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"Democratic control over economics" looks like people voting for more services and lower taxes.

Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down.

After the finance crash the UK was increasing it's debt load at something like 200bn GBP/yr, iirc. A rate that credit-nervous markets wouldnt sustain cheaply.

Austerity is the way the ideologues talk about the consequences of economic collapse without having to learn anything.

What you never hear from them is alternative policies that address the specific economic problems periods of austerity are solving. You hear instead about ever more elaborate abstractions that ever less map on to any observed reality.

Somehow we went from "the state should be financed from taxes" to "in hard times the state should spend more than it has to quickly get back to the good times where it can pay back its debts" to "the state should spend to stimulate the economy in both good times and bad times, and as long as the economy grows fast enough it doesn't matter that this spending isn't covered by taxes".

This is in effect an infinite-money glitch, until you overplay your hand and a market upset bankrupts the state (or the state triggers hyper-inflation in an attempt to prevent bankruptcy). Austerity is just a roundabout way of saying "let's get more breathing room by abusing this infinite-money glitch less".

In an ideal world any country would go through periods of austerity to get rid of wasteful spending, before increasing spending again. But of course this is not how politics works: it's hard to sell to voters, and the things that get cut in "austerity" are often not the most wasteful things.

Austerity was an absolute disaster for the UK.

https://en.wikipedia.org/wiki/United_Kingdom_government_aust...

> Most macroeconomists now agree that the austerity programme pursued by the Coalition Government in its first two years was both too severe and unnecessary and set back the economic recovery which was underway in the first half of 2010. The Office of Budget Responsibility confirmed that the austerity programme reduced GDP, while the Oxford economist Simon Wren-Lewis has calculated that the Coalition Government's austerity programme cost the average household £4000 over the lifetime of the Parliament and severely damaged those public services which were not ring-fenced.

This is the ONS graph of debt to GDP (which is not absolute debt level, but it's the measure that usually matters for markets):

https://www.ons.gov.uk/chartimage?uri=/economy/governmentpub... (source: Figure 1 here: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...)

You can see that it was indeed increasing through 2008/2009, although that was largely a one-off thing because of the financial crisis.

The problem is austerity didn't work, and the reason is that it also reduces economic growth (slowing growth of the demoninator - GDP). Without austerity, if we'd spent money on infrastructure, we'd likely have had higher growth, reducing debt to GDP that way.

Plus the fact is the markets were lending the UK money at 1% for very long terms all through the 2010s, so funding a large debt to spend on infrastructure would not have been difficult.

> What you never hear from them is alternative policies

You’re not familiar with Keynes I guess. There are many many well thought out alternatives to austerity that have been shown to work. The problem with them is it’s harder to cushion particular classes from having to bear some of the cost.

Just focusing on this statement:

> "Democratic control over economics" looks like people voting for more services and lower taxes.

The services part seems clear but "lower taxes" makes me ask what kind of taxes are we talking, income tax, sales tax, corporate tax, capital gains tax, corporate tax credits, import duties, national insurance (UK government health service levy), wealth tax, etc, etc, etc

There are so many taxes and 100 more exceptions and loopholes and so many vested influences pushing for changes that benefit themselves. The current political processes aren't capable of a systematic review and revamp of all of the taxes.

>"Democratic control over economics" looks like people voting for more services and lower taxes.

contra - Denmark, Germany, Sweden...

there are countries that vote for the taxes that allow for supporting the services they want.

And I say this as someone who feels totally screwed over by the Danish tax system, but really your intro blanket statement was just not true.

> Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down.

That is not why austerity happens, at least in recent history:

* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...

During the 2010s, when rates were at an all-time low, Very Serious People were going on and on about "expansionary austerity" to boost the economy:

* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...

Austerity is a policy choice, it has nothing to do with the cost of borrowing. States that control their own currency, like the US, the UK, Japan etc. do not borrow money at all. The term is simply not applicable.

During the COVID crisis deficits grew rapidly and the cost of borrowing did not change. This only happened after the crisis was over, and as a policy choice, not necessity. Japan never increased interest rates and its deficit has continued to widen.

The credit markets do not sustain the UK. It is the other way around. Without the UK state there would be no credit markets, at least not in GBP.

I think the core problem is that it is your thinking that does not map to any observed reality.

"Austerity occurs when the cost of government borrowing becomes so high governments are would be functionally unable to operate in the medium term without brining it down."

Given that the 'cost of government borrowing' is a policy setting, there can therefore never be a case for 'austerity'.

See Japan for details.

There is no traditional market in government bonds. The only aggregate alternative to the fixed rate is the expected path of the floating rate and the floating rate is set by the central bank. Which we can easily set permanently to zero once we reject the failed 'twin star' economic hypothesis and accept the 'price anchor' hypothesis.

