The Australian case for expansionary austerity rests on fabricated facts.

Evidence

If Denmark and Ireland don’t really make the case for expansionary austerity and the all-important expectations effect, what about the Australian case? Actually, Australia problematizes the case for expectations-augmented austerity still further. John Quiggin has examined Alesina and Ardagna’s “Tale” of Australian adjustment and declared it to be little more than “shoddy scholarship” that gets basic facts about the case entirely wrong. On Quiggin’s account, and contrary to Alesina and Ardagna’s telling of the tale, neither cuts in unemployment benefits nor capital taxes actually occurred in the Australian case, so their effect in altering expectations must be declared null and void. After all, if they didn’t happen they can’t have an effect. Similarly, the role accorded to wage bargaining by Alesina and Ardagna was, by Quiggin’s estimation “absolutely opposite to the story told here,” which actually featured “a major expansion in the role of government” rather than any contraction. Most interestingly in this case, Alesina and Ardagna do to Australia what Bergman and Hutchinson do to Denmark—they omit the fact that “almost immediately after their story ends, Australia entered the worst recession in its postwar history.” Given Quiggin’s demolition of the Australian case, we are forced to conclude that yet another often-cited positive case of expansionary austerity seems to collapse the moment any weight of historical evidence is placed upon it. Most significantly, the expectations mechanism, the key claim in all the literature, is again nowhere to be seen in the final analysis. — Mark Blyth, Austerity, 568

Categorization

• XREF: Directly extends Blyth’s running demolition of the expansionary austerity cases in this book’s preceding pages on Denmark, Ireland, and Sweden; connects to Mattei’s critique of austerity’s empirical foundations. — connects to: Austerity operates as speculation that converts fiction into fact — Aris Komporozos-Athanasiou, Speculative Communities: Living With…, 400; Austerity was installed by deliberately confusing cause and correlation — Mark Blyth, Austerity: The History of a Dangerous…, 204; Austerity’s success cases are few and possibly wrong while its failures are demonstrable — Mark Blyth, Austerity: The History of a Dangerous…, 479 (+2 more)
• SEED: Angle: ‘the worst recession in its postwar history’ omitted from the canonical case studies—how terse post-hoc case selection conceals inconvenient countercases, a pattern across Alesina-Ardagna and Bergman-Hutchinson.

Broader Connections

• Austerity’s success cases are few and possibly wrong while its failures are demonstrable #corroborates (0.82) — Mark Blyth, Austerity, 479
• The IMF’s 2011-12 papers refuted the expansionary austerity hypothesis by name #corroborates (0.78) — Mark Blyth, Austerity, 582
• Austerity operates as speculation that converts fiction into fact #qualifies (0.72) — Aris Komporozos-Athanasiou, Speculative Communities, 400
• Austerity was installed by deliberately confusing cause and correlation #qualifies (0.72) — Mark Blyth, Austerity, 204