Paul Krugman and Simon Wren-Lewis make a good point – the reason capital-A Austerity seems to come back to us over and over has to do with the psychology of humans, and not as much with the underlying economics.
“when the market starts to punish fiscal profligacy, it is as if a parent has discovered the child’s guilty secret. (The market is seen by many as a mysterious deity.) The politician wants to repent (or at least be seen to repent), and atone for past sins. After eating too many pastries, we go on a crash diet. After deficit bias, we have austerity.
So here are we Keynesians, telling politicians that they don’t need to go on that diet just yet – they can put it off until times are good. Indeed, now is just the time to eat more pastries – it will make you feel better, they are very cheap at the moment, and you might even lose weight in the long run! It sounds too good to be true, and just the kind of tale the devil might spin. Give in, and the all seeing parent/god that is the market will find you out again. So the politician ignores these siren voices, and buckles down to austerity. “
This reminded Krugman of Obamas first speech as a president, but it reminded me of something a bit more obscure. Wilhem Reich wrote a book “The Mass Psychology of Fascism“, in which he makes the claim:
“Suppression of the natural sexuality in the child, particularly of its genital sexuality, makes the child apprehensive, shy, obedient, afraid of authority, good and adjusted in the authoritarian sense; it paralyzes the rebellious forces because any rebellion is laden with anxiety; it produces, by inhibiting sexual curiosity and sexual thinking in the child, a general inhibition of thinking and of critical faculties. In brief, the goal of sexual suppression is that of producing an individual who is adjusted to the authoritarian order and who will submit to it in spite of all misery and degradation. At first the child has to submit to the structure of the authoritarian miniature state, the family; this makes it capable of later subordination to the general authoritarian system. The formation of the authoritarian structure takes place through the anchoring of sexual inhibition and anxiety.“
I dunno if the reason behind the fascist mentality is psycho-sexual, but I can see how Austerity is attractive to many people – it’s how they run their lives on a day to day basis! Successful people tend to deny themselves the immediate pleasurable experience – for example, sleeping in and going to work late – in favor of doing the hard, difficult action which pays off in the long run.
It’s a good way to live your personal life if you want to do more. I suspect this has something to do with the reason the entire mainstream discussion favors Austerity even when the evidence is all pointing at just giving piles of cash to the middle class. Giving piles of free cash to the middle class would be the easy, lazy way to approach this problem, and does not involve a hard choice at all. It’s very difficult to understand the easiest approach would also be the most successful approach to solving our output gap.
(Wilhelm Reich was a crazy person or perhaps a genius, who had 6 tons of his writings and research burned by the American Government! He after he became a well respected psycho-analyst, he threw this away and researched UFOs, sexual energy, bions (!), and a host of other seemingly insane topics. The wikipedia article is worth a read if you have a few minutes.)