Does anyone honestly think austerity is important to the restoration of fiscal balance because discipline and frugality lead to wealth? The people promoting austerity are invited to dinner in places like the room to the right. They’re doing well and not practicing austerity, so the answer must lie elsewhere.
And, really, it’s not that hard to figure out if you remember not to listen to a word they say.
- 1) For whatever reason (the crash in this case) there’s not enough money to go around.
- 1a) It is necessary to get the money from somewhere.
- 2) You could get it from rich people.
- 2a) If you do this by making them take the loss (= no taxpayer-funded bailout), they will threaten to take their ball and go home. (For instance, “I won’t buy your treasury bonds. I’ll buy somebody else’s.” Government goes into cold sweat worrying about finding money and has a crisis of confidence. This is the real “confidence fairy.”)
- 2b) Assuming you must bail out the rich, the government could cover the cost by taxing the rich. But the wealthy own the media, plus they can defund re-election campaigns, so the actual people in government would be out of a job. This, too, leads to cold sweat, but it does not yet have a catchy name. (The “keep-my-job fairy”?)
- 3) You could get it from everybody else.
- 3a) Everybody else objects because they didn’t cause the problem, so why should they pay for it?
Because austerity! It sounds so much better than,
“You pay for it. I don’t want to.” And way better than,
“I don’t need you for anything, Bub. Pay up.”
Full disclosure: I am (obviously) not an economist.