Austerity

The Great Failure, Florian Schui, Yale University Press.

“Today’s controversies over austerity are not new,” begins Florian Schui in the introduction to ‘Austerity: The Great Failure.’ “The notion that individuals, states and societies benefit from limiting their consumption is almost as old as humanity.” The book is the author’s effort to put these controversies in historical context, and to explain why austerity remains popular, despite a track record of dismal economic failure.

“Austerity policies are proposed to restore balance in government finances and regain economic dynamism and competitiveness,” explains Schui, who researches the history of political and economic thought at the University of St Gallen in Switzerland. This is typically pursued by cutting back on government expenditures (pensions, health care and education, for instance), while attempting to lower the cost of labor (wages).

Schui notes how proponents of austerity policies “are often cast as hard-nosed economic experts who advocate unpleasant but necessary measures.” At the same time, opponents are typically viewed as well-meaning but naïve. Never mind that austerity policies have been shown to make economic downturns longer and deeper, as opposed to shorter and less severe. This hasn’t diminished their popularity, however, perhaps because proponents argue on the basis of morality and politics.

In the course of tracing the historical roots of arguments about austerity, Schui examines the ideas of everyone from Aristotle, Adam Smith, and Karl Marx, to more modern thinkers like Friedrich Hayek and John Maynard Keynes. Ultimately, Schui concludes that “[f]or the past 2,500 years proponents of austerity have mostly failed to make a convincing case for their cause…. There are no convincing economic arguments for austerity policies in their current form and there is no compelling moral or political case for them either. Austerity, in its current form, is simply a great failure.”