The formula for the total cost of a spell is
cost(mana cost or alternative cost)+additional costs-cost reductions
So Voracious Reader Flip makes Collective Defiance's total cost . Since cost reductions can only reduce the cost once per spell it would make Collective Defiance escalated once . On the other hand Borrowed Hostility would still cost with Voracious Reader Flip out since it only reduces the cost by generic mana. An escalated Borrowed Hostility would cost because the cost before reductions now does include generic mana. So yes it does apply to escalate costs, but not how it seems you might have been hoping.