> "Democratic control over economics" looks like people voting for more services and lower taxes.

Yes. And then they see the consequences.

Coddling the people is not going to make our governance better. Do you prefer that an elite nanny the people?

Nonsense. Privatization has resulted in the coverage, quality, and liability of services to plummet while the price of those services has skyrocketed.
"Austerity is antidemocratic", indeed because a democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
From a European perspective, I would not say it's antidemocratic if parties who are pro-austerity get elected while being transparent about their policies.

However in my opinion, there is a great lack of "class consciousness" from the people who vote for these parties, in a sort of Stockholm syndrome, or because people easily fall prey to the sensationalist idea that you can apply household economics to macro-economics.

Being "transparent about their policies" doesn't mean that the voter understands them or their consequences.

This is just a fig leaf.

The proverbial "Swabian Housewive" comes to mind. States, governments and economies don't work like your household budget.
But do people generally vote for parties based on their attitude towards the budget/austerity plans?

Because my experience is that the big parties in most countries cover so many topics in their political agendas that people are voting for them for all manner of different reasons. Sometimes it's the social/moral aspect that they care about more than the economic one, and sometimes vice versa.

It's unlikely any conservative will vote for the more left leaning party based on a dislike for austerity, and vice versa.

Democratically elected parties can transparently enact anti-democratic policies. If my local democratically elected fascist transparently has "do not allow group x to vote" as an intended policy, then that policy is anti-democratic, even though it may be popular.

The argument the article makes is not that austerity measures are unpopular, it's that they're anti-democratic.

> However in my opinion, there is a great lack of "class consciousness" from the people who vote for these parties

After those voted come to power, nothing prevents them from flipping on their agenda. I've seen it happen countless times, and probably so did you.

If only there were mechanics (a la Liquid Democracy) to recast votes in collective actions without the initiative of the government, but by way of constitutional rights. Politicians would be more interested to keep themselves aligned to their electorate, or lose their comfy job before their term would normally end.

Politician as a career, and unconditional 4 year terms seem like a problem imo.

I would say there are two problems here that are different: intervention as it stands can regulate in favor of a few groups of people. More intervention can easily lead to more corruption.

As for austerity: reasonable people do not spend beyond what they have and if they do they do it in reasonable ways: things with an expected return on investment and with limited, calculated risk.

Yet what I see is increasing intervention and out of control debt.

Starting from these two premises...

I do not think austerity is antidemocratic in itself. What I see is that a high degree of intervention ends up doing a cost transfer to normal people.

But that would be a problem of hyperregulation, not from austerity itself IMHO. After all, I would say the correct philosophy is to spend what you have and measure the risk every time you go beyond that. Sometimes you have less, sometimes you have more, but I would not advice any person, business or state to go out of control about this. However, a state incentive is different from the former two, since they continuosly transfer costs by the force of law to unrelated people. Namely, I do and you pay, be it by friends regulation or by direct expenses and taxes increases.

> As for austerity: reasonable people do not spend beyond what they have and if they do they do it in reasonable ways: things with an expected return on investment and with limited, calculated risk.

It seems to me that this is becoming harder and harder, and consumer debt is pushed harder and harder, people are forced to take on more debt as costs of living increase. No matter how reasonable you are, you need a place to live and food to eat.

> reasonable people do not spend beyond what they have and if they do they do it in reasonable ways

That’s true, but debt held by a country isn’t really the same thing as household debt.

I have doubts about the idea "spend what you have". It is framing wrongly the problem. Money are not something "you have". Money are "a promise" to get something "in the future". Evaluating how much that promise "will be worth it" is complex.

To give an example "at the limit" - sometimes easier to see the issues. Assume all people in the world die except 2 people, if they inherit all the wealth, each will be multi-billionaires (or something - no clue how much money is in the whole world). That would not mean they could do a lot with that "money".

Back to austerity. I agree with you that the key is "spending in reasonable ways". But to understand what is reasonable you must make a projection. And that is the hard part. A projection will probably affect the result. Of course you are correct you can't just say we will spend 10x more because we will have 10x more, so there are limits...

I think you are very wrong.

You are mixing regulation, intervention and austerity, which is so broad, it cannot provide a distinct explanation for the declining public services, which enforcing regulations is a part of, btw.

Budget cuts set a hard upper bound on the reach of public institutions. Nothing else you mentioned achieves this.

Ok, austerity bad, but the alternative isn't better. Either way it's the 'little man' who ends up paying through the nose.

