Austerity kills investment by suppressing the aggregate income that justifies new capacity.

Evidence

Austerity is not just bad for workers and people in need of state support during tough times, it also murders investment. In any economy, what we spend collectively translates automatically into what we earn collectively. The definition of a recession is when private expenditure is falling. By reducing public expenditure at precisely the same moment, the state accelerates the decline of economy-wide expenditure and thus hastens the rate at which a society’s total income is falling. And if society’s total income is falling, businesses are hardly going to spend money building up capacity when consumers don’t have the money to buy. That’s how austerity slays investment. — Yanis Varoufakis, Technofeudalism, 393

Categorization

• XREF: Links to Keynesian expenditure-income identity that frames the post-2008 investment strike; usable comparator against the platform-rent thesis of later chapters. — connects to: Austerity’s core claim that cuts lead to growth is dangerous nonsense — Mark Blyth, Austerity: The History of a Dangerous…, 15; Announced austerity cuts signaled lower growth and deflated markets instead of calming them. — Mark Blyth, Austerity: The History of a Dangerous…, 28; Austerity suppresses consumer demand by starving the population that sustains the economy — Clara E. Mattei, Escape from Capitalism, 349 (+2 more)
• corroborated: 2 independent passages support this claim — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 393

Broader Connections

• Austere fiscal contraction produces the very outcomes its advocates seek to avoid #corroborates (0.85) — Mark Blyth, Austerity, 26