Mark Blyth (9) : On the Dead End of Austerity

The Great Gatsby is out as a film again. Go see it! Think about it. Basically you have this tiny elite. How many yachts can they buy, right? They have all the goddam cash. And they don’t need to invest in a recession because they can live off the interest on their investments, so they’re fine. Everybody else is screwed if they don’t have investments. They can’t consume enough because of the wage skew. We’re back to where we were in the Twenties and Thirties. Political economist Mark Blyth, with Chris Lydon. June, 2013.

Mark Blyth, the butcher’s son from Dundee, is sounding off again in the Scottish pub where we all belong — if you want the news of wealth in our time deciphered, and if you can listen as fast as Mark Blyth talks. The authority of his brash gab is reinforced by the reviews hither and yon of his pithy new treatise from Oxford on the false doctrine of the day: Austerity: The History of a Dangerous Idea. That idea he’s been bashing in our conversations for almost three years now is the doctrine (rampant in official Europe, fashionable in the US) that governments can shrink their way out of debt by slashing their public budgets. Professor Blyth’s counter here is that it’s government’s job to grow the economy and the taxes that will service the debt.

Not the least of what’s new in Mark Blyth’s book is the argument that austerity (not inflation) was the proximate cause of Naziism in Germany in the Thirties — also of Japanese expansionism in the same period that led to World War 2. So there may be a grim warning in his evocation of Scott Fitzgerald’s Gatsby and the Jazz Age.

In the class-divided skies of British Airways nowadays he sees another flash of where we’re going:

I fly a lot on British Airways, which now has four classes in its planes when you go trans-Atlantic. It’s the medieval class structure brought back to life. At the very front of the plane where you turn left instead of right as you come in the nose — first class! — that’s the Aristocrats. They’re the ones you never get to see. Literally, the Lords and Ladies. Then, when you turn right, you go through all these flat lie-down beds. These are the trans-Atlantic Knights of the Financial Nobility. Then you get past that to Premium Economy, which is like the Serfs with Money — you notice that’s a very small section of the plane. And then: one third of the air frame has two thirds of the passengers. Cattle. Cargo. Self-loading. Everybody else. It’s a bit like the societies we’ve built for ourselves. And until the people — not at the bottom but the ones in the middle, the ones whose voices matter the most in politics — say: you know what? I just can’t afford $50,000 a year for whatever Ivy League or non-Ivy League university my kids gets into. How am I going to do this? Let’s say you earned $150,000 a year… That’s a lot of money — it’s three times the median income. You’ve got a chunk of change, but you still have to eat. Let’s say you save $40,000 of that. That’s still not enough for one year of college. And you won’t get financial aid because you’re making $150,000. I know professors who can’t send their kids to these schools. And that’s if they have one. What if they have two? So when that constituency starts to say: hang on a minute; there’s something seriously wrong here. That’s when you’ll begin to see change.

Mark Blyth’s argument here is drawn from life — that is, from his own: