This is a very clear and convincing account of why and how austerity is dangerous. I appreciate if you could allow me to put this video with Japanese subtitles on RUclips.
Best economic explanation that I have ever seen! t's obvious that we have to turn around the tax loopholes for the rich. Maybe not back to Eisenhower levels, but somewhere in-between
@@movement2contact you say that, but if you don't put it back up to eisenhower levels it's what will happen. sometimes the taxes just come in the form of torches and pitchforks, but they always come.
Simple. 10 or more tax brackets, zero incentives and loopholes for any persons or businesses. Until we all understand that an individual is taxed more punitively than a business, nothing will change.
Oh my god. This makes me realize what I was actually hearing in the radio following the crisis. "Nedskæringer, nedskæringer"... they were playing us for fools.
@@owlblocksdavid4955 Too bad that some rando on the internet can't provide any evidence that the world renown economist is wrong. So i guess they get ignored.
Austerity Farmer: Oh no, the soil is depleted! I'll just sell my tractor and cows to cover costs until the soil recovers. Keynesian Farmer: Oh no! The soil is depleted! I'll take out a quick loan to buy some fertilizer, and use my profits to pay the bank back. Socialist Farmer: Oh no! The soil is depleted. Maybe I shouldn't exploit the soil this much. I'll cooperate with my fellow farmers to help get through this. Fascist Farmer: Oh no! The soil is depleted! I'll just rally my farm hands, and have then take some farm land next door for me.
The model looks plausible at first glance - especially in regards to *Keynesian* public spending and the *historicity* of the German, _nationalistic_ *'Agrarian* *League'* - but is flawed down to the core. Isolated *'subsistence* *farming'* would simply lead to starvation in case of poor harvests and once commercial farming in a _global_ _economy_ has built up debt, it's likely to default, sell the land and move to the city - since food prices are only going up if there is not enough food production or rampant overpopulation, close to _starvation_ . The notion of a 'socialist farmer' is outright _deceptive_ and it's reasoning sounds like an _'environmentalist_ _commune'_ that rather sells over-priced 'courses on self-discovery' than mere food. During LENIN's 'New Economic Policy' soviet farmers were producing as 'laissez-fair' _anarchists_ , according to _demand_ without state intervention - under the *collectivization* by STALIN or Mao, the *'planned* *economy'* *by* *the* *state* , they were _exploited_ in favour of _foreign_ _currency_ _reserves_ - until they _starved_ . Austerity brings people back to square one of *'subsistence* *farming'* - _if_ they can pay the _land_ _tax_ - otherwise they would default and move to the city, possibly joining the military (fascism, imperialism). Keynesian public spending depends on public funds - if states are in debt and lack income because they 'bailed out' their banks and businesses in the real economy are too poor - or *'off-shored'* to emerging countries (as increasingly in Western societies) - _there_ _will_ _be_ _no_ _stimulus_ by the state - as in Greece. That is why *'fascism'* *is* *not* *a* *choice* , *but* *a* *matter* *of* *circumstance* . "(...) as your father and mine, foolish Perses, used to sail on shipboard because he lacked sufficient livelihood. And one day he came to this very place, crossing over a great stretch of sea; he left Aeolian Cyme and fled, not from riches and substance, but from wretched poverty which Zeus lays upon men, and he settled near Helicon in a miserable hamlet, Ascra, which is bad in winter, sultry in summer, and good at no time." (Hesiod. 'Works and Days'.)
This kinda brings up the need to discuss sound monetary policy along with government finances. As long as central banks counterfeit money to cover up missing deposits, governments will have little intention to cut both spending & taxes.
They just need to inflate their currency. Inflation being "the tax that no one voted for, but that everyone has to pay". There is no such thing as a free lunch.
@@owlblocksdavid4955 No one is looking for a free lunch. Inflation is a tax on lenders and as most of the population suffering at this point are borrowers it's a pretty safe temporary tax.
This is basically Keynesian Economics, their are two ways to to reel in the debt, borrow money so that you can earn more revenue, or cut expense. Politicians are basically saying that there is no way for them to raise more revenue, so they must cut expenses. Mark is saying that, no you can still raise revenue. This is a very simplistic analogy, but the main kicker is that everyone is going to be paying no matter what because in the end the bankers made off with all the cash.
he said something to think about that class warfare allways ends badly, like the French Rev.the poor were suffering and the noble lived the good life with out a worry that is until the poor showed up at the gates with axes and pich forks. People can say that would never happen here but those that forget history will repeat it and all through history that is what happened our own U.S.A. was created this way.
This aged very well. Austerity proved to be a disaster. Yet I fear that with recessions looming in 2022 and going into 2023, the UK and other governments are going to repeat these same mistakes. Like the BS sandwich that keeps on giving, screwing the poorest in our societies and increasing inequality.
Great video! I am just starting the book today. I see this video is more from a UK/USA perspective, about governments that spend most money on services. My interest is more in Eastern Europe, where governments spend half on services and give half to corrupt oligarchs. "Austerity" in Eastern Europe (so far) means cutting the services without cutting the oligarch gifts.
I come back to this 10 years later and the summary mark gives at the end "..this is class politics, and it usually ends badly..." present day and Donal Trump recently ended his presidency of USA.
So, reading between the lines, what he's saying is that, if things keep going in the way they're headed, we'll be seeing blood in the gated communities before too long.
One thing I didn't understand. At 3:17, you talked about the economy craters is everyone pays down debt at the same time. But wouldn't one person's payment of debt be another person's revenue? Or is it because goods and services aren't being made and consumed, but debt is just being paid? Please excuse my ignorance, I'm an artist, not an economist!
well, it is a debt based system. If there was no debt, there would be no money. so the economic system requires continual expansion (gdp) of debt to be 'positive'. If people and corporations start making payments and stop borrowing , the economic system would contract and the ordinary person would experience deflation - falling prices as a result. However deflation to the economic system is like sunlight to a vampire.
I'm not saying that quantitative easing is working! Q: Where does money to spend come from? A: The budget which, in the UK is given annually. Q:where does austerity take the money to ? A: I don't know
that is a beautiful use of a common known logic fallacy by logicians alike. so the fallacy goes like this, if i stand up during a baseball game i see better, but it doest follow then there fore if we all stood up during a baseball game we all see better. god damn that was good.
Right. So, as a defense against the known boom to bust character of our economy, I should do all I can to save my earnings, invest it in a diversified manner to minimize loss due to inflation, and certainly make sure I am debt free, especially when everyone else is jumping into asset markets driven by a speculative fever. Economists will hope the majority of people behave with less concern for the long term.
Austerity policies a new study suggests has caused 120,000 deaths. The paper found that there were 45,000 more deaths in the first four years of Tory-led efficiencies than would have been expected if funding had stayed at pre-election levels. On this trajectory that could rise to nearly 200,000 excess deaths by the end of 2020, even with the extra funding that has been earmarked for public sector services this year. The paper identified that mortality rates in the UK had declined steadily from 2001 to 2010, but this reversed sharply with the death rate growing again after austerity came in. From this reversal the authors identified that 45,368 extra deaths occurred between 2010 and 2014, than would have been expected, although it stops short of calling them "avoidable". Based on those trends it predicted the next five years - from 2015 to 2020 - would account for 152,141 deaths - 100 a day - findings which one of the authors likened to “economic murder”. The study, published in BMJ Open today, estimated that to return death rates to their pre-2010 levels spending would need to increase by £25.3bn. Per capita public health spending between 2001 and 2010 increased by 3.8 per cent a year, but in the first four years of the Coalition, increases were just 0.41 per cent, researchers from University College London found. In social care the annual budget increase collapsed from 2.20 per cent annually, to a decrease of 1.57 per cent. The researchers found this coincided with death rates which had decreased by around 0.77 per cent a year to 2010, beginning to increase again by 0.87 per cent a year. And the majority of those were people reliant on social care, the paper says: “This is most likely because social care experienced greater relative spending constraints than healthcare." It also notes that a drop in nurse numbers may have accounted for 10 per cent of deaths, concluding: "We have found that spending constraints since 2010, especially public expenditure on social care, may have produced a substantial mortality gap in England.” The papers’ senior author and a researcher at UCL, Dr Ben Maruthappu, said this trend is seen elsewhere. “When you look at Portugal and other countries that have gone through austerity measures, they have found that health care provision gets worse and health care outcomes get worse,” he told The Independent. One of his co-author’s, Professor Lawrence King of the Applied Health Research Unit at Cambridge University, said "It is now very clear that austerity does not promote growth or reduce deficits - it is bad economics, but good class politics," he said. "This study shows it is also a public health disaster. It is not an exaggeration to call it economic murder.”
You also need to know, that according to professor Warren at Harvard Law, the laws in the US are written for the very people that caused this crisis, the bankers and the Fed and so on.
I don't know what do you think about when you say that but most people here are against the killing from both sides of the conflict i wonder what does that have to do with the economic dialogue we are having .
Well, he is arguing not to do something (austerity) which is, you know, the alternative to doing something. He also implies some further measures in this. Taxing those who have the money and got us into our current predicament and giving it back to people who contribute to our society and economy, preferably giving them greater equity as well. Unlike the rich, poor people actually spend a big part of their added income which will stimulate the economy a lot more. And if we had a more democratic approach to our economy we might see very different decisionmaking that doesn't have the pitfalls of shareholder value maximization.
@@Pletzmutz arguing not to do something is not the same as providing an alternative. We tried spending our way out of a crisis in the 1970s and that led to the UK needing an IMF bailout. And the Labour government at the time had to introduce austerity anyway.
Right and the problem is, one way or another, we are being asked to pay off debts which have a leveraged, not true, value. The real problem is leveraged value and derivatives of it. The solution was to unwind the leveraged value and the derivatives and only pay back the true value--the value of the collateral. Govts did not demand this when they bailed out the financial industry and that's why we are where we are.
It was only numbers on a sheet of paper, backed by debt that would never be paid. It was fake money. If you want the money back, we are going to have to rebuild the economy honestly, not through more financial gambling.
As I understand it, the money never existed. The banks got carried away gambling with "money" they didn't have - fantasy money, (in this video, he refers to it more politely as I.O.U.s) in the hope that the gamble would pay off, but they couldn't all win and once many started losing big time, time after time, banks started to get cold feet and stop lending to each other and call in debts. That's when the whole phoney edifice collapsed like a souffle, which is full of hot air, collapses when the oven door is opened too early. Moral. Banks should not be allowed to gamble with money they don't have and in my opinion they shouldn't be allowed to gamble people's savings either. Governments have imposed some rules on them, that they need back up funds before gambling, but they've not gone as far as to stop them from gambling and or to separate retail from wholesale banking. When the banks collapsed we the taxpayer bailed them out, or rather the government did it with taxpayer's money and that was to save people's savings but also to save the banks which are essential to allow capitalism to function. Without them the system collapses. Scary.
Your first statement is true and i don't see your point from saying it . I live in Egypt so i am not familiar with the DC metro area may be you can explain theoretically why government spending makes counties rich given this 1-The government can only get money either by printing it ,which causes inflation and in a way a tax on everyone owning cash, or it can tax people the whole idea about spending cuts is that people spend their money better than the government 2-Debt is the cause of problems
That does not create money in the way the government creates it. When a private institution multiplies the flow of money by lending it there is no new money created without creation of a tangible associated asset. When the government creates money they create it without creating tangible assets and they get first use of the money before the rest of the community does. You are ignoring the fact that private lending requires a depositor to create goods/services before the multiplication happens.
What makes them more greedy than you or me? I don't see where you are getting that assumption, beyond the observation that they are trying to get the best deal as possible for themselves. But that's what everyone does. So again, why are "bankers" greedier than anyone else?
Main mistake was not defaulting and taking over than banks, while locking up culprits, instead of bailing them out with fat check at the end Luckily my country laws and mechanisms didn't allow for it to happen in the first place
Not doing these things. Breton-Woods didn't work over the long term, but it was done to stop the rise of fascists, by preventing what lead to WW1 and WW2. They got rid of that. Oh look. Fascists.
During the Great Depression, the US government increased public spending. Bridges and other large construction projects gave people jobs which brought more money into the economy, and sped uptake end of the Depression. Public spending helps in crises. In theory the debt would be paid back after, but we frequently don't pay it back when times are good. Also, higher taxes on the rich are an option. Many of the bankers who caused the crisis received millions in bonuses from their companies a year or two later. They didn't feel the consequences. Higher taxes would hit the people who caused the problem, rather than those who'd already been hurt by it.
please clarify how did they make Washington Dc very wealthy because it sounds like they used the tax money for the state for one part only (I am not sure i just guessed that from what you said) Inflation is not logical why do you print money in the first place ? If you want to redistribute wealth just do it in a clear way inflation does it in a very chaotic way (taking value from those with cash without those from property)
Government contractors have made the area around Washington DC very wealthy. That's government spending. It's so wealthy that it's taxed more by Virginia so that they can send the tax dollars to pooer areas of the state. Inflation is natural. I'm more worried about jobs than inflation. Hyper inflation in the US isn't going to happen. Debt is only a problem if you can't repay it. Plenty of people have mortages, which is debt, and live fine. Last thing Egypt needs to do is cut services
Doesn't it kind of depend on what you're cutting? This is the same type of mistake of looking just at aggregate demand without understanding the richness of the data behind that aggregate. How about we start with eliminating govt subsidies, govt loans to corporations, tax credits, special projects, etc. I mean in the US, Ron Paul has talked about eliminating 1 trillion dollars in one year. Seems excessively harsh, except this is equivalent to 2006 level spending. Not exactly the stoneage.
And Egypt needs to stop subsidizing the rich by fuel subsides and start providing basic services like clear water and electricity , the food subsides are kind of in between
Corporations are not going to invest in anything unless they see they can make a profit. You realize that government spending is the reason the DC metro area has the richest counties in terms of median income in the country?
The logic Keynes used to describe the "fallacy of composition" is flawed for the reason that Keynes discounted the role of land markets in developed countries. Thus, he also failed to see that although most taxes impose a heavy deadweight loss on the production of goods and services, the public collection of the rent of land imposes a zero deadweight loss. Moreover, the taxation of rent has the potential to bring down the cost of land which then makes its way through the economy, removing a primary source of inflation. Thus, the taxation of rent of land (and land-like assets, such as the broadcast spectrum and even take-off and landing slots at airports) allows the reduction in taxation of earned income streams, capital goods and commerce, with the great positive effect of the elimination of so-called business cycles. Removing the land price component from an economy reduces the dependence on credit in both the private and public sectors.
Government debt is mostly owned by wealthy people and the interest paid on it is a form of welfare for the wealthy. It's so safe that people pay governments (aka negative interest rates) for the privilege of owning it! Government deficits are simply the national accounting identity balances of private and foreign net saving desires (aka de-leveraging). Mass unemployment is a sign government deficits are too low, increasing them stabilises the economy at higher income levels and pay off debts!
@DOHC2L it IS responsible for the surge in the deficit the past two years and attendant increase in the debt, which the GOP has glommed onto as their reason why the debt that *their* policies have actually done the most to create is suddenly a "crisis" which must be addressed with austerity measures.
Well how do you think money is created in the federal banking system. And compare it to the private banking system where there is a difference. The main difference is private banks cannot create money expansion without the reseve acting first. And private banks cannot print money at all as currency or data.!! The Fed can and does both with congress urging it to do so.
Bankers have always been greedy and you can't explain a variable with a constant. What is different is their debt got unloaded on the public. That was because of their political clout. What is different is not banker's greed, what is different is the private banking system's size and political influence.
the cure is democracy. when power is shared, wealth will be widely distributed. when power is narrowly held, wealth will be too. aristotle and madison were agreed on this principle. it's just that madison wanted the rich to rule, and designed his constitution to make that easy. good design, 4 of the first 5 presidents were plantation plutocrats, and the rich continue to rule right down to today. oligarchy is oligarchy, and it makes little difference if it is elective oligarchy, because politicians in office are powerful, and soon are wealthy. how to get democracy? funny you should ask- madison thought of that, too. he left citizen initiative out of the constitution. i told you he wanted the rich to rule. it needs revolution to change the constitution from below. madison thought of that, too. but he figured the 'mob' were too gormless to be a threat. he was right about that, too.
Well it is not about commenting about my country it is about calling the people of my country savage animals and by the way i didn't comment on your country we were discussing an economic idea called Austerity not the USA
Austerity will bring a version of the "Tragedy of the Commons" problem that conservatives use to argue against liberal policies, especially where benefits and social safety net programs are concerned.
lol all the major EU countries that took "austerity" measures cut the rate of increase in spending, which is very similar to the US sequester. All those govts spent more this year than they did the last. How do people think that debt is good for the poor? Where does the govt get the money to fund programs even when its in debt? Obviously the banks. QE is just printed money that buys bonds from banks. Thats why bankers are getting rich. Its the monetary policy.
@DOHC2L His discussion of "debt" has little to do with the fiscal debt of the United States. It's got to do with the collective debt that has been amassed by delinquent financial instruments. The government, who has so wisely chosen to pour tax money into that collective debt, hasn't necessarily increased fiscal debt or trade deficits as much, but it's clearly made the have-nots less off.
