Austerity rests on a fallacy of composition, not a confidence problem

Evidence

As we shall see, if one starts from the premise that investment and growth flow from confidence, then one misses this point rather completely. What matters is a “fallacy of composition” problem, not a confidence problem, in which what is true about the whole is not true about the parts. This runs counter to common sense and much current economic policy, but it is vitally important that we appreciate this idea since it is the third reason austerity is a dangerous concept: we cannot all be austere at once. All that does is shrink the economy for everyone. — Mark Blyth, Austerity, 45

Categorization

• XREF: Explicitly frames austerity doctrine (confidence/virtue theory) against the fallacy-of-composition critique; connects to Mattei and the broader anti-austerity canon. — connects to: Austerity’s intuitive logic fails once distributional and aggregate questions are asked — Mark Blyth, Austerity: The History of a Dangerous…, 41; Austerity is an effective class-structure instrument, not an economic error — Clara E. Mattei, Escape from Capitalism: An Intervention, 142; Austerity’s success cases are few and possibly wrong while its failures are demonstrable — Mark Blyth, Austerity: The History of a Dangerous…, 479 (+6 more)

Broader Connections

• Austerity is economically irrational yet politically rational for preserving capitalism #complicates (0.78)
• Austerity is an effective class-structure instrument, not an economic error #complicates (0.75) — Clara E. Mattei, Escape from Capitalism, 142
• Austerity logic ignores that growth, not cuts, may resolve debt #expands (0.75) — Mark Blyth, Austerity, 53
• Austerity’s success cases are few and possibly wrong while its failures are demonstrable #expands (0.72) — Mark Blyth, Austerity, 479