The article mentions how war time economy is evidence how the society can do whatever it wants, and implies this should be done during peace time too. And then later in the article mentions how war time leaves the economy heavily indebted. So you can do the same during peace time - take on as much debt as needed to do everything. The issue with this approach is that this increases the money supply, effectively debasing the currency. Due to the Cantillon effect, the first people to use the new money will be able to spend it at 'old value', while people further down the line will get less and less value out of it.

If you're wealthy enough, you can short the currency by taking out debt, and buying assets. If the assets are yield bearing (dividend, rent), your income automatically adjusts for increased money supply. If you depend on your wage, tough luck, wages are last to adjust, so you just keep silently getting poorer.

So there's no free lunch. Either explicitly or implicitly, the poorest pay the most.

I don't think that's a predicament though. It's just that the answer likely doesn't lie in the extremes. A prudent enough government should be able to navigate this by not devaluating the currency too much, yet also taking on reasonable amounts of debt to fund the functions with the highest ROI.

modern democracy is a sham anyway. lets examine a recent large crisis we had in Finland - the border crisis, in which Russia systematically weaponized migrant waves - where the democratically elected government was initially unable to act with any measures on, because it would've been in violation of a UN convention which was agreed on in the 60's.

This was one of the most prolific decisions to be done in the 2020's and yet we could just barely enforce the will of the people over the interests of extragovernmental groups. Now imagine the thousands of small decisions being done which the average voter has no transparency into.

A good start to real democracy would be completely outlawing lobbying, NGO's, think tanks and other garbage organizations who's only raison d'etre is subverting the peoples right to their own governance.

The book "The Capital Order" by Clara Mattei is recommended. Subtitle is "How economists invented austerity and paved the way to fascism".

It's a study of WW1 and the early 1920s from an economic and social POV.

The non-austere "Free stuff for you! Vote for me!" political strategy has worked pretty well while technology improvements has made stuff faster than politicians can give it away. But it's a precondition. If technology ever stops improving at this rate, we're going to have a hard time, and no amount of words will change that fact.

To be for free stuff and at the same time be for degrowth, decel, limit resource use, etc.... seems naive to say the least.

I appreciate the review, especially in making connections between fascism and economic policy. Historically, fascists had support from powerful economic groups because of their ability to deliver on highly unpopular economic measures. The current state of politics in the West is that while (some) governments are not outright fascist, any pretense of them representing the political will of the majority of its population is crumbling. They serve a minority of very wealthy individuals much more than they do their general populace, and we accept that as fact.

To play devil's advocate, however, I would argue that there is sound rationale for not allowing economic policy to be decided in an a purely democratic way. If everyone had equal vote in what the government should do monetarily, the result could quickly evolve to a disaster, which we have also seen in places where dictators try to appease to the population as a whole by subsidizing costs and wages.

The title is linkbait-ish and the author is ideological, but the book reviewed in the OP, "The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism," by Clara Mattei, is truly worth a read.

Recommended by economists as different as Tyler Cowen and Thomas Pikkety, the book won Best Book of the Year by the Financial Times.

Ignore the OP's review of the book. Instead, read the book itself:

https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...

https://www.amazon.com/Capital-Order-Economists-Invented-Aus...

The opposite of austerity, stimulative spending (by printing money), has also been argued, by similar groups, to increase inequality due to the inflation of asset prices. Which way, left-leaning man?
State profligacy in the era of Central banking is an anti Democratic strategy to boost capital too. You borrow money, which increases the money supply, stealing value from everyone through inflation. This hurts the poor the worst, and benefits the rich, who rely on debt for capital instruments (the value of the debt, which is nominal, is reduced over inflation). Then you spend that money on contractors (even when it's used for social services).
When run unchecked, capital will happily suck all the money from the economy and into its coffers, and the fun thing is, it has no idea what to do next. Next it would very likely invest these money in the worst possible way and cause a big crash. Think about is like of a centipede instead of sentient creatures at work. It does not know what to do once it eats its leaf. We know it's going to morph but the thing is oblivious to it itself.
Voting to fire people working in government to lower costs is antidemocratic? In government, you aren't even fired but retired, allowing you to collect your pension and benefits. It's as humane a practice as it can be while addressing financial responsibility.

It's undemocratic to continue growing in perpetuity and not be held accountable to those who pay for it.

It scares me a lot that modern economies don't understand yet the worst tax on citizens is the Inflation tax. Still can't understand why we're still trying to make things work after centuries of failures. Obviously monetary base expansion to support non austerity policies is the biggest inflationary factor.
> Capitalism gave rise to a value system that teaches us to find meaning in our work; yet millions are employed in low-paying, soul-crushing jobs.