The problem is NOT debt. It's fiat currency coupled with a fractional reserve credit system. I'm glad this video is still up after 10 years as evidence that the same economic forces create the same outcome again, and again, and again. And oh yeah, just for the lefty's out there, the rich keep getting richer, regardless of taxation policy or governmental system (see Commie China for a great example). That's because proximity to the spigot is the determining factor in how much of the $$ flows your way. Ultimately this poor fellow is incorrect. Debt funded fiat systems, yes ALL of them, eventually collapse. The austerity comes whether you like it or not. This "austerity is inherently bad" argument comes from people who are strongly entrenched in the system that's in place now. This is the ruling class telling you "just stay the course, that iceberg ahead is just an optical illusion." They think the economy can be managed and they're so gosh-darned smart they're the ones to do it. It will not work forever. Plan on austerity, and if you're under 60, in your lifetime.
Many people advocates for Austerity throughout the year but when any crisis occurs they just hide inside the cave. Ultimately the Keynesians come up as the savior. And the cycle repeats :-)
Real austerity would avoid services like police firemen courts and maintenance of public works & mean the cutting bureaucracy dead end departments over regulation of every aspect of your life all nonperforming government contracts especially in the military. America can save 1 Trillion dollars a year by ending the over 1 thousand land bases around the world.
@clos4672 Underemployment, underpay, overtaxation, overcharging and rent seeking acquisitive crony capitalism aka neo-feudalism if not Imperialistic debt slavery are what keeps the people impoverished.
The balance sheet of the world is terribly difficult to accurately discern. It may be many trillions in debt. Or there may be no interplanetary lenders.
l wish this man was my ecconomics teacher when l was at school. all l learnt was Adam Smith and his 'invisible hand'. yes, it sounded creepy then and l was right.
+Some Guy Basically cutting government spending while in a recession. It seems crazy that a government should of coarse do that in a recession. But as he explains it doesn't work, because for every dollar the government cuts it cuts 7 from the economy this is why Japan, Ireland and Greece can't pay down their debts. What actually needs to happen is Government spends more thus creating jobs which stabilizes labor and consumerism But, then cut and tax more when you are in a boom in order to pay down the debt.. Well the political process gets sort of in the way right. no one wants to see their taxes go up after living in a depression right? So the responsible adults so to speak aren't going to be elected suggesting that.. Thus. Our politicians become ideologs spouting debunked theories like trickle down or the laffer curve. depressions and wars will happen eventually. At least you tried to listen haha.
Some Guy Most people don't want to live in truth. Unfortunately, it means most people are going to be miserable most of their lives. Always question if your thoughts and beliefs are true and avoid trying to hear what you want.
U r needed in the UK and EU as austerity is causing the rise of extremism. ... paying off private irresponsible banks in retutn 4 Greek govt employees 2 get a >30% decrease in pay and pensions...40% youth unrmployment.... youngsters who r angry and decide 2 mobilise are dangerous...
How does austerity do that ? And no sir you can't give money value if the government prints a trillion This trillion will cause inflation no value given here You should be aware that much of the government spending goes to big corporations and limiting this part if government is the most important
Lmao yeah sure let's call it a rise or planned event... This administration had just passed a bill recently called the cares act, it was voted on nearly unanimous, the vote on it seem to not have been recorded and only way to cast your vote is by voice. You'll surprised how partisan everyone was..
Come on, even those at the Univ of Chicago economics department (which I was accepted to but did not attend) has some sense of a resultant state of welfare that is very contrary to the current world. You can't root for theoretical market perfection which clearly can't be perfect in reality -- the only hopeful experimental ground for Friedman was the US, and we've seen its economy fail in the last three years.
So 10 years on and this still seems incredibly relevant.
⁶
Well said, "workers of the world unite, you have nothing to lose but your chains"
Let Me explain.
Austerity = Taking money out of the economy.
Spending = Putting money into the economy
Bankruptcy = spending too much
@@cyrusol Bankrupty : leaving societies and CEO keeping their taxes
@@maxentirunos Wrong.
its big brain time
yes but the spending isn't money you actually have
This is a very clear and convincing account of why and how austerity is dangerous. I appreciate if you could allow me to put this video with Japanese subtitles on RUclips.
Can't you just add the subtitles to this video?
Best economic explanation that I have ever seen! t's obvious that we have to turn around the tax loopholes for the rich. Maybe not back to Eisenhower levels, but somewhere in-between
More like back to Lenin levels.
@@junkersintutus4282 No, thanks... No, no, no...
@@movement2contact you say that, but if you don't put it back up to eisenhower levels it's what will happen.
sometimes the taxes just come in the form of torches and pitchforks, but they always come.
Cap income over 10 million at 90% tax
Simple. 10 or more tax brackets, zero incentives and loopholes for any persons or businesses. Until we all understand that an individual is taxed more punitively than a business, nothing will change.
What an incredible breakdown.
Marl Blyth is my PATRONUS
Dr. Blyth, brilliant, well done. Great explanation. I'll send this on.
Oh my god. This makes me realize what I was actually hearing in the radio following the crisis. "Nedskæringer, nedskæringer"... they were playing us for fools.
They were, and they still are. Us Norwegians suffered the same as you did in Denmark, and we were among the least impacted countries
Great video & so easy to understand that even politicians can understand.
Too bad he's fundamentally wrong.
@@owlblocksdavid4955 Too bad that some rando on the internet can't provide any evidence that the world renown economist is wrong.
So i guess they get ignored.
we love you Mark. We need you in Australia. Please come here and start a new political party.
The Irony abounds as we are on the precipice of a new cycle of the same thing.
Precipice now crossed.
Funny how this cycle keeps repeating. Would love to see some of these lefty professor-think tank types address that. LOL. Of course they won't.
@@markw999 Mainstream economists don’t even understand what’s going on
Austerity Farmer: Oh no, the soil is depleted! I'll just sell my tractor and cows to cover costs until the soil recovers.
Keynesian Farmer: Oh no! The soil is depleted! I'll take out a quick loan to buy some fertilizer, and use my profits to pay the bank back.
