Austerity’s Irrationality: The Age of Economic Anorexia

By Michael Hoexter

Rational public debate about the economy and government’s role in the economy is currently in extremely short supply.  In a debt-deflation, a weak economy saved from Great Depression-level misery by half-way, inadequate government action, government spending is now blamed categorically for the ills of the economy by the aggressive austerity campaign that has captured the political discussion in major capitals.  Previous flaws in the economic theory of the state and theory of money, typically consigned to the realm of different economic “tastes” or moral persuasions, are now revealed to be catastrophic gaps in most economists’ and the public’s understanding of the basics of the capitalist economy.  The predatory austerity campaigners, many originating from within the financial industry, have turned what should have been an era of greater clarity about government’s critical role in the economy into a scapegoating of government for ills perpetrated for the most part by components of the financial sector or by the subservience of the public sector to the financial sector.  Austerity policies when implemented are the equivalent of ‘economicide’ as they strangle government’s ability to spur lagging demand for real goods and services as well as government’s role in steering the economy to deal with challenges that the private sector can’t or doesn’t want to face on its own.

The current public debate in Washington reveals two political sides that are competing to be “better” executors of an austerity agenda, each side apparently struggling against the other to cut government budget deficits more in number and/or more “effectively”.   The elementary Keynesian notion that both raising taxes and cutting spending are each individually and together brakes on private sector growth and ability to save seems to escape the understanding of either political side.  There are in the major media or on the major political stages no consistent anti-austerity voices that counteract the drive to eliminate or lame government’s ability to respond to economic, social and ecological challenges.  What would be at this point in time the engine of the economy’s vitality and any significant moves towards environmental sustainability, a forward-looking government prepared to spend beyond taxes collected, is treated as if it is the deadweight holding the economy back.  If the public were to rely exclusively on the utterances of politicians and media pundits, they would come to believe that austerity (in some form) is, contrary to the facts, a means to achieve prosperity and that “There is No Alternative” (TINA) to austerity.  An examination of the facts would show otherwise but we are not usually treated to careful examination of the facts, as the predominant lens through which the debate is channeled is that it is simply a political tug of war with no anchor in consistent facts.

While the Euro-Zone countries are an exception as they have a monetary union but not a fiscal union, those non-EZ countries that control their own currency can easily implement an agenda that provides adequate funding for government functions as well as provides additional demand for the economy until the private sector recovers.  Some governments may decide to issue bonds in the amount of their spending above taxes collected (budget “deficits”) but it is also possible in the era of fiat currencies for governments to spend above the taxes they collect without issuing bonds.  The US government, for instance, has a capacity to mint platinum coins in any denomination for deposit in the spending accounts of the Treasury according to a 1996 law.  Ignoring this facility of the US government is a motivated forgetting or ignorance of important information by politicians like President Obama.  Thus Obama and other political leaders attempt to keep the public in the dark, that they as leaders in fact do not have to cut government to please the bond markets that supposedly lend the US government the dollar, the dollar produced at near zero cost by the US government.  Even if we accept in theory the bond markets as an intermediary in the internals of government finance (which they are not) these markets already buy the bonds of the US and other monetarily sovereign governments at extremely low yields because they know that they will always be repaid, except if overtaken by completely delusional politicians, by sovereign debtors that issue the currency in which their bonds are denominated.

Alternative Hypotheses: Is Austerity Even Irrational?

The most common explanation that one finds among those who might agree that austerity is destructive and “bipartisan”, is that austerity’s overt irrationality is not really irrationality but a false front over the stealthy rationality of the politically corrupt amassing money and power.  The players in the austerity drama, according to this account, are actually well aware of the falsity of their claims that austerity is good for the economy but are serving their own private interests and those of powerful patrons by pushing for austerity.  Politicians are courting the interest of wealthy donors from the private sector, useful to them in their re-election efforts and in their ability to do favors for themselves and their family members; austerity is then the product of a rational calculation behind various diversions.

Another view is that some political players and certainly many pundits are ignorant and do not know that currency-issuing governments do not face the dire consequences which austerity advocates hyperventilate about.  Thus, in this account they may be rational but they are austerity advocates out of ignorance: there is a limited supply of “coin” that must be divided between various players and the most powerful and wealthiest get the first cut because they can do the US harm at some point in the future or will generate jobs out of the money they are allowed to keep.  A support for this view is that conventional economics has been no help in educating the public and the political class on the monetary operations of fiat-currency-issuing governments.   Most economists edit out the role of government in the economy in the first place and view money as being simply a “veil over barter” rather than a differentiated element within the economic system.

