Austerity’s Stupidity

When I was a graduate student in public policy, way back in the 80s, the professor who taught development economics told an anecdote about this brilliant plan to put get a North African country in the black by taxing bread. As he correctly explained, that didn’t go well.

So at 24 I already understood how plans to squeeze water from the already dehydrated was simply terrible economics. FDR knew that, and the New Deal that pumped money into the America of the Great Depression was genius, making America great. Full stop.

But since the 1980s the wealthy countries of the global north and west have made it a point to completely ignore this fundamental economic lesson. This hasn’t gone well. Austerity does not work. Worse, it destroys economies. Apparently, even the IMF is slowly coming to acknowledge this.

But mostly the IMF, the World Bank, and other spawns of neoliberalism ignore the science and plunge ahead with further austerity politics.

They blame those who accepted loans offered by predatory banks. They demand that those who are suffering suck it up and pay more. They know that the debt payments go to private bankers, not public coffers. They ignore the obvious need for debt restructuring. Are they stupid? Or just plain heartless, selfish, and evil?

I’m thinking the latter, though if it works better politically, let’s just call them stupid. For more on this, see this conversation between Yanis Varoufakis and Noam Chomsky.

Full transcript of the Yanis Varoufakis | Noam Chomsky NYPL discussion

The full transcript of my discussion with Noam Chomsky at the New York Public Library (26th April 2016) was just sent to me by Kelly Patrick Gerling. I thank him profusely. Here it is, just below the video window

April 26, 2016, LIVE from the New York Public Library, http://www.nypl.org/live, Celeste Bartos Forum

YANIS VAROUFAKIS: Good evening, we don’t have anyone to introduce us, so I’ve been asked to kick off by saying firstly that isn’t this wonderful that we are all here just to subvert the notion that nothing good can come out of the public sector? (laughter) Noam.

NOAM CHOMSKY: Well, the fact that I’m here, barely, actually has a relationship to that comment. I came from Boston, my wife and I came from Boston, it took seven hours, and any society that hasn’t been smashed by neoliberal policies of the kind you describe, it would have taken maybe an hour and a half, two hours. (laughter) There is a train, the pride of the public sector, which I took for the first time in 1950, and it’s about fifteen minutes faster now than it was then, (laughter) when it makes the schedule, which is a chancy situation, so we decided to come by airplane and spent most of the afternoon on the runway.

YANIS VAROUFAKIS: Well, Noam, what shall we talk about?

NOAM CHOMSKY: Well, we can talk about the neoliberal assault on the world’s population in the last generation, which you’ve written so brilliantly about.

Full transcript here.