Socialist Farmer: Oh no! The soil is depleted. Maybe I shouldn't exploit the soil this much. I'll cooperate with my fellow farmers to help get through this.
Fascist Farmer: Oh no! The soil is depleted! I'll just rally my farm hands, and have then take some farm land next door for me.
Stealing this. Sorry.
The model looks plausible at first glance - especially in regards to *Keynesian* public spending and the *historicity* of the German, _nationalistic_ *'Agrarian* *League'* - but is flawed down to the core.
Isolated *'subsistence* *farming'* would simply lead to starvation in case of poor harvests and once commercial farming in a _global_ _economy_ has built up debt, it's likely to default, sell the land and move to the city - since food prices are only going up if there is not enough food production or rampant overpopulation, close to _starvation_ .
The notion of a 'socialist farmer' is outright _deceptive_ and it's reasoning sounds like an _'environmentalist_ _commune'_ that rather sells over-priced 'courses on self-discovery' than mere food. During LENIN's 'New Economic Policy' soviet farmers were producing as 'laissez-fair' _anarchists_ , according to _demand_ without state intervention - under the *collectivization* by STALIN or Mao, the *'planned* *economy'* *by* *the* *state* , they were _exploited_ in favour of _foreign_ _currency_ _reserves_ - until they _starved_ .
Austerity brings people back to square one of *'subsistence* *farming'* - _if_ they can pay the _land_ _tax_ - otherwise they would default and move to the city, possibly joining the military (fascism, imperialism).
Keynesian public spending depends on public funds - if states are in debt and lack income because they 'bailed out' their banks and businesses in the real economy are too poor - or *'off-shored'* to emerging countries (as increasingly in Western societies) - _there_ _will_ _be_ _no_ _stimulus_ by the state - as in Greece.
That is why *'fascism'* *is* *not* *a* *choice* , *but* *a* *matter* *of* *circumstance* .
"(...) as your father and mine, foolish Perses, used to sail on shipboard because he lacked sufficient livelihood. And one day he came to this very place, crossing over a great stretch of sea; he left Aeolian Cyme and fled, not from riches and substance, but from wretched poverty which Zeus lays upon men, and he settled near Helicon in a miserable hamlet, Ascra, which is bad in winter, sultry in summer, and good at no time."
(Hesiod. 'Works and Days'.)
@B. Greene You can't use the logic of the analogy to justify your ideology...
@@lukestclair8027
Rational planning is the only way to eliminate scarcity.
nice!
Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊
The book was great!!
This kinda brings up the need to discuss sound monetary policy along with government finances. As long as central banks counterfeit money to cover up missing deposits, governments will have little intention to cut both spending & taxes.
LOVE THIS. THANKS.
good video. i would just like to add that governments that issue their own currency never need to borrow in order to spend.
They just need to inflate their currency. Inflation being "the tax that no one voted for, but that everyone has to pay". There is no such thing as a free lunch.
@@owlblocksdavid4955 No one is looking for a free lunch. Inflation is a tax on lenders and as most of the population suffering at this point are borrowers it's a pretty safe temporary tax.
This is basically Keynesian Economics, their are two ways to to reel in the debt, borrow money so that you can earn more revenue, or cut expense. Politicians are basically saying that there is no way for them to raise more revenue, so they must cut expenses. Mark is saying that, no you can still raise revenue. This is a very simplistic analogy, but the main kicker is that everyone is going to be paying no matter what because in the end the bankers made off with all the cash.
he said something to think about that class warfare allways ends badly, like the French Rev.the poor were suffering and the noble lived the good life with out a worry that is until the poor showed up at the gates with axes and pich forks. People can say that would never happen here but those that forget history will repeat it and all through history that is what happened our own U.S.A. was created this way.
This aged very well. Austerity proved to be a disaster. Yet I fear that with recessions looming in 2022 and going into 2023, the UK and other governments are going to repeat these same mistakes. Like the BS sandwich that keeps on giving, screwing the poorest in our societies and increasing inequality.
Published in September 2010 ... I wish I had seen this video back then (I had never heard of Mark Blyth.).
Very good explanation and props!
Thanks!
Great video! I am just starting the book today. I see this video is more from a UK/USA perspective, about governments that spend most money on services. My interest is more in Eastern Europe, where governments spend half on services and give half to corrupt oligarchs. "Austerity" in Eastern Europe (so far) means cutting the services without cutting the oligarch gifts.
That was incredibly informative mark
This man is awesome!
>Where austerity takes the money to
Into the pockets of corporations. They just sit on the cash.
>Money is not value
We give it value.
What a wonderful video, really enjoyed it a lot : D
Such a great video
Well said!
I come back to this 10 years later and the summary mark gives at the end "..this is class politics, and it usually ends badly..." present day and Donal Trump recently ended his presidency of USA.
So, reading between the lines, what he's saying is that, if things keep going in the way they're headed, we'll be seeing blood in the gated communities before too long.
As he always says: the Hamptons are not a defensible position.
One thing I didn't understand. At 3:17, you talked about the economy craters is everyone pays down debt at the same time. But wouldn't one person's payment of debt be another person's revenue? Or is it because goods and services aren't being made and consumed, but debt is just being paid? Please excuse my ignorance, I'm an artist, not an economist!
well, it is a debt based system. If there was no debt, there would be no money. so the economic system requires continual expansion (gdp) of debt to be 'positive'. If people and corporations start making payments and stop borrowing , the economic system would contract and the ordinary person would experience deflation - falling prices as a result. However deflation to the economic system is like sunlight to a vampire.
I'm not saying that quantitative easing is working!
Q: Where does money to spend come from?
A: The budget which, in the UK is given annually.
Q:where does austerity take the money to ?
A: I don't know
that is a beautiful use of a common known logic fallacy by logicians alike. so the fallacy goes like this, if i stand up during a baseball game i see better, but it doest follow then there fore if we all stood up during a baseball game we all see better. god damn that was good.