Finally, there is a case to be made that group-think leads people to support things that don’t make rational sense.  In this case, the notion of “Villagers” as some bloggers characterize Washington insiders, implies that public discourse is always produced by herd-thinking which may not be consistently logical but a narrative that is continually changed to fit the current consensus within the “Village”.  To be “serious” in this context means to be within the bounds of the discourse shared by the Village.  Rationality for individuals then means self-preservation by maintaining one’s membership in the “Village” by not questioning the assumptions that keep the privileged group together.

All of these “alternative” rationales for the austerity campaign have elements of truth in them but they also do not address the question how people are actually persuaded by the narratives produced as a) a ruse, b) out of ignorance or c) from a semi-conscious group process.  If we accept these as the only explanation, everybody in the society would have to be a cynic and would tune out the propositional content of what politicians and pundits say.  I don’t think this is the case, as people are in fact swayed by what politicians and “talking heads” say, even though they may not hold them in high esteem.

It then would make sense to explore the content of the public narrative itself.  The logical underpinnings of that narrative are still, as compared to the real evidence and ostensible goals of the parties involved, irrational and furthermore, I would add, pulls from non-rational motivations to make the narrative believable and even inspiring.  The austerity campaign evokes real feelings in people, perhaps in even the main actors who implement it.  How can we characterize the emotive power of the austerity narrative that leads us away from rational solutions to our serious problems and away from rationally dismissing out of hand politically popular non-problems?

Anorexia: Restriction and Self-“Purification”

I would submit that a close analogue to the type of irrationality upon which austerity advocates draw comes from the psychiatric disorder of anorexia nervosa.  While there are a number of theories about the cause of anorexia, it also happens to be one of the most deadly psychiatric disorders, as people who suffer from it starve themselves sometimes to death.  The disorder seems to hit adolescent girls in upper or middle class environments most frequently but the incidence of it in boys has been rising.  While there are some indications that there may be genetic predispositions to developing anorexia, there are psychological characteristics associated with the disorder, in particular perfectionism, orderliness, and a tendency towards overt compliance with rules.

While anorexia often must be treated behaviorally or even medically to prevent starvation, there are psychoanalytic and family dynamics theories that are some of the more plausible about motivations for why these young people would endeavor to hurt themselves.  Anorexics compare themselves to unrealistic ideals of practically asexual beauty, a vision of beauty that is made to appear very desirable and powerful by the thinness-obsessed fashion industry and media.  Many anorexics are thought to be attempting to rid themselves of the “messy” signs of puberty by becoming more juvenile and asexual in their appearance by starving themselves.  Additionally this effort leads to a feeling of “control” over their own lives, a control that is very satisfying to the anorexic, who may have been feeling out-of-control for family or social reasons.  That feeling of control may extend to the attention they get from their parents as the parents become more concerned about their child’s physical health.  The disorder and the eating of food can become a power struggle in the family and which the adolescent feels like she or he “wins” by starving themselves and defying the parents.

While psychoanalysis is not usually the treatment of choice in dealing with self-starvation, it does provide categories for classifying possible motivations:  spurning the “oral” satisfactions of eating for the “anal” satisfactions of control, of “purification” of the signs of puberty, and of the ideal of perfection.  The sociology of the disorder is also important, as the proliferation of images of very skinny women and very low body fat men have made it more common.  Furthermore, we live in a culture in which self-control is considered to be one of the highest personal virtues, extolled almost incessantly in the media in a wide variety of settings.  Self-improvement is in popular media in the United States almost an obsession.  It is difficult then to argue within the terrain of popular morality and self-justification against the numerous cases of borderline self-starvation, which seem to accrue benefits to those who stay just shy of overt malnutrition but often receive compliments about how “thin” they are.

The Austerity Campaign Pushes “Economic Anorexia”

In the discourse and tendencies of the austerity campaign we can see that the analogy to anorexia nervosa is a good fit.  The austerity campaign is focused on foreswearing government funding as the means of attaining an unrealistic ideal of economic perfection.  Cutting government funding and support, most empirically-oriented economists understand, will lead to slowed growth or recession.  Austerity advocates become swept up in the idea that restriction and supposed self-control leads to virtue; that “starving” the economy is good for it.  An examination of how economic growth happens over the longer term, via government spending over taxes collected, invariably contradicts this view.   Egged on by neoclassical and Austrian economics both of which have unrealistic ideas about where money and economic growth come from, the austerity advocates hold government and the economy as a whole to an unattainable ideal.  In pursuit of the unrealistic ideal of a self-sufficient private sector including ordinary households, the economy itself will be devastated (“starved”) by the austerity effort.

