Left v right and right v wrong: part IV

John Rentoul

Krugman New popup v2 200x300 Left v right and right v wrong: part IVFurther to my previous posts about why left-wing people tend to support fiscal stimulus and right-wingers to support budget-balancing, Paul Krugman (pictured) has devoted his column in the New York Times to the subject. Here’s the important part:

Real-world events — stagnation in Ireland, the original poster child* for austerity, falling interest rates in the United States, which was supposed to be facing an imminent fiscal crisis — quickly made nonsense of austerian predictions.

Yet austerity maintained and even strengthened its grip on elite opinion. Why?

Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price. Economists