Austerity’s costs fall harder on the poor, making it politically unsustainable

Evidence

Economists tend to see questions of distribution as equivalent to Bill Gates walking into a bar. Once he enters, everyone in the bar is a millionaire because the average worth of everyone in the bar is pushed way up. This is at once statistically true and empirically meaningless; in reality, there are no millionaires in the bar, just one billionaire and a bunch of other folks who are each worth a few tens of thousands of dollars, or less. Austerity policies suffer from the same statistical and distributional delusion because the effects of austerity are felt differently across the income distribution. Those at the bottom of the income distribution lose more than those at the top for the simple reason that those at the top rely far less on government-produced services and can afford to lose more because they have more wealth to start with. So, although it is true that you cannot cure debt with more debt, if those being asked to pay the debt either cannot afford to do so or perceive their payments as being unfair and disproportionate, then austerity policies simply will not work. In a democracy, political sustainability trumps economic necessity every time. — Mark Blyth, Austerity, 42

Categorization

• ADDENDUM: Directly reinforces the distributional-threat logic underlying ‘On Sacrifice’ — who bears the cost of a stabilization regime matters more than its aggregate logic.
• APHORISMS: ‘In a democracy, political sustainability trumps economic necessity every time’ reads as durable practical wisdom about governing.
• XREF: connects to: Austerity-era sacrifice drops the trickle-down promise that sacrifice would benefit the poor — Wendy Brown, Undoing the Demos: Neoliberalism’s…, 419; Unequal austerity generates populism, nationalism, and violent movement instead of revenue — Mark Blyth, Austerity: The History of a Dangerous…, 63; Austerity ignores the externality costs of top-income decisions on lower-income people — Mark Blyth, Austerity: The History of a Dangerous…, 62 (+3 more)

Broader Connections

• Sri Lankan austerity combined fiscal and monetary contraction hitting the poor hardest #exemplifies (0.90) — Clara E. Mattei, Escape from Capitalism, 347
• Austerity-era sacrifice drops the trickle-down promise that sacrifice would benefit the poor #expands (0.82) — Wendy Brown, Undoing the Demos, 419
• Unequal austerity generates populism, nationalism, and violent movement instead of revenue #expands (0.80) — Mark Blyth, Austerity, 63
• Austerity ignores the externality costs of top-income decisions on lower-income people #corroborates (0.75) — Mark Blyth, Austerity, 62
• Austerity’s success cases are few and possibly wrong while its failures are demonstrable #qualifies (0.75) — Mark Blyth, Austerity, 479
• Austerity is economically irrational yet politically rational for preserving capitalism #corroborates (0.72)