It is the quality not the quantity of debt that matters
Of course, reality is more complex than this simple demarcation implies, and even orthodox institutions such as the International Monetary Fund have come around to the view that austerity can be self-defeating. As John Maynard Keynes argued back in the 1930s, if governments cut spending during a downturn, a short-lived recession can become a full-fledged depression. That is exactly what happened during Europe’s period of austerity after the 2008 financial crisis.
Second, in this intellectual climate it has become much easier for politicians to call for public-sector downsizing than to defend public-sector risk taking. And, in the process, they attack not simply the size of public-sector budgets, but the sector’s organizational structure. Not surprisingly, US President Donald Trump has targeted the US Advanced Research Projects Agency-Energy (ARPA-E is the Department of Energy’s key innovation agency, and
the sister organization of the Defense Advanced Research Projects Agency—DARPA—
in the Department of Defense), while congressional Republicans routinely threaten the public broadcaster PBS. In the UK, the BBC’s prestige has not insulated it from years of fierce attacks.
Does austerity help or hurt economic growth?
The attack on public organizations, not just public budgets, means that the progressive agenda cannot be just about increasing public spending. It must also be about safeguarding the structures and organizations that, when dismantled, can take decades to reconstruct. While budgets come and go, organizations don’t. They take time to build and to take on the nature of the movements that created them—whether green movements, or movements for transparency and objective broadcasting.