http://mainlymacro.blogspot.com/...
A fascinating little piece by Simon Wren-Lewis:
I start with human nature, and the constant debate within ourselves between current consumption and future wellbeing through saving. What for economics is just an intertemporal optimisation problem is for most people often a battle of wills between our schizophrenic selves. In this battle, spending now is often the temptation of the devil, and saving is the virtue.
(If the market appears) to punish fiscal profligacy, it is as if a parent has discovered the child’s guilty secret. (The market is seen by many as a mysterious deity.) The politician wants to repent (or at least be seen to repent), and atone for past sins. After eating too many pastries, we go on a crash diet. After deficit bias, we have austerity.
Politicians...don’t need to go on that diet just yet - they can put it off until times are good. Indeed, now is just the time to eat more pastries - it will make you feel better, they are very cheap at the moment, and you might even lose weight in the long run!
It sounds too good to be true, and just the kind of tale the devil might spin. Give in, and the all seeing parent/god that is the market will find you out again. So the politician ignores these siren voices, and buckles down to austerity.