Like the sociology of anorexia, the advocates of austerity are not necessarily themselves sufferers from the blight itself; economic anorexia (anorexia economica) is a social disorder, a folie a plusieurs (a madness of many), not necessarily an individual one.  Fashion moguls and designers are often of normal weight and do not necessarily restrict their food intake; the young models that they use as a “canvas” for their designs are those that are more likely to suffer or inspire other young women watching them to choose an anorexic solution to their personal and social challenges.  Similarly, the advocates of austerity are most keen on making the poor and middle classes an example and part of a tableau of (unnecessary) “sacrifice”.  The addition of tax hikes on the wealthy as way to complete the tableau of sacrifice, without acknowledging that the (unnecessary from the point of view of funding the government) sacrifices of the wealthy are not nearly as painful as what is asked of ordinary people, invokes in austerity advocates a feeling that they are fair.  However there are signs that in fact, privileged groups will be “well served” by any tax deals arranged by the current political class.  Ultimately they are hypocrites, asking others to do what they themselves cannot or will not do, which furthermore and tragically, is unnecessary.

The economic anorexics are also prone to magical thinking, in particular about how the wealthy people in bond markets might look at them more favorably if they just sacrifice a little more (“were a little thinner”).  Sacrifice on the altar of these wealthy investors and winning their favor is supposed to be the key to future prosperity, the causality of which can never be fully explained.  It is an economic Cinderella story.

In the US, Barack Obama is the economic-anorexic-in-chief, seemingly captivated by the vision of “sacrifice” which he along with the Republican Congress will impose on millions if they are able to do their “Grand Bargain”.   He seems to instinctively gravitate to a stance that embraces restriction of intake and of abstemiousness, which has contributed to the perception of him, in the view of our self-control obsessed culture, as a man of individual virtue.   It must be admitted, that Obama , unlike some Presidents, has an apparently model family life, which it seems is irrelevant to whether one can govern well or fairly.  While he is rail thin, he supposedly has a healthy appetite and certainly he seems to be physically fit.  However, in matters related to the macro-economy, his primary attraction is to “belt tightening” and other “anti-oral” efforts.  That Obama himself will never have to worry with regard to his own substantial Presidential and post-Presidential benefits does not seem to hold him back in advocating that the less fortunate “sacrifice”, he imagines, for the common good and to win the favor of the wealthy.

So the difference between anorexia nervosa and anorexia economica is that in the former those with the disordered ideas suffer most but in the latter it is more likely that the disordered ideas inflict pain on others.  In anorexia economica, the “good idea” of self-starvation seems “better” if others are the ones who starve.

Towards Healthy “Nutrition” in Economics

In our current economic era after the crash of 2007-2008, “doing without” is thought to be a virtue, yet this contradicts our understanding of how economies function, driven as they are by the desires of people to live, to possess things and have pleasurable experiences as well as build and maintain their communities.   We are as living social organisms biophysically open systems that require the input of energy and nutrients to survive as well as participation in a living community.  We cannot, as the ideals embedded in some economic models suggest, become autarchic or self-sufficient from the natural environment, from society, or from the institutions of government of some kind.

While it has some much-celebrated strengths, the capitalist economy is in part built upon some of the less morally admirable aspects of human nature and amplifies them, creating in the process of a series of cultural, economic, and ecological crises with some unpleasant and highly destructive dynamics.   The austerity campaign creates a false resolution to these by diverting blame from the causes of these various problems to their potential solution, and in the meantime preaching a self-destructive form of self-purification, an “economic anorexia”.  By throttling the publicly provided liquidity of the economy, thereby making the economy more dependent on private finance, the austerity campaign freezes and stagnates the economy in the current unsustainable and highly unequal status quo.

In some sense we need to become more “austere” about many elements of our society (reducing the wasting of our natural environment, of the human potential of the unemployed, and of the real resources of the economy) but with the help of the instrument of government finance, unencumbered by misplaced ideas about the nature of the currency.  Fiscal austerity advocates cleverly mobilize regret about excess and turn it against that instrument which can help our society use real resources more effectively and in closer touch with our better ethical selves.  They are formidable, amoral political opportunists and extremely destructive.

