Austerity logic ignores that growth, not cuts, may resolve debt

Evidence

We can, of course, raise issues with each position. To name but an obvious few: low growth could equally lead to more debt, so the solution would be to increase growth, not cut debt. Any savings that could be made through cuts now could simply be given away as yet another tax cut in the near future without any corresponding payoff to coming generations. A refusal by the United States to recycle foreign savings could be just as deleterious to the global economy as the excessive borrowing of foreign money, since the ability of the rest of the world to run a surplus against the United States, necessary because of its export-led growth models, would be compromised. Finally, financial repression, what Krugman implicitly advocates, does have some costs as well as benefits. — Mark Blyth, Austerity, 53

Categorization

• XREF: The ‘export-led growth models requiring US surplus absorption’ point echoes Blyth’s later argument about the global asymmetry of austerity in Southern Europe and connects to Mattei’s systemic critique. — connects to: Austerity failed to deliver promised wage declines and deficit cuts in the REBLLs. — Mark Blyth, Austerity: The History of a Dangerous…, 607; Austerity has never successfully reduced debt and instead causes instability, riots, and war — Mark Blyth, Austerity: The History of a Dangerous…, 614; Linear debt projections assume a future that other trends will upend — Mark Blyth, Austerity: The History of a Dangerous…, 685 (+5 more)

Broader Connections

• Large debts shrink in real terms when growth outpaces the debt #corroborates (0.95) — Mark Blyth, Austerity, 52