Robert Skidelsky for The Guardian
The period since 2008 has produced a plentiful crop of recycled economic fallacies, mostly falling from the lips of political leaders. Here are my four favorites.
Robert Skidelsky:
The Swabian Housewife: "One should simply have asked the Swabian housewife," said German chancellor Angela Merkel after the collapse of Lehman Brothers in 2008. "She would have told us that you cannot live beyond your means."
Paul Krugman:
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But the larger point here, surely, is that Rehn has let the mask slip. It’s not about fiscal responsibility; it never was. It was always about using hyperbole about the dangers of debt to dismantle the welfare state. …
Simon Wren-Lewis’ France and the Commission
Paul Krugman’s Evidence and Economic Policy:
Henry Blodget says that the economic debate is over; the austerians have lost and whatshisname has won. And it’s definitely true that in sheer intellectual terms, this is looking like an epic rout. The main economic studies that supposedly justified the austerian position have imploded; inflation has stayed low; the bond vigilantes have failed to make an appearance; the actual economic effects of austerity have tracked almost exactly what Keynesians predicted.
But will any of this make a difference? …
The Colbert Report
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Paul Krugman’s The Good Glitch:
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The point is that the next time Olli Rehn, or George Osborne, or Paul Ryan declares, sententiously, that we must have austerity because serious economists (i.e., not Krugman and friends) tell us that debt is a terrible thing, people in the audience will snicker — which they should have been doing all along, but now it has become socially acceptable.
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Go to Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems by Mike Konczal
@ www.nextnewdealDOTnet.
Paul Krugman’s Reinhart-Rogoff, Continued, also Holy Coding Error, Batman
Paul Krugman:
… bad analogy between governments and individuals, and the line that the government should act like an individual family or business, and cut back when times are tough. The key point is realizing interdependence: your spending is my income, my spending is your income, and if we all try to slash spending at the same time the result is a depression. Somebody needs to step up and spend when others won’t — and the government can and should be that somebody.
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“If this plan is working, what would a failing one look like?” So asks Martin Wolf in response to David Cameron’s speech insisting that his austerity policy was right, is right, and is succeeding. Simon Wren-Lewis goes through Cameron’s assertions in some detail, among other things catching him more or less lying about what the Office of Budget Responsibility …
I was particularly struck by the way Cameron is still claiming that Britain’s low interest rates show that his policy is successful and necessary. This is a bit like the high priest sacrificing a virgin once a month to ensure that the sun keeps rising, …
Paul Krugman‘s Of Cockroaches and Commissioners:
… on the news that various officials at the European Commission are issuing outraged tweets against yours truly. You see, I’ve been mean to Olli Rehn.
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What you would never grasp from those outraged tweets is that all my criticisms have been substantive. I never asserted that Mr. Rehn’s mother was a hamster and his father smelt of elderberries; I pointed out that he has been promising good results from austerity for years, without changing his rhetoric a bit despite ever-rising unemployment, and that his response to studies suggesting larger adverse effects from austerity than he and his colleagues had allowed for was to complain that such studies undermine confidence.
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Now, it’s true that I use picturesque language — but I do that for a reason. “Words ought to be a little wild”, said John Maynard Keynes, “for they are the assault of thoughts on the unthinking.” Exactly.
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There’s an especially telling tweet in there about how “unimpressive” I was when visiting the Commission in 2009. No doubt; I’m not an imposing guy. (I’ve had the experience of being overlooked by the people who were supposed to meet me at the airport, and eventually being told, “We expected you to be taller”). And for the life of me I can’t remember a thing about the Commission visit. Still, you can see what these people consider important: never mind whether you have actually proved right or wrong about the impacts of economic policy, what matters is whether you come across as impressive.
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Katharine Ainger:
Actually the public deficit is a smaller proportion of GDP in Spain than in Germany.
There is a huge mountain of toxic private debt largely due the property speculation bubble. Many regions were quite dependent on revenue from this sector which has now dried up.
That is just one reason why the population is demanding a debt audit. While there are many politicians to blame, it wasn't the nurses and teachers who bankrupted the state.
Paul Krugman:
In a lot of ways George Osborne, the Chancellor of the Exchequer (finance minister) is Britain’s answer to Paul Ryan. True, he’s a toned-down version — no Ayn Rand, please, we’re British — but other aspects of package are there in full force: he’s articulate, has a vision that’s completely at odds with everything we actually know about macroeconomics, and he was for a while the darling not just of the right but of self-proclaimed centrists on both sides of the Atlantic.
Osborne’s big idea was that Britain should turn to fiscal austerity now now now, even though the economy remained deeply depressed; it would all work out, he insisted, because the confidence fairy would come to the rescue. Never mind those whining Keynesians who said that premature austerity would send Britain into a double-dip recession.
Strange to say, Britain’s recovery stalled soon after Cameron/Osborne began their new policies, and the country is now in a double-dip recession.
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Paul Krugman:
The New Statesman had a good idea — it went to 20 British economists who signed a letter back in early 2010 calling for immediate austerity and asked them whether they still supported the Osborne policies now that Britain is in double-dip recession. Only one of those who replied said yes, while nine urged Osborne to reconsider his opposition to stimulus.
Good on them. I was, however, disappointed to see so many of the prodigal economists asserting that they were responding to changed circumstances rather than admitting that they simply got it wrong.
For circumstances really haven’t changed; the UK had a depressed economy then, and it still does now.
Here in Portugal ( i no longer watch TV or read newspaper ) but i guess the same austerians ARE in charge still, pretending to be as serious as your life and enjoying stoic support from the ever ignorant journalists that bothers not to peak outside their own comfortable bubble.
And the people play being rich, taking side of the rich and powerful plus their puppets.
Like everything is alright.
Right!
