Austerity’s intuitive logic fails once distributional and aggregate questions are asked

Evidence

But austerity intuitively makes sense, right? You can’t spend your way to prosperity, especially when you are already in debt, can you? Austerity is intuitive, appealing, and handily summed up in the phrase you cannot cure debt with more debt. If you have too much debt, stop spending. This is quite true, as far as it goes. But thinking this way about austerity neither goes far enough nor asks the important distributional questions: who pays for the reduction in the debt, and what happens if we all try to pay back our debts at one time? — Mark Blyth, Austerity, 41

Categorization

• XREF: The ‘what if we all try to pay back at once’ question is the Keynesian paradox of thrift; links to Mattei and standard austerity critiques. — connects to: Austerity rests on a fallacy of composition, not a confidence problem — Mark Blyth, Austerity: The History of a Dangerous…, 45; The ECB justified austerity through rational-expectations Ricardian consumer theory — Mark Blyth, Austerity: The History of a Dangerous…, 174; The liquidationist logic makes austerity seem unavoidably necessary. — Mark Blyth, Austerity: The History of a Dangerous…, 324 (+1 more)

Broader Connections

• Austerity rests on a fallacy of composition, not a confidence problem #expands (0.85) — Mark Blyth, Austerity, 45