A “healthily nourished” economy would not in the process of taking in “nutrients” from the natural environment, exhaust the ability of that environment to provide these nutrients in the future.   The use of fossil fuels, an absolutely critical input in our current economy, is one such “nutrient” that needs to be replaced or it will endanger the entire enterprise of organized human society and life.  Recognizing that the economy cannot be sectioned off from its biophysical basis, the implementation of sensible rules, funding of renewable energy and energy efficiency, and “green” taxation all originating from responsible governments are the instruments we have to be able to preserve something that we might call wealth in the middle and longer term.  The austerity campaign directly attacks these capacities and potential in the name of a misplaced “conservation” of the wrong thing, an empty token of value but not its source or what it is supposed to represent.

14 Responses to Austerity’s Irrationality: The Age of Economic Anorexia

  1. Oh come on. A more accurate explanation is that many people are dissatisfied with liberal “solutions” to the fundamental injustice and instability of the government backed counterfeiting cartel, the banking system, to the extent that even conservatives lies and hypocrisy seem plausible.

    If Progressives had abolished that cartel instead of enabling it with say, the Fed and government deposit insurance, then there would be little need for social welfare programs.

  2. perhaps if some small nation tried this out they could be that shining lamp…

  3. This is an interesting analogy, but I don’t find it particularly useful because anorexia nervosa, although it has social contributions, is primarily an individual illness. Austerity, however, is primarily a social-political disease, although there must be some individual contributing factors; some of which Michael mentions. I tend to place more of the blame for austerity on group think, endless repetition of the family budget analogy, and political duplicity on the part of the 1% and their political lackeys. The level of information in the MSM and on “reality television” and Faux News also contributes. The number of economically literate Congress people can be counted on one hand, if it’s not zero.

    • I address this in my “alternative hypotheses” section. The discourse produced for propaganda is not something random like “the moon is made of green cheese” but a narrative that sounds plausible and has emotional weight for people. I don’t think you are listening closely enough to what is being said if you think that repetition alone or ignorance alone explain what is going on. People’s lack of knowledge about federal budgets is filled in by a narrative with emotional persuasive power by propagandists and by ignorant politicians and economists. Also people care about themselves as individuals, so narratives draw on individual AND group experience. “Slimming down” and “self-control” are very powerful memes that are being deployed.

      • I hate to bring the Nazi’s up again, but the propaganda described by them still seems to be relevant today.

        Mein Kampf contains the blueprint of later Nazi propaganda efforts. Assessing his audience, Hitler writes in chapter VI:

        “Propaganda must always address itself to the broad masses of the people. (…) All propaganda must be presented in a popular form and must fix its intellectual level so as not to be above the heads of the least intellectual of those to whom it is directed. (…) The art of propaganda consists precisely in being able to awaken the imagination of the public through an appeal to their feelings, in finding the appropriate psychological form that will arrest the attention and appeal to the hearts of the national masses. The broad masses of the people are not made up of diplomats or professors of public jurisprudence nor simply of persons who are able to form reasoned judgment in given cases, but a vacillating crowd of human children who are constantly wavering between one idea and another. (…) The great majority of a nation is so feminine in its character and outlook that its thought and conduct are ruled by sentiment rather than by sober reasoning. This sentiment, however, is not complex, but simple and consistent. It is not highly differentiated, but has only the negative and positive notions of love and hatred, right and wrong, truth and falsehood.”

        As to the methods to be employed, he explains:

        “Propaganda must not investigate the truth objectively and, in so far as it is favourable to the other side, present it according to the theoretical rules of justice; yet it must present only that aspect of the truth which is favourable to its own side. (…) The receptive powers of the masses are very restricted, and their understanding is feeble. On the other hand, they quickly forget. Such being the case, all effective propaganda must be confined to a few bare essentials and those must be expressed as far as possible in stereotyped formulas. These slogans should be persistently repeated until the very last individual has come to grasp the idea that has been put forward. (…) Every change that is made in the subject of a propagandist message must always emphasize the same conclusion. The leading slogan must of course be illustrated in many ways and from several angles, but in the end one must always return to the assertion of the same formula.”

        • James,
          A chilling reminder of what cleverly designed propaganda can do to distort the truth and encourage people to do monstrous things. Propaganda and irrationality are not the same as “random” or simply a smokescreen.

    • Robert Bostick

      Co-signed.

