Austerity stems from societies unable to agree on tax distribution

Evidence

The final part of this concluding chapter turns to the question of how this all ends. The discussion of the cases of austerity from the 1920s, especially the French case, shows us that austerity is generated in part by the inability of societies, as Barry Eichengreen first proposed, to agree on an equitable distribution of the tax burden. There is a strong parallel to be drawn between France in the 1920s and the condition of the crisis-shocked countries today. The alternative to cut is to tax. Given this, there are two other ways out of the crisis in addition to the usual choices of inflation, devaluation, endless austerity (deflation), and default. The financial community will welcome neither of these two options, but it is not as if the other options on the table are great for them either. Those alternative choices are, first, what is known as financial repression, and second, a renewed effort to seriously collect taxes on a global scale. These efforts to get us out of this mess may not be popular, but one, or both, is coming. — Mark Blyth, Austerity, 623

Categorization

• DEFINE: Defines financial repression as one of the two foreseeable exits alongside global taxation — a concept worth pinning down for the austerity literature vocabulary.
• XREF: The 1920s French parallel and the Eichengreen tax-burden thesis connect directly to the broader intellectual history of austerity that this reader is mapping toward Mattei. — connects to: Tax evasion, austerity, and loose monetary policy mutually reinforce each other — Nick Srnicek, Platform Capitalism, 38; Austerity arose in response to mass political challenge to capitalism itself — Clara E. Mattei, The Capital Order: How Economists…, 798; Equity worries cannot be delegated to tax-and-transfer because no global redistribution institutions exist — Douglas A. Kysar, Regulating from Nowhere: Environmental…, 340

Broader Connections

• Tax evasion, austerity, and loose monetary policy mutually reinforce each other #complicates (0.82) — Nick Srnicek, Platform Capitalism, 38
• Austerity arose in response to mass political challenge to capitalism itself #qualifies (0.78) — Clara E. Mattei, The Capital Order, 798