Before we get to that all-important question, there's more to the G20 meeting - namely, the rather interesting tale of the one nation that apparently resisted the turn to Hooverism:

But there were concerns around the G20 that the rush to reduce budget deficits, necessary though officials now thought it was, would undermine the recovery in the near term.

In a letter to the rest of the G20, Tim Geithner, US Treasury secretary, argued: "Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery".

Ministers from many countries stressed the need for structural reforms to boost the potential for private sector growth

In private, G20 officials said that the US had been the country most concerned about the new austerity drive and feared for the momentum for global growth. In the meetings it had been frank in the meeting in calling for China to revalue the renminbi and for Germany to boost domestic demand, officials said.

Mr Geithner, himself, was open about his fears in his letter to the G20. "Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery," he wrote, adding that fiscal tightening won't "succeed unless we are able to strengthen confidence in the global recovery."

To an American reader familiar with Geithner and the White House's approach to the deficit, this may sound like something of a surprise. Geithner refused to backstop California debt in 2009, and the White House has embraced its own Hooverism with the federal budget and the "Cat food" commission, named for its desire to slash Social Security and Medicare benefits and thereby reduce the retired to eating cat food.

Further, the White House didn't put up a fight when Austerity Democrats gutted stimulative funding in the jobs bill last week, despite efforts by Prosperity Democrats to push through health care subsidies and funding to save teacher jobs.

So to read that Geithner was arguing for stimulus and against austerity in the name of worrying about deficits was unexpected. What gives? Is he trying to have Germany and China stimulate growth in order to alleviate the deflationary and depressionary impact of austerity here in the US? Or do we who oppose austerity have an unexpected ally in our global fight against Hooverism?

One of the first people to take up my questions was Digby, the pseudonymous blogger at Hullabaloo. She's been focusing on these issues lately, including a damning recent post about stigmatizing the unemployed. I'm the unnamed correspondent in this fine post about "Global Neo-Hooverism":

My correspondent wondered why there was an international move to neo-Hooverism considering the differences in cultures between the various European countries and the US. I replied with a somewhat glib and facile response about disaster capitalism and Pete Peterson, and he pressed for a reason why the rest of the world is on the same bandwagon, especially considering their more generous history with the welfare state. (He also mentioned that Tim Geithner was surprisingly Keynesian at the G20.)

Digby's take on Geithner is this:

As for Geithner at the G20, I'm guessing that at a minimum, they may see the efficacy of maintaining some flexibility. Their magical thinking hasn't gotten them to where they hoped it would ---the market hasn't "fixed itself" at least on terms that are politically sustainable --- and so perhaps they are seeing this as a long term challenge instead of a short term cyclical crisis. I don't know. But aside from the inadequate stimulus, everything they have said up to now is in service of the hoary old Hooverite ideas about belt tightening and sacrifice even down to giddily announcing they are going to reform social security the "right way." The re-institution of Paygo, the deficit commission, the constant lip service to austerity has led to a validation of the erroneous idea that deficits are causing our economic problems and that government needs to hold back spending to fix them --- when the opposite is true.

Again, this sounds right to me, although Geithner's statements at the G20 were apparently rather strong about the risks of austerity and the need for stimulus and growth. I'm still inclined to believe that Geithner and the White House would like other countries to do the stimulus so they can score political points with the Village by slashing the US deficit. And let's not forget that the Obama Administration has a nasty habit of saying some good, progressive-ish things and then doing something deeply neoliberal.

But that doesn't address the deeper question: why are we seeing this mass global outbreak of Hooverism? What explains its newfound popularity as a policy tool?

Digby again:

After thinking about it for a bit, I'm not sure the same phenomenon we see here isn't happening internationally. It's an article of faith among financial elites across the planet that the welfare state is an abomination and this is a global opportunity to end it. Each culture will deal with it slightly differently --- riots in Greece, marches in France, blog posts in America. But in the end, the result, short of revolution, will be similar everywhere --- the post-war welfare state will be weakened or destroyed. The left is barely relevant anywhere anymore and they simply do not fear any kind of serious populist uprising. I'm not suggesting conspiracy. I think it's more of a natural result of ideological capture.

Digby's argument, which I think is sound, is that we're essentially seeing the product of 20+ years of an effort to weave together an elite global economic philosophy that is inherently neoliberal in character that has, in her phrase, "ideologically captured" both governments and media discourse. The welfare state is seen as a drag on economic productivity, financial markets and creditors are seen as the most important economic actors in an economy, combining to convince many elites that deficits to fund a safety net are bad and should be eliminated. The Washington Consensus on steroids.

Having lurked and occasionally commented here at the European Tribune for many years, this not only sounds right, but it's neither new nor surprising. Yet the thoroughness with which Hooverism has become the dominant policy choice among the G20 - now to the exclusion of stimulus - has me wondering if there's more to the story than the admittedly important, if not central, role of elites.

