Death of a Fairy Tale | Krugman - NYT
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For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should by spending more to offset falling private demand but with fiscal austerity, slashing spending in an effort to balance their budgets.
Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the austerians insisted that the reverse would happen. Why? Confidence! Confidence-inspiring policies will foster and not hamper economic recovery, declared Jean-Claude Trichet, the former president of the European Central Bank a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.
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But while the confidence fairy appears to be well and truly buried, deficit scare stories remain popular. Indeed, defenders of British policies dismiss any call for a rethinking of these policies, despite their evident failure to deliver, on the grounds that any relaxation of austerity would cause borrowing costs to soar.
So were now living in a world of zombie economic policies policies that should have been killed by the evidence that all of their premises are wrong, but which keep shambling along nonetheless. And its anyones guess when this reign of error will end.
link to the full article
pacalo
(24,721 posts)benefits, homes.
Shameful.
suffragette
(12,232 posts)K&R
provis99
(13,062 posts)I think Naomi Klein is prescient or something.
AndyTiedye
(23,500 posts)eShirl
(18,491 posts)"No one could have foreseen..."
jimlup
(7,968 posts)MannyGoldstein
(34,589 posts)'specially old folks. Peas and catfood.
I know, I know... IOKIYAD.
Dragonfli
(10,622 posts)MannyGoldstein
(34,589 posts)Actually, that seems true these days...
Dragonfli
(10,622 posts)the "confidence fairy", austerity should be a bi-partisan goal or so I have heard.