Many philosophies throughout history emphasize finding meaning in your work:

- Ikigai: discover your reason for being, which is at the intersection of passion, mission, vocation, and profession. It is not just about yourself, but contributing to the world and bringing joy to others

- Stoicism: while not solely focused on work, Stoicism emphasizes finding purpose and virtue in whatever situation you find yourself in, including approaching work with a sense of duty and striving to contribute to a greater good, even if the task itself is mundane

- Confucianism: stresses the importance of hard work, diligence, and skill in all aspects of life, incl. work. Emphasizes fulfilling your roles and responsibilities in society with excellence, finding meaning and respect through well-performed work

- Protestant work ethic: sees work as a moral obligation and way to glorify the Christian god. Encourages hard work, diligience, and productivity, finding meaning through creation & contribution to society through labor

- Existentialism: encourages individuals to create own meaning in life, incl. through their work. Involves taking responsibility for your choices, pursuing authentic goals, and engaging authentically with your work.

Few democratic countries can manage their finances well. Switzerland comes to mind. But the general experience is that if the population can vote itself more money and services at the cost of a) either someone else, or b) growing national debt, they usually will. We are well down the same road in Czechia.

Europe has a very long history of banking, but at the moment when the Euro was created, most of the obliterated national currencies were weak, reflecting distrust towards their overlords. Switzerland, the country with the strongest national currency in Europe, never felt compelled to join the bloc.

Historically, authoritarian countries tend to go bankrupt over war expenses, democratic countries over handouts. The British pound was strongest at the time when the country was somewhat semi-democratic, neither-nor. But that is a very unstable configuration.

Pick your poison.

Austerity is result of reckless state money printing and waste.
Ridiculous. Working class != labor unions. Militant labor unions murdered numerous members of the working class who dared to cross their picket lines.
With all the temporary embarrassed and actual millionaires here on HN I'm not so sure that this article will go over well.

Most people who are into this space are doing relatively well, but then remember that more than 60% of Americans can't spare 400 dollars for an emergency and this simple fact shows how absolutely bonkers the whole system is.

You may be free to say hateful things if that's your definition of freedom, if we define freedom as having the means to develop your true potential or just do things you like sometimes without a constant feel of existential threath, that's what I call freedom.

Marx hasn't been around for a while. With the corporate world sucking so hard on government teats, in the US and Europe in particular, austerity has a more distributed but still intensely negative impact. I strongly recommend Mark Blyth's book Austerity: The History of a Dangerous Idea as a more modern and nuanced take on what is going on.
I got most of the way through this and found many things to disagree with. I started to write a reply and then I read this part:

> Expertise is, in a certain sense, a bourgeois concept, a by-product of the ideological imperative to organize our lives and activities in a rational way.

God help anyone who takes this shit seriously.

I don't know when, if ever, austerity is called for (even Paul Krugman has called for deficit reduction in certain circumstances: https://www.nytimes.com/2023/10/10/opinion/us-budget-deficit...). But this review is dripping with ideology to the point that it's genuinely disconcerting.

It is funny. For like 4 or 5 years ago I would have waived away the article as communist hallucinations. But somehow covid made me realize that we don't live in a market economy, but rather have a central power that benefits the rich via monetary policy and lower tax.

It is the same realization as when I stopped consider the GNU guys paranoid crackpots.

I come to HN for tech news and recently I get a heaping of 100% political, 100% partisan, non-tech-related drivel that is not even news - it's just opinion blog.

I'd apply it to both sides, but I only see one side on HN:

Dear leftists! Can you please take your propaganda and fuck off to reddit, twitter/X, or wherever?

This is nonsense, the opening paragraph isn't a contradiction, it's describing an equilibrium, and the difference between the actions of a single firm and aggregate demand/supply.

This has been studied for over a century, why this being repeated uncritically in media?

Hacker news needs a butthurt marxist flag....

Yet another butthurt marxist misinterpretting (among other things) the fact that free markets evolve into oligopolies to mean twar the whole system apart. The correct interpretation is that we screwed up going full rehnquist and nerd our antitrust enforcement to move back nearer to what it was doing pre rehnquist supreme court.

I'm a bit surprised to see this at the top of HN. Maybe the US is still asleep, and the Friedman fanboys have not read that yet.

This look like a good book and I am likely to buy it. From a systems standpoint it is quite obvious that capitalism tends to concentrate wealth in the hands of those who already own capital.

Piketty showed the historical data agree with that: as long as growth is less than capital rewards, wealth concentrates.

We need a systemic solution to that, and that can't happen with représentative democracy. We need direct control of the means of production by those who make them work. This means stronger unions, but also platform régulations, as users are unpaid knowledge workers giving away their data in exchange for a service, an exchange so one-sided and highly beneficial to the platforms that states are losing their sovereignty to the platforms.

See bratton's The Stack to know more.