Go Lean…Caribbean

Go Lean Commentary

The economic status in the Caribbean – all 30 member-states despite the colonial legacy – can be summed up with one word:

Crisis!

Alas, the book Go Lean…Caribbean declares that a crisis is a terrible thing to waste.

This commentary relates the below Book Review of the publication by Economist and Political Scientist Mark Blyth entitled: Austerity – The History of a Dangerous Idea. This commentary asserts that those who advocate to remediate Caribbean economics needs to avoid a series of Economic Fallacies.

This is commentary 2 of 6 from the Go Lean movement on the subject of Economic Fallacies. As related in the previous submissions on this series, the situation in the Caribbean region is likened to the imagery of an animal foraging for food, but then gets distracted and “chases a squirrel up a tree”. The squirrel in the tree will never be a meal; it is just a waste of time and energy for the animal. This analogy conveys the waste of time associated with a frivolous and fallacious pursuit. The other commentaries detailed in this series are as follows:

1. Independence – Hype of Hope
2. Austerity – Book Review: Mark Blyth’s “History of a Dangerous Idea”
3. Education & Student Loans – Not a good Return on Investment
4. Phillips Curve – Fallacy of Minimum Wage
5. Self-regulation of the Centers of Economic Activity
6. Casino Currency – US Dollars?

All of these commentaries are economic in nature. They refer to rules for managing the valuable resources of time, talents and treasuries. There are rules for winning and rules for losing. Normally these are discovered after the fact, not before hand. So examining the experience of other communities, the winners and losers, can be extremely helpful to our Caribbean cause. This is a mission of the Go Lean roadmap, to learn lessons from how other communities have handled economic crises.

One common remediation for economic crisis has been Austerity. What is Austerity? And is this a good thing or bad thing? First, the dictionary definition is: “reduced availability of luxuries and consumer goods, as brought about by government policy”. Second, consider Mark Blyth’s own definition, here:

The Book Review and VIDEO on Mark Blyth’s Austerity book is as follows:

Book Review: Austerity – The History of a Dangerous Idea
By: Mark Blyth

Selected as a Financial Times Best Book of 2013
Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts–austerity–to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.

That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn’t work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we austerity for what it is, and what it costs us.

About the Author

Mark Blyth is associate professor of political science at the JohnsHopkinsUniversity and the author of Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century.

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Editorial Reviews

“Austerity is an economic policy strategy, but is also an ideology and an approach to economic management freighted with politics. In this book Mark Blyth uncovers these successive strata. In doing so he wields his spade in a way that shows no patience for fools and foolishness.”
— Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science University of California, Berkeley

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“Of all the zombie ideas that have been reanimated in the wake of the global financial crisis, austerity is the most dangerous. Mark Blyth shows how austerity created the disasters of the 1930s, and contributed to the descent of the world into global war. He shows how European austerity policies have prevented any recovery from the crisis of 2009, while rescuing and protecting the banks and financial institutions that created the crisis. An essential guide for anyone who wants to understand the current depression.”
— John Quiggin, author of author of Zombie Economics

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“Most fascinating is the author’s discussion of the historical underpinnings of austerity, first formulated by Enlightenment thinkers Locke, Hume and Adam Smith, around the (good) idea of parsimony and the (bad) idea of debt. Ultimately, writes Blyth, austerity is a ‘zombie economic idea because it has been disproven time and again, but it just keeps coming.’ A clear explanation of a complicated, and severely flawed, idea.” — KIRKUS REVIEW

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‘One of the especially good things in Mark Blyth’s Austerity: The History of a Dangerous Idea is the way he traces the rise and fall of the idea of “expansionary austerity,” the proposition that cutting spending would actually lead to higher output. EL As Blyth documents, this idea spread like wildfire.’ — Paul Krugman, The New York Review of Books

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“Among all the calamities spawned by the global financial crisis, none was as easily avoidable as the idea that austerity policies were the only way out. In this feisty book, noted political scientist Mark Blyth covers new territory by recounting the intellectual history of this failed idea and how it came to exert a hold on the imagination of economists and politicians. It is an indication of the sorry state of macroeconomics that it takes a political scientist to expose so thoroughly one of the economics profession’s most dangerous delusions.”
— Dani Rodrik, Rafiq Hariri Professor of International Political Economy, The John F. Kennedy School of Government, Harvard University

Product Details

• ISBN-13: 978 019938 9445
• Print Length: 304 pages
• Publisher: OxfordUniversity Press
• Publication Date: March 27, 2013

Source: Financial Times – Book Review – Retrieved July 6, 2016 from: https://www.amazon.com/dp/B00BJK4Y7U/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

VIDEO: Mark Blyth: Is Austerity a Dangerous Idea? – https://youtu.be/2v8m-J8sgik

Published on Mar 27, 2013 – Governments the world over are looking at austerity measures to help battle the financial crisis. Author and Ivy League professor Mark Blyth tells Steve Paikin why he thinks this is a bad idea.

