The Tough Love of ‘Austerity’

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tags: austerity, Grexit



Jennifer Szalai is an editor at The New York Times Book Review. She last wrote for the magazine about the complicated origins of the phrase ‘‘having it all.’’

Austerity, diet of our lives, girder of our loins. At the moment, the word brings to mind the continuing crisis in Greece and, by extension, the power of the Germans holding the purse strings. ‘‘Austerity’’ has become the catchall word for the cost-cutting a government enacts in order to balance its books: Cut pensions, cut the public payroll, cut social services — cut whatever and wherever. Shrink spending, shrink debt, shrink deficits. The idea is to inspire confidence and make the place more attractive to investors, who prefer a government that’s tough and lean to one that’s marbled and tender.

That, at least, is the theory. Germany has been a big proponent of austerity measures, but German officials avoid invoking Austerität, preferring instead Sparpolitik, or ‘‘savings policy.’’ Chancellor Angela Merkel has made her distaste for the A-word well known. ‘‘I call it balancing the budget,’’ she said at an event a couple of years ago. ‘‘Everyone else is using this term ‘austerity.’ That makes it sound like something truly evil.’’ Austerity implies deprivation, undertaken under duress, to be suffered through or endured; a ‘‘savings policy,’’ by contrast, sounds practical and prudent, a solid foundation for a sensible way of life.

As it happens, the word ‘‘austerity’’ owes its roots to the ancient Greeks, for whom austeros meant ‘‘harsh,’’ ‘‘rough,’’ ‘‘bitter.’’ It denotes dryness and astringency, a constriction that cuts off the bleeding and dissolves the fat. The desirability of this therefore depends on whether the bleeding and fat are endangering the organism or are, as blood flow and body fat have been known to do, sustaining it. During times of scarcity or subsistence — which is to say, most of human history — life was austere, not so much by choice but simply by dint of the way things were. When affluence, or surplus, became a possibility, austerity could go from unavoidable circumstance to attainable goal. In the recent book ‘‘Austerity: The Great Failure,’’ the historian Florian Schui presents Aristotle, born in 384 B.C., as laying the philosophical groundwork for austere living as an ideal, even if he didn’t use the term. The son of a king’s physician, Aristotle led a life of considerable privilege, studying at Plato’s academy and traveling around Greece. He was comfortable, but he was also leery of excess. Aristotle wanted to discuss the ‘‘abstinence’’ that would allow for ‘‘the good life.’’ The pursuit of wealth for its own sake was endless, whereas ‘‘the art of managing a household’’ had natural limits, its own equilibrium.

This shrewd (and, it must be said, mythical) household would become a favorite muse for austerity’s proponents, even when they began talking about the economies of entire countries: the thrifty state as a bigger version of the thrifty household, taking care never to spend more than it takes in, scrimping and saving and carrying little to no debt. Unlike the household, though, which has been venerated ad nauseam, the state has historically been an object of suspicion, especially in classical economics. Mark Blyth, a political economist at Brown University and the author of ‘‘Austerity: The History of a Dangerous Idea,’’ traces the concept of fiscal austerity back to the 17th-century British philosopher John Locke and an ambivalence toward state power. Locke and his fellow liberals recognized the need for government to overthrow the divine right of kings, but they also feared government, worrying it could give with one hand and take away with the other. Instead, Blyth writes, the market was to be the ‘‘antidote to the confiscatory politics of the king,’’ and the bond market of creditors would keep the state in check. The smaller the government, the better; it should protect property rights and otherwise get out of the way.

In other words, the market was to be left alone — ‘‘laissez faire’’ — so that it was free to operate according to its natural laws. Recessions and downturns were the market’s way of correcting itself. When government intervenes, it invariably distorts. During World War I, deficits in the United States ballooned, and a succession of American presidents in the 1920s were committed to slashing government spending. Warren G. Harding created a Federal Liquidation Board, whose purpose was the shuttering of government offices. ‘‘We are going to cut the garment to fit the cloth,’’ he explained. His successor, Calvin Coolidge, once received a gift of two lion cubs and named them Tax Reduction and Budget Bureau. But it was the Treasury secretary Andrew Mellon who would perhaps become best known for an almost fanatical adherence to austerity. After the crash of 1929, President Herbert Hoover recalled in his memoirs, Mellon insisted that he knew what the country needed: ‘‘Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.’’ The market had overindulged in speculation and borrowing, and it was issuing its own emetic. ‘‘It will purge the rottenness out of the system,’’ Hoover remembered Mellon saying. ‘‘People will work harder, live a more moral life.’’ Austerity was the natural consequence of the market returning to its purer, laissez-faire state. The ensuing Depression therefore gave laissez-faire a terrible name. In 1931, Business Week asked, ‘‘Do You Still Believe in Lazy-Fairies?’’ ...




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