      A more realistic metaphor for austerity is the blatant, cynical subversiveness of political progressives among the the group just below the 1%ers, the next 10%. Who support entitlement cuts and meaningless tax hikes on their ilk all in the name of solidarity with the .01%ers. If MMT could reach some of this crowd with the compelling and convincing arguments about Federal taxes i.e., that they pay for nothing, word could spread among this group about it being scammed, leading to their assault on Congress to further reduce rates or expand exemptions. That revolt would then bring to light, for many in the electorate, that they too are being scammed. They would collectively hold the view that it shouldn’t only be the next 10% who get more tax cuts.

      The indignation would spread and before you can say rendition and citizens camps the 1% would stifle them like they did the OWS.

      Just musing.

  4. No need for this kind of in-depth analysis to explain why austerity is popular. Two words explain it. Propaganda works. The wealthy can afford to buy all sorts of propaganda in order to push their agendas & to cause the sheeple to vote against their own best interests. Until there are progressive media empires the size of Clear Channel & Fox– Faux News being the most watched news station– the sheeple will hear lies repeated over & over again until they sound like they are true.

    This simple Goebbels style method of brainwashing listeners by repeating something 1000 times, works. Of course there are plenty of more sophisticated subsconscious techniques being used in additon to repetition: positive imagery & words for the agendas of the wealthy. Negative imagery & words for the agendas of their opponents or for anything the wealthy or the corporate welfare recipients want to paint as scary or negative: “Death tax, fiscal cliff” etc. Increase of adrenaline levels through instigation of fear & anger– getting the sheeple so worked up emotionally that they can’t think straight & are even more vulnerable to believing what they are told by the “fair & balanced” authority.

    • As my above comment says, successful propaganda is not random words but often an emotionally powerful narrative that sidelines the use of reason. Your theory that it is simple repetition is deaf to what is being said and how people are convinced that austerity is morally “right”. To you (and me), it may be morally wrong, but the propaganda convinces people, quite easily, that it is morally right based on an “anorexic” idea about how economies work. That “anorexic” idea is that you starve people and/or people starve themselves and they somehow produce prosperity and businesses from that starvation. It is an extremely common narrative in the right-ward side of economic discourse.

  5. Biological metaphors are a great step towards generating a new meme for economics. Anne Buttimer a human geographer provides an amazing account of the historical development of geography. This history is very similar to the development of economics, and for now economics is stuck in the mechanical metaphor. In order to make the embeddedness of the economy naturally visible biology and geography can facilitate the transition away from the mechanics (and mathematical elegance) to a human approach to social economics. If one views our economic reality in spatial terms the biological processes emerge very clearly. Throughout our nation, sections of our cities are being left to die. Institutions and social boundaries slowly wall off the circulation of liquidity into these areas allowing the tissue to deteriorate. These allostatic processes are destructive symptom of economic anorexia. We are only as healthy as our weakest organs. It is time for a social enlightenment and to allow liquidity to flow freely to our dying tissue. The United States of America is only as rich as its poorest members. Our benchmark of success should be measured by a lack of poverty not the efficiency with which we can create it. Can somebody please call a Doctor?!

  6. Ashley Cutts

    For me this is a brilliant analogy and this post has helped me understand my own relatively cloudy ideas about why this austerity madness is unfolding. A big question in my mind is whether this really could be a conspiracy. How can such intelligent observations as laid out in this post as well as many others be ignored by the mainstream media? Why is there not a more aggressive anti-austerity line being taken in the media? I am convinced that if a more balanced debate is had then the public will always choose what is best for them given the chance to do so. Perhaps we have to conclude that this is not democracy. Not even close.

    • Thank you Ashley. The point of this post is exactly to clarify. I believe that the more truthfully and completely the story is told, the more people will listen. I think the anorexia analogy is getting at a dynamic that has not been discussed in any depth or at any length yet in the public sphere or within academic economics. So my expectation would be that this particular perspective will not yet have penetrated into the mainstream media.

      This being said, I don’t think the media has taken much of a confrontational role on almost any issue in many years, especially at a time when it will make a big difference. Judith Miller, for instance, was exposed as hyping the Iraq WMD threat years after we were dragged into that war. During the run up to the Iraq war the media played a critical role in supporting the Administration’s “case” for war.

    • The main stream media is owned by six large multinational corporations, who depend on other corporate advertising revenue. Any deviation from standard corporate propaganda would result in fewer ads. Fox News being the most egregious example, who support the Republicans and MSNBC the Democratic party.

  7. Thanks so much for this analysis. Now I understand more I can explain to others.