The Go Lean book details the economic crisis stemming from the 2008 Great Recession. But the book prepares societal engines of the Caribbean so as to not waste this crisis; it calls for the establishment of a regional administration to monitor, mitigate and manage the economic dynamics of the region. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The prime directives of this federal entity are described as:

• Optimize the economic engines of the Caribbean to elevate the regional economy to grow to $800 Billion and create 2.2 million new jobs.
• Establish a security apparatus to protect the resultant economic engines.
• Improve Caribbean governance and industrial policies to support these engines.

So the Go Lean roadmap calls for the CU to serve as the regional administration to optimize banking and sovereign debt in the region. Part of the CU roadmap is the accompanying Caribbean Central Bank. (CCB). The premise of the book is simple: that the problems of the region are too big for any one member-state to resolve alone. This point was pronounced in the opening Declaration of Interdependence in the Go Lean book (Pages 12 – 13) with these statements:

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xii. Whereas the legacy in recent times in individual states may be that of ineffectual governance with no redress to higher authority, the accedence of this Federation will ensure accountability and escalation of the human and civil rights of the people for good governance, justice assurances, due process and the rule of law. As such, any threats of a “failed state” status for any member state must enact emergency measures on behalf of the Federation to protect the human, civil and property rights of the citizens, residents, allies, trading partners, and visitors of the affected member state and the Federation as a whole.

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

xxv. Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the Federation and of the member-states.

The Go Lean/CU/CCB roadmap is designed to deliver many empowerment activities to elevate Caribbean society. These activities will carefully balance the obligations of the past (debt) and the needs of the Caribbean future: we need growth and jobs … now. Debt is really just other people’s money; which always come with strings attached, as in repayment in a foreign currency … with interest.

What exactly is the Go Lean plan to counter the economic fallacy of austerity?

Economic growth …

… as in creating jobs through industrial and entrepreneurial endeavors – for a grand total of 2.2 million new jobs.

How is this different from previous administrations?

Technocratic administration for an economy of $800 Billion GDP; just consider these two strategies: Exclusive Economic Zones and Self Governing Entities.

• Exclusive Economic Zones will facilitate both economic empowerment (like Fisheries management) and security assurances for the territories between the islands and the outer reaches of the Caribbean Sea. – Go Lean book (Page 104).
• SGE’s are necessary features of the CU roadmap, allowing for industrial parks, technology labs, medical campuses, agricultural ventures, airport cities and even the Capital District. All aspects of their administration are managed by the CU, including monetary issues managed by the Caribbean Central Bank. – Go Lean book (Page 105).

The cautionary tales of austerity-like measures have been repeatedly addressed and further elaborated upon in these previous blog/commentaries:

The CU is designed to do the heavy-lifting of organizing Caribbean society to benefit from the lessons from austerity measures and the underlying sovereign and municipal personal debt crises of other communities. Since the purpose of austerity is to impact economic turn-around, it is important to fully dissect the anatomy of austerity programs. This was the goal and successful execution of the book in the foregoing Book Review; austerity is an economic fallacy. This goal is also a mission of the Go Lean book as it details the community ethos to adopt, plus the executions of the following strategies, tactics, implementations and advocacies to impact the economic turn-around of Caribbean communities:

The Go Lean roadmap posits that change is coming to the Caribbean; we do not want to be over-dependent on other people’s money – that means answering to other people’s demands. As the title of Mark Blyth’s book concludes: its a dangerous idea. This has been the campaign of the Go Lean movement, to pursue economic growth, not debt. The movement (book and blog-commentaries) have even trumpeted a solution for the current public debt – no austerity, rather robust capital markets using a single Caribbean currency. Change is afoot!

The summary of the book in the foregoing Book Review is that austerity as a turn-around strategy is a dangerous idea, an economic fallacy. It is not a best-practice. The best way to correct economic stagnation and recession is simply growth! Period!

Aggressive debt repayment should only be pursued during periods of growth.

With the Go Lean roadmap, change has come to our region. But there is the need for a permanent union to provide efficient stewardship for Caribbean economy, security and governing engines. There must be the constant balancing act between past debt obligations and future growth. The Go Lean…Caribbean book posits that this challenge is a direct result of agents of change facing the modern world, as in globalization. This challenge is too big for just any one member-state to tackle alone, so there must be a regional solution. This is the quest of the multi-state technocratic administration of the CU.

The people and institutions of the region are hereby urged to lean-in to this Go Lean roadmap, to embrace the economic turn-around and avoid austerity. Only then, can we make the Caribbean a better homeland to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!