Krugman: The Smith/Klein/Kalecki Theory of Austerity

[limpyhobbler]

Noah Smith recently offered an interesting take on the real reasons austerity garners so much support from elites, no matter hw badly it fails in practice. Elites, he argues, see economic distress as an opportunity to push through “reforms” — which basically means changes they want, which may or may not actually serve the interest of promoting economic growth — and oppose any policies that might mitigate crisis without the need for these changes:

I conjecture that “austerians” are concerned that anti-recessionary macro policy will allow a country to “muddle through” a crisis without improving its institutions. In other words, they fear that a successful stimulus would be wasting a good crisis.
…
If people really do think that the danger of stimulus is not that it might fail, but that it might succeed, they need to say so. Only then, I believe, can we have an optimal public discussion about costs and benefits.

As he notes, the day after he wrote that post, Steven Pearlstein of the Washington Post made exactly that argument for austerity.
...

more: http://krugman.blogs.nytimes.com/2013/05/16/the-smithkleinkalecki-theory-of-austerity/

[The Magistrate]

1. Hear Hear, Sir

[DCKit]

2. Shock Doctrine. nt

[dreamnightwind]

3. Armed robbery

From the OP's link:

“First, do nothing to mitigate harm”. For the people must suffer if neoliberal reforms are to prosper."

Armed robbery. Instead of a gun, they use the monetary supply. Anything you want, mister bankster, just don't starve us.

[n2doc]

4. The rich have done quite well during this "Austerity"

They have a good thing going and don't want to see it end. Their well-paid minions will try to keep it going.

[fasttense]

5. It's just how a corrupt and broken economic capitalist society works.

Eventually, just like a game of monopoly, only one guy is left standing and he becomes our king/dictator. See how the economy and politics are so closely woven together?