Krugman vs. Austerians

Paul KrugmanThis is great.

In this country, I’ve noticed that people who disagree with Paul Krugman tend to simply ignore his arguments and call him crazy. Last night, he was on the BBC’s Newnight, debating vulture capitalist Jon Moulton and conservative MP Andrea Leadsom. The two came out swinging and got bloodied. Leadsom claimed that Krugman’s view was “reckless.”

The daring duo presented the same old discredited arguments we’ve heard before. Leadsom: we have to cut our way to prosperity! Krugman: we aren’t a household; your spending is my income. Moulton: our government is too big! Krugman: larger governments are doing better; you just want to use the crisis to enact policy you’ve always be in favor of.

Watch it, it’s great:

I like the tired conservative line that everyone will start their own businesses. And the idea that people aren’t starting businesses because of all the regulations? If people want to start a business they will do it the time honored way: illegally.

It is nice to see these fucktards put in their places. Of course, they’ve learned nothing. If all the evidence from Europe hasn’t convinced them then nothing will. Besides, there is the Upton Sinclair Dictum: it is difficult to get a man to understand something, when his salary depends upon his not understanding it.

The Austerity Agenda

In Krugman’s column tomorrow, he writes:

Over the past few days, I’ve posed that question [why the austerians promote a policy that is backwards] to a number of supporters of the government of Prime Minister David Cameron, sometimes in private, sometimes on TV. And all these conversations followed the same arc: They began with a bad metaphor and ended with the revelation of ulterior motives.

The bad metaphor — which you’ve surely heard many times — equates the debt problems of a national economy with the debt problems of an individual family. A family that has run up too much debt, the story goes, must tighten its belt. So if Britain, as a whole, has run up too much debt — which it has, although it’s mostly private rather than public debt — shouldn’t it do the same? What’s wrong with this comparison?

When the private sector is frantically trying to pay down debt, the public sector should do the opposite, spending when the private sector can’t or won’t. By all means, let’s balance our budget once the economy has recovered — but not now. The boom, not the slump, is the right time for austerity.

So why have so many politicians insisted on pursuing austerity in slump? And why won’t they change course even as experience confirms the lessons of theory and history?

Well, that’s where it gets interesting. For when you push “austerians” on the badness of their metaphor, they almost always retreat to assertions along the lines of: “But it’s essential that we shrink the size of the state.”

So the austerity drive in Britain isn’t really about debt and deficits at all; it’s about using deficit panic as an excuse to dismantle social programs. And this is, of course, exactly the same thing that has been happening in America.


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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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