Right. So, as a defense against the known boom to bust character of our economy, I should do all I can to save my earnings, invest it in a diversified manner to minimize loss due to inflation, and certainly make sure I am debt free, especially when everyone else is jumping into asset markets driven by a speculative fever. Economists will hope the majority of people behave with less concern for the long term.
Austerity policies a new study suggests has caused 120,000 deaths.
The paper found that there were 45,000 more deaths in the first four years of Tory-led efficiencies than would have been expected if funding had stayed at pre-election levels. On this trajectory that could rise to nearly 200,000 excess deaths by the end of 2020, even with the extra funding that has been earmarked for public sector services this year.
The paper identified that mortality rates in the UK had declined steadily from 2001 to 2010, but this reversed sharply with the death rate growing again after austerity came in. From this reversal the authors identified that 45,368 extra deaths occurred between 2010 and 2014, than would have been expected, although it stops short of calling them "avoidable".
Based on those trends it predicted the next five years - from 2015 to 2020 - would account for 152,141 deaths - 100 a day - findings which one of the authors likened to “economic murder”.
The study, published in BMJ Open today, estimated that to return death rates to their pre-2010 levels spending would need to increase by £25.3bn.
Per capita public health spending between 2001 and 2010 increased by 3.8 per cent a year, but in the first four years of the Coalition, increases were just 0.41 per cent, researchers from University College London found. In social care the annual budget increase collapsed from 2.20 per cent annually, to a decrease of 1.57 per cent. The researchers found this coincided with death rates which had decreased by around 0.77 per cent a year to 2010, beginning to increase again by 0.87 per cent a year. And the majority of those were people reliant on social care, the paper says: “This is most likely because social care experienced greater relative spending constraints than healthcare."
It also notes that a drop in nurse numbers may have accounted for 10 per cent of deaths, concluding: "We have found that spending constraints since 2010, especially public expenditure on social care, may have produced a substantial mortality gap in England.”
The papers’ senior author and a researcher at UCL, Dr Ben Maruthappu, said this trend is seen elsewhere. “When you look at Portugal and other countries that have gone through austerity measures, they have found that health care provision gets worse and health care outcomes get worse,” he told The Independent.
One of his co-author’s, Professor Lawrence King of the Applied Health Research Unit at Cambridge University, said "It is now very clear that austerity does not promote growth or reduce deficits - it is bad economics, but good class politics," he said. "This study shows it is also a public health disaster. It is not an exaggeration to call it economic murder.”
You also need to know, that according to professor Warren at Harvard Law, the laws in the US are written for the very people that caused this crisis, the bankers and the Fed and so on.
Pretty much summed up the catalyst for the rising tide of global populism in the next couple of years
I don't know what do you think about when you say that but most people here are against the killing from both sides of the conflict i wonder what does that have to do with the economic dialogue we are having .
It's simply to put emphasis on important point.
there is only one cure: get democracy. do business in public, subject to scrutiny and public acceptance. democracy does lead to socialism. good.
And how long does socialism last before they (power hungry individuals) implement mao level of fascism.
He's an eloquent critic of austerity, but I've never heard what his alternative would actually be.
Well, he is arguing not to do something (austerity) which is, you know, the alternative to doing something. He also implies some further measures in this. Taxing those who have the money and got us into our current predicament and giving it back to people who contribute to our society and economy, preferably giving them greater equity as well. Unlike the rich, poor people actually spend a big part of their added income which will stimulate the economy a lot more. And if we had a more democratic approach to our economy we might see very different decisionmaking that doesn't have the pitfalls of shareholder value maximization.
@@Pletzmutz arguing not to do something is not the same as providing an alternative.
We tried spending our way out of a crisis in the 1970s and that led to the UK needing an IMF bailout.
And the Labour government at the time had to introduce austerity anyway.
Right and the problem is, one way or another, we are being asked to pay off debts which have a leveraged, not true, value. The real problem is leveraged value and derivatives of it. The solution was to unwind the leveraged value and the derivatives and only pay back the true value--the value of the collateral. Govts did not demand this when they bailed out the financial industry and that's why we are where we are.
Well money is not value and you can't print value and where does money to spend come from and where austerity takes the money to ?
The crash of 2008. I want to know where the money went. It didn't just disappear. Where did it go because we want it back.
Jews.
It was only numbers on a sheet of paper, backed by debt that would never be paid. It was fake money. If you want the money back, we are going to have to rebuild the economy honestly, not through more financial gambling.
John Doe
That is anti-Semitic.
BOB FRYE And out of left-field!"
As I understand it, the money never existed. The banks got carried away gambling with "money" they didn't have - fantasy money, (in this video, he refers to it more politely as I.O.U.s) in the hope that the gamble would pay off, but they couldn't all win and once many started losing big time, time after time, banks started to get cold feet and stop lending to each other and call in debts. That's when the whole phoney edifice collapsed like a souffle, which is full of hot air, collapses when the oven door is opened too early. Moral. Banks should not be allowed to gamble with money they don't have and in my opinion they shouldn't be allowed to gamble people's savings either. Governments have imposed some rules on them, that they need back up funds before gambling, but they've not gone as far as to stop them from gambling and or to separate retail from wholesale banking. When the banks collapsed we the taxpayer bailed them out, or rather the government did it with taxpayer's money and that was to save people's savings but also to save the banks which are essential to allow capitalism to function. Without them the system collapses. Scary.
@AntiNeoFascist you took the words out of my mouth, seems like no one considers cutting money from "defense" and corporate welfare
Just how did they make it wealthy ? and how is that applicable to every where else ? That's the answer i seek
Your first statement is true and i don't see your point from saying it .
I live in Egypt so i am not familiar with the DC metro area may be you can explain theoretically why government spending makes counties rich given this
1-The government can only get money either by printing it ,which causes inflation and in a way a tax on everyone owning cash, or it can tax people the whole idea about spending cuts is that people spend their money better than the government
2-Debt is the cause of problems
How exactly?
