Deespite the obvious failure of austerity (recently admitted even by the IMF regarding its role in the Greek debt crisis), the odious doctrine still dominates economic policy in Europe, resulting in crippling recession and high unemployment.
Mark Blyth, author of Austerity: the History of a Dangerous Idea, argues that not only has the policy of slashing state spending so far failed to repair the economy, it can never work. Policymakers must examine the evidence of austerity’s failure and not be afraid to change their minds before it’s too late.
Austerity is a zombie economic idea because it has been disproven time and again, but it just keeps coming. Partly because the commonsense notion that “more debt doesn’t cure debt” remains seductive in its simplicity, and partly because it enables conservatives to try (once again) to run the detested welfare state out of town, it never seems to die.
In sum, austerity is a dangerous idea for three reasons: it doesn’t work in practice, it relies on the poor paying for the mistakes of the rich, and it rests upon the absence of a rather large fallacy of composition that is all too present in the modern world.
Austerity is the penance – the virtuous pain after the immoral party – except it is not going to be a diet of pain that we shall all share. Few of us were invited to the party, but we are all being asked to pay the bill.
The alternative to austerity? Stop doing it!
Which leads us to Debtocracy, a 2011 Greek documentary by Katerina Kitidi and Aris Hatzistefanou. The production team coined the word “debtocracy” (Greek “Χρεοκρατία”), defining it as the condition by which Greece found itself trapped in its debt. With the help of the theory of odious debt and the case studies of Argentina and Ecuador the film tries to point to an alternative solution to the austerity paradigm imposed by international creditors.