ABSTRACT
“War is too serious a matter to be entrusted to the military alone,” said Clemenceau. So, what about the economy? Surely, that is too important to be left solely to economists. Academic mistakes revealed recently confirm this assessment only too well, with several research studies used in support of austerity policies proven fanciful to say the least. First, the idea of “expansionary austerity” – that we would promote growth by cutting government spending (Alesina and Ardagna, 2010) – has been refuted a little more each day by the developments of the crisis in Europe, and more academically by the International Monetary Fund (IMF) (Baum et al., 2012; Blanchard and Leigh, 2013). Eventually even the European Commission (in ‘t Veld, 2013) itself, confirmed that austerity is ultimately “contractionary” (what a surprise!). Even more embarrassingly, works by Reinhart and Rogoff (2010) suggesting that a public debt above 90% of gross domestic product (GDP) has a negative impact on growth were found to have gross mistakes in their Excel spreadsheets (Herndon et al., 2013). These examples would constitute simply laughable anecdotes if they did not at the same time so crudely reflect the vagaries of economics and its fatal role in the pursuit of the neoliberal agenda. Indeed, Reinhart and Rogoff’s works have been used extensively as an excuse for policy makers to impose upon people what they cynically call “structural reforms” – dismantling the welfare state, privatising the common good, deregulating the labour market, etc. 1