Digby gets at it:

I think it's easy to over think this. The world economy is unstable for myriad reasons. But the reasons for insisting on austerity are fairly obvious. The question is whether or not people will see through this or not. Disaster capitalism depends upon the people being confused and stressed for its success. (In that sense, rioting in the streets may actually help them.) And all over the world right now, with the rapid change from globalization and resistance to modernity in general, there is a tremendous amount of social stress and cultural upheaval on top of this economic downturn. It's the perfect time to strike.

It's that "social stress and cultural upheaval," the "resistance to modernity in general," that I'm most interested in. I don't believe that the political/media elite would be able to get away with this Hooverism were there not some amount of buy-in from the public.

That buy-in should not be overstated. Digby is right to talk about the defeat and disempowerment of the political left, one of the necessary conditions of neoliberal success over these last 30 years (and always one of their most overriding concerns). Here in California, polls show most voters do not want austerity, at least when it comes to core public services.

Yet there is some level of buy-in for budget cuts, austerity, and worrying about deficits. The logic of "belt tightening" is common. Even many Democratic voters I talk to, some of whom consider themselves progressive, believe there's just not enough money to go around, that we have to cut back, that's just what you do in a serious recession.

The shift to a "cuts are good" mentality in a recession is, as we know, extremely damaging and reckless policy. But it appears to flow not from a flawed economic assessment, but from a very different place entirely - the "social stress and cultural upheaval" Digby mentioned. Without it, austerity would not be possible.

The globe is entering a period of fundamental change. Here in the US, the assumptions, values, and lifestyles of the last 60 years are no longer viable and are on their way out. Virtually everyone seems to know it in their bones. Some of us embrace the opportunity to construct something better.

Others resist, and cling ever more tightly to their older values. In the US much of this is driven by a growing generational gap that is rooted in race. California's white population is "in decline", and states like California, Arizona, and Texas have a stark divide between a diverse youth and a white aged population.

We see this in other areas as well; Northern California appears to be abandoning mass transit as older homeowners fight vociferously against new transit systems, be it bus rapid transit in Berkeley, light rail here in Monterey, or high speed rail in the Palo Alto area. Current services are withering due to a lack of funds, and yet nobody seems moved to try and rescue them.

What I see happening here in the US is that austerity is being mobilized to protect existing privilege. Whites with some assets, property, and political/cultural dominance see in stimulus for everything from mass transit to schools and health care a threat to their privilege through government aid to those who are the agents of the massive change they feel is coming upon them, change they do not want.

Here in California, unemployment hits unevenly. Latinos, African Americans and young people are facing the highest unemployment rates. Those are among the same people who are at the core of the new California, the new America, a place that in 10 or 20 years will look different than the 1950s or 1980s version of America that the defenders of the status quo remember and cling to.

Austerity helps rip out the legs from underneath those people and gives those who feel threatened by a diverse, different future a sense that their privileges are secure. As we know, this is a totally false hope - not only will the passage of time ensure their America vanishes, but their embrace of austerity is going to rebound on them, especially when their Social Security and Medicare benefits are cut, their pensions slashed, and their home values collapse when nobody is able to sustain the current, overinflated prices (at least here in California).

That's how I see it working in the US, the embrace of austerity fueled by a desire to maintain white privilege and the trappings of a 20th century lifestyle that is no longer tenable. But what of Europe and the rest of the G20?

Others here can tell me if the argument is strained when applied to Europe, but the same basic elements appear to be operative there as well. Germans resent the notion of bailing out supposedly profligate Greece and Iberia. It may not be fear of a different future, but there seems to be a sense of privilege at work. Perhaps it's nationalistic, perhaps it's just plain greed. Austerity also enables its promoters to frame themselves as frugal and others who oppose austerity as profligate, which can be framed in any number of "us versus them" ways.

So how do we get out of this? It's unfortunately not enough to make the economic argument against austerity. If it were, Hooverism would remain in its tomb.

Instead it seems we need to do two related things: rally those who lack or are being denied privilege in support of a stimulus that is connected to a clear, coherent vision of future prosperity, a vision that can be sold to enough people in the privileged class that we can cleave them apart.

Disaster capitalism thrives on the belief that there is no alternative. Austerity works because people believe we cannot afford to build the future. So we have to provide an alternative so that people feel willing to build the future, and cast aside the belief that we can only afford to prolong the failed status quo.

It may be the case that we construct such an alternative in fits and starts over the next decade or two, as austerity produces a global "lost decade" - that seems to be Richard Florida's argument in The Great Reset. I'd like to think there's a way to construct it sooner and shortcut that painful process.

In either case, the key to blocking austerity is to understand how it is rooted in privilege, and to articulate a future vision that can animate a movement to destroy privilege, resist the elite, and defeat disaster capitalism.

Here in the US, that won't happen under Barack Obama, who is fundamentally rooted in those 20th century values that are no longer viable. He too is drawn to the protection of privilege, perhaps because he feels a precarious connection to it himself, perhaps because he is as ideologically neoliberal as they come.

But it will happen eventually, whether in reaction to Obama's austerity or in support of his pursuit of stimulus and growth.