That does not create money in the way the government creates it. When a private institution multiplies the flow of money by lending it there is no new money created without creation of a tangible associated asset. When the government creates money they create it without creating tangible assets and they get first use of the money before the rest of the community does. You are ignoring the fact that private lending requires a depositor to create goods/services before the multiplication happens.
@lushfauna you do know Ron Paul is for Austerity right?
I get it what i don't get is where did the government get the money in the first place ?
What makes them more greedy than you or me? I don't see where you are getting that assumption, beyond the observation that they are trying to get the best deal as possible for themselves. But that's what everyone does. So again, why are "bankers" greedier than anyone else?
I learned nothing of this at school. School lacks a lot of vital information about the world.
Main mistake was not defaulting and taking over than banks, while locking up culprits, instead of bailing them out with fat check at the end
Luckily my country laws and mechanisms didn't allow for it to happen in the first place
See also 'Shock Doctrine'.
So what's the alternative to austerity?
Not doing these things.
Breton-Woods didn't work over the long term, but it was done to stop the rise of fascists, by preventing what lead to WW1 and WW2.
They got rid of that.
Oh look. Fascists.
During the Great Depression, the US government increased public spending. Bridges and other large construction projects gave people jobs which brought more money into the economy, and sped uptake end of the Depression. Public spending helps in crises. In theory the debt would be paid back after, but we frequently don't pay it back when times are good.
Also, higher taxes on the rich are an option. Many of the bankers who caused the crisis received millions in bonuses from their companies a year or two later. They didn't feel the consequences. Higher taxes would hit the people who caused the problem, rather than those who'd already been hurt by it.
please clarify how did they make Washington Dc very wealthy because it sounds like they used the tax money for the state for one part only (I am not sure i just guessed that from what you said)
Inflation is not logical why do you print money in the first place ? If you want to redistribute wealth just do it in a clear way inflation does it in a very chaotic way (taking value from those with cash without those from property)
Government contractors have made the area around Washington DC very wealthy. That's government spending. It's so wealthy that it's taxed more by Virginia so that they can send the tax dollars to pooer areas of the state.
Inflation is natural. I'm more worried about jobs than inflation. Hyper inflation in the US isn't going to happen.
Debt is only a problem if you can't repay it. Plenty of people have mortages, which is debt, and live fine.
Last thing Egypt needs to do is cut services
Doesn't it kind of depend on what you're cutting? This is the same type of mistake of looking just at aggregate demand without understanding the richness of the data behind that aggregate. How about we start with eliminating govt subsidies, govt loans to corporations, tax credits, special projects, etc. I mean in the US, Ron Paul has talked about eliminating 1 trillion dollars in one year. Seems excessively harsh, except this is equivalent to 2006 level spending. Not exactly the stoneage.
And Egypt needs to stop subsidizing the rich by fuel subsides and start providing basic services like clear water and electricity , the food subsides are kind of in between
Good one - Spending other peoples money is too easy - Governments do it all the time and even arrogantly crow about it being good !!
^smart man.
Yes, that would make sense. But the banks don't like that because they would lose real money. They want you to pay for their lost money.
Corporations are not going to invest in anything unless they see they can make a profit.
You realize that government spending is the reason the DC metro area has the richest counties in terms of median income in the country?
The logic Keynes used to describe the "fallacy of composition" is flawed for the reason that Keynes discounted the role of land markets in developed countries. Thus, he also failed to see that although most taxes impose a heavy deadweight loss on the production of goods and services, the public collection of the rent of land imposes a zero deadweight loss. Moreover, the taxation of rent has the potential to bring down the cost of land which then makes its way through the economy, removing a primary source of inflation. Thus, the taxation of rent of land (and land-like assets, such as the broadcast spectrum and even take-off and landing slots at airports) allows the reduction in taxation of earned income streams, capital goods and commerce, with the great positive effect of the elimination of so-called business cycles. Removing the land price component from an economy reduces the dependence on credit in both the private and public sectors.
This ain't complicated at all.No demand. No reason to supply. No reason to supply no reason to hire. No reason to hire crisis gets worse.
Government debt is mostly owned by wealthy people and the interest paid on it is a form of welfare for the wealthy.
It's so safe that people pay governments (aka negative interest rates) for the privilege of owning it!
Government deficits are simply the national accounting identity balances of private and foreign net saving desires (aka de-leveraging).
Mass unemployment is a sign government deficits are too low, increasing them stabilises the economy at higher income levels and pay off debts!
@DOHC2L it IS responsible for the surge in the deficit the past two years and attendant increase in the debt, which the GOP has glommed onto as their reason why the debt that *their* policies have actually done the most to create is suddenly a "crisis" which must be addressed with austerity measures.
To the point.
Well how do you think money is created in the federal banking system. And compare it to the private banking system where there is a difference. The main difference is private banks cannot create money expansion without the reseve acting first. And private banks cannot print money at all as currency or data.!! The Fed can and does both with congress urging it to do so.
Bankers have always been greedy and you can't explain a variable with a constant. What is different is their debt got unloaded on the public. That was because of their political clout.
What is different is not banker's greed, what is different is the private banking system's size and political influence.
Things are bad, yes, and no answer from Marc Blyth.
its an insult that bankers earn millions in bonuses when it was them who caused the crisis!
the cure is democracy. when power is shared, wealth will be widely distributed. when power is narrowly held, wealth will be too. aristotle and madison were agreed on this principle. it's just that madison wanted the rich to rule, and designed his constitution to make that easy. good design, 4 of the first 5 presidents were plantation plutocrats, and the rich continue to rule right down to today. oligarchy is oligarchy, and it makes little difference if it is elective oligarchy, because politicians in office are powerful, and soon are wealthy. how to get democracy? funny you should ask- madison thought of that, too. he left citizen initiative out of the constitution. i told you he wanted the rich to rule. it needs revolution to change the constitution from below. madison thought of that, too. but he figured the 'mob' were too gormless to be a threat. he was right about that, too.
