Summary: In this animated clip, Mark Blyth casts suspicion on the meaning of the term "austerity," which is typically understood as a virtue and regarded as "'common sense' on how to pay for the massive increase in public debt caused by the financial crisis." Blyth explains that two years ago the world's financial system exploded, creating a two trillion dollar hole in financial space-time. Governments around the world responded by spending, lending, or guaranteeing between 5 and 50 percent of GDP in order to save banks which were deemed too big to fail. However, as Blyth notes, the debt leveraged by these governments must be paid, and payment can only be accomplished through raising taxes or reducing spending on public services. Because raising taxes is politically unpopular, the debt will likely be repaid by slashing public spending, and while these cut backs in public services are framed as virtuous measures of austerity, which are endured by the nation equally, people at the lower end of the income distribution are disproportionately affected because of their dependence on public services. Those who paid for the crises already through the bailouts will pay again, this time through "austerity." Thus, what is ostensibly billed as an economic crisis for entire nations is fundamentally about the class politics within nations. Blyth's argument dovetails nicely with David Harvey's Marxist take on the financial crises, which is also posted on The Sociological Cinema.
Submitted By: Lester Andrist