Academic journal article Global Economic Observer

Austerity and Economics: Why Germany and European Union Supported Austerity and Why Europe Is Lagging Behind in Its Recovery after the Crisis

Academic journal article Global Economic Observer

Austerity and Economics: Why Germany and European Union Supported Austerity and Why Europe Is Lagging Behind in Its Recovery after the Crisis

Article excerpt

Austerity and Economics: Why Germany and European Union supported austerity and why Europe is lagging behind in its recovery after the crisis Mark Blyth: Austerity - The History of a Dangerous Idea, Oxford University Press, 2013

A brief introduction about the economic crisis that started in 2008

Before discussing about austerity and the well documented and highly captivating analysis of it done by Mark Blyth1 in his book "Austerity - The History of a Dangerous Idea" some introduction about the economic crisis that started in 2008 is needed. The reason for this logical and contextual need is the fact that in the European Union, particularly in the Euro area (in countries like PUGS - Portugal, Ireland, Italy, Greece, Spain) as well as in the less developed member countries (Romania included), austerity started to be advocated as a cure for the crisis despite the fact that five years later the results are still expected to manifest in any significant way. The point we want to make here is that indeed starting with 2008 it was an economic crisis but not a global one. The demonstration for this statement is rather simple. The World Economic Outlook of the International Monetary Fund series 2000 - 2014 (covering time interval 1998 - 2013) shows that at the world economy level only in 2009 we had a negative growth (a rather small decline of -0.6% at world level and, at the same time, in the same year 2009, a high growth of +6.9 % in developing Asia), while for all years before and after 2009 the world economy registered a positive (and even reasonably high growth rate). The interpretation of this data is that the world economy system has not been in crisis, what we have is a repositioning of the participants, a restructuring, a period of redefining the hierarchies". Therefore, from the very beginning the crisis should have been presented as a specific economic phenomenon that required specific solutions and not as a global phenomenon asking for overall, standard solutions.

In this context European Union has been the less performing component of the world economy (with the notable exception of Germany and, to a certain extent of Poland)), most of the time after 2008 Europe being unable to generate sustainable and significant economic growth. During all this period European Union through a number of political leaders and through the actions of the European Commission quite stubbornly insisted that austerity is the solution to its economic problems. In order to be accurate we need to point out that the support and sometimes the enforcement of austerity came largely from Germany and that although many European countries applied in various ways and intensities austerity policies, not all countries have been convinced to do so or happy about austerity's implications and their effectiveness.

Mark Blyth and his p a rticula r/p er son al approach to austerity

The publishing of Mark Blyth's book "Austerity - The History of a Dangerous Idea" in 2013 generated a lot of reactions and comments in international media. It had been considered a timely book as in 2013 five years had already passed since the onset of the crisis. And it had been also timely because in 2013 there was an evident difference between those who applied austerity (mainly countries in the European Union) and those who did not (mainly United States, but also Poland, Asian countries and others). The first group is still struggling in 2014 with difficulties, while the latter it is not in perfect condition but anyway overcame the effects of the crisis.

Aside of being timely the Mark Blyth's book has some characteristics that recommend it. First, from a reader's point of view, the book has a personal touch, in author's words it has a "personal history". This personal history refers to the fact that Mark Blyth originates from a relatively poor background in Scotland and had benefitted from the welfare state to survive and to be educated until he reached the current position of Professor of International Political Economy at Brown University in Rhode Island, USA, and Director of the International Relations and Development Studies Programs with Watson Institute for International Studies. …

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