True, but the economy (and society) works a whole lot better when debt is a thing.
Well it is not about commenting about my country it is about calling the people of my country savage animals and by the way i didn't comment on your country we were discussing an economic idea called Austerity not the USA
Show it to them
I am not saying a agree with the French revolution, but I understand.
Bankers are the greediest of people.
When too many ideas emerge from a cretive meeting and the atory suffers.
@DOHC2L Who do you think is paying for all of those tarp bailouts????????
Austerity will bring a version of the "Tragedy of the Commons" problem that conservatives use to argue against liberal policies, especially where benefits and social safety net programs are concerned.
lol all the major EU countries that took "austerity" measures cut the rate of increase in spending, which is very similar to the US sequester. All those govts spent more this year than they did the last.
How do people think that debt is good for the poor? Where does the govt get the money to fund programs even when its in debt? Obviously the banks. QE is just printed money that buys bonds from banks. Thats why bankers are getting rich. Its the monetary policy.
@DOHC2L His discussion of "debt" has little to do with the fiscal debt of the United States. It's got to do with the collective debt that has been amassed by delinquent financial instruments. The government, who has so wisely chosen to pour tax money into that collective debt, hasn't necessarily increased fiscal debt or trade deficits as much, but it's clearly made the have-nots less off.
Once again government contracts. The government would SPEND and buy weapons and other items from businesses.
The problem is NOT debt. It's fiat currency coupled with a fractional reserve credit system. I'm glad this video is still up after 10 years as evidence that the same economic forces create the same outcome again, and again, and again. And oh yeah, just for the lefty's out there, the rich keep getting richer, regardless of taxation policy or governmental system (see Commie China for a great example). That's because proximity to the spigot is the determining factor in how much of the $$ flows your way. Ultimately this poor fellow is incorrect. Debt funded fiat systems, yes ALL of them, eventually collapse. The austerity comes whether you like it or not. This "austerity is inherently bad" argument comes from people who are strongly entrenched in the system that's in place now. This is the ruling class telling you "just stay the course, that iceberg ahead is just an optical illusion." They think the economy can be managed and they're so gosh-darned smart they're the ones to do it. It will not work forever. Plan on austerity, and if you're under 60, in your lifetime.
Many people advocates for Austerity throughout the year but when any crisis occurs they just hide inside the cave. Ultimately the Keynesians come up as the savior. And the cycle repeats :-)
Real austerity would avoid services like police firemen courts and maintenance of public works & mean the cutting bureaucracy dead end departments over regulation of every aspect of your life all nonperforming government contracts especially in the military. America can save 1 Trillion dollars a year by ending the over 1 thousand land bases around the world.
@clos4672 Underemployment, underpay, overtaxation, overcharging and rent seeking acquisitive crony capitalism aka neo-feudalism if not Imperialistic debt slavery are what keeps the people impoverished.
AKA: Capitalism.
and yet people in the UK just keep voting for it. Sad
Well yeah. they were lied to.
What do you expect?
The balance sheet of the world is terribly difficult to accurately discern. It may be many trillions in debt. Or there may be no interplanetary lenders.
Planet earth can not be in debt to itself, there must always be a creditor for every debtor.
Everyone's debt is someone else's asset. Debts and assets always sum up to zero. It's a math thing.
l wish this man was my ecconomics teacher when l was at school. all l learnt was Adam Smith and his 'invisible hand'. yes, it sounded creepy then and l was right.
Uh so what's austerity again?
+Some Guy Basically cutting government spending while in a recession. It seems crazy that a government should of coarse do that in a recession. But as he explains it doesn't work, because for every dollar the government cuts it cuts 7 from the economy this is why Japan, Ireland and Greece can't pay down their debts. What actually needs to happen is Government spends more thus creating jobs which stabilizes labor and consumerism But, then cut and tax more when you are in a boom in order to pay down the debt.. Well the political process gets sort of in the way right. no one wants to see their taxes go up after living in a depression right? So the responsible adults so to speak aren't going to be elected suggesting that.. Thus. Our politicians become ideologs spouting debunked theories like trickle down or the laffer curve. depressions and wars will happen eventually. At least you tried to listen haha.
+Patrick P fuk man why are us in the bottom so ignorant about these things.. thanks for clearing it up.
Some Guy Most people don't want to live in truth. Unfortunately, it means most people are going to be miserable most of their lives. Always question if your thoughts and beliefs are true and avoid trying to hear what you want.
google Australian economics
It's basically a party with drugs, booze and hookers that only the rich were invited to.
Then the poor are told they'll have to pay for it.
Ron Paul 2012!
U r needed in the UK and EU as austerity is causing the rise of extremism. ... paying off private irresponsible banks in retutn 4 Greek govt employees 2 get a >30% decrease in pay and pensions...40% youth unrmployment.... youngsters who r angry and decide 2 mobilise are dangerous...
How does austerity do that ?
And no sir you can't give money value if the government prints a trillion This trillion will cause inflation no value given here
You should be aware that much of the government spending goes to big corporations and limiting this part if government is the most important
and they make us pay the bill!
This video translated to Portuguese has over 135k views:
/watch?v=E1Kzp5EVUWg
Congrats to Brown University and Mark Blyth.
its surprising (not really tbh) how Blyth predicted Trump's rise and populism because of austerity measures
Lmao yeah sure let's call it a rise or planned event... This administration had just passed a bill recently called the cares act, it was voted on nearly unanimous, the vote on it seem to not have been recorded and only way to cast your vote is by voice. You'll surprised how partisan everyone was..
Come on, even those at the Univ of Chicago economics department (which I was accepted to but did not attend) has some sense of a resultant state of welfare that is very contrary to the current world. You can't root for theoretical market perfection which clearly can't be perfect in reality -- the only hopeful experimental ground for Friedman was the US, and we've seen its economy fail in the last three years.