possible, all things considered. Hence, the attempts to "hack away at spending". <br /><br />But how are these policies in the interests of the ‘business community’? Surely what is in the interests of the business community, in general, are people with disposable incomes they can use to buy things from these businesses? So if ‘austerity’ is not naturally in the interests of prominent business leaders, we have to explain why they support it?<br /><br />“Hence the tax cuts for the rich and tax increases for pensioners in the most recent budget, which were praised by business and The Economist. All very materialist.””<br /><br />Accepting the importance of ideas in driving austerity (in general, perhaps not in Blyth’s conception – I haven’t read the book but Farrell says in the review it’s not without flaws, but a way to start thinking about the role of ideas) is not incompatible with austerity taking very specific distributional forms in very specific contexts, or is it? If you see what I’m saying? <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-75980069377955675102013-03-15T10:52:25.356-04:002013-03-15T10:52:25.356-04:00“But because he's taken the word "austeri...“But because he's taken the word "austerity" to mean something different from the general/historical understanding”<br /><br />I don’t get your general objection here. As you’ve shown there is no “general/historical understanding” of the word austerity. It means different things at different times in different contexts. What Blyth is doing (I assume) is giving that history, (the background to the current interpretation of austerity) to explain its current manifestation in a very specific mix of policies. <br />You can acknowledge the way ‘austerity’ has been interpreted historically as background, while also explaining its specific interpretation now, without contradicting yourself or being disingenuous, imo.<br /><br />Also, if austerity is the result of material, (or distributional), concerns, does the fact that it is beginning to be implemented/ supported in the core undermine that argument?<br /><br />http://www.economist.com/blogs/democracyinamerica/2013/03/economics-and-ideology?fsrc=scn/tw/te/bl/rightforthewrongreasons<br />Anonymousnoreply@blogger.com