Austerity ignores the externality costs of top-income decisions on lower-income people
Evidence
Austerity is, then, a dangerous idea because it ignores the externalities it generates, the impact of one person’s choices on another person’s choices, especially for societies with highly skewed income distributions. The decisions of those at the top on taxes, spending, and investment prior to 2008 created a giant liability in the form of a financial crisis and too big to fail and bail financial institutions that they expect everyone further down the income distribution to pay for. “We have spent too much” those at the top say, rather blithely ignoring the fact that this “spending” was the cost of saving their assets with the public purse. Meanwhile, those at the bottom are being told to “tighten their belts” by people who are wearing massively larger pants and who show little interest in contributing to the cleanup. — Mark Blyth, Austerity, 62
Categorization
- XREF: Connects directly to Mattei’s work on austerity, the reader’s stated companion text; also echoes the income-distribution framing in Parable of the Sower context. — connects to: Fiscal and monetary austerity jointly transfer capital accumulation costs onto working classes — Clara E. Mattei, The Capital Order: How Economists…, 774; Austerity reduces taxes on capital while raising taxes on labor income — Clara E. Mattei, Escape from Capitalism, 146; Austerity’s costs fall harder on the poor, making it politically unsustainable — Mark Blyth, Austerity: The History of a Dangerous…, 42 (+1 more)
- ADDENDUM: The ‘belt-tightening by those in bigger pants’ framing parallels the moral-imposition logic at the heart of the sacrifice theme in ‘On Sacrifice.‘
Broader Connections
- Austerity reduces taxes on capital while raising taxes on labor income
#expands(0.75) — Clara E. Mattei, Escape from Capitalism, 146 - Fiscal and monetary austerity jointly transfer capital accumulation costs onto working classes
#expands(0.72) — Clara E. Mattei, The Capital Order, 774