September 2, 2011

Economics for the Easily Led

Paul Krugman, writing for his weblog:

“The awful thing is that those of us who warned about all this — based not on some unorthodox doctrine, but on basic textbook macroeconomics — weren’t so much argued down as just ignored. Somehow, those with actual power were convinced that fiscal austerity wasn’t just an option but the only option, and that anyone arguing with that — even people like me and Joe Stiglitz, who had a few easy-to-understand credentials — were just not part of the serious discussion.”

Krugman and others rightly argued for larger stimulus spending by the US and European governments two years ago, but were ignored. And without greater stimulus spending both Europe and the US still wallow in sluggish growth and high unemployment today, as predicted.

Yet the deficit hawks, who were nowhere to be seen during the last US administration’s spending spree, continue to hammer on short-term budget deficits like that’s going to solve a problem. They managed to reduce the final US stimulus spending to inadequate levels. But the problem they’re really trying to solve is their loss of the Oval Office in 2008.

I wonder if the people who elect the Eric Cantors and John Boehners of US politics will ever wake up and realize what a massive fraud has been committed upon them. The candidates they support manage to persuade them to get behind policies that harm, not help those very people.

The “easily-understood credential” Krugman alludes to is the Nobel Prize for economics. Both he and Joe Stiglitz earned them with their research and insight into economic theory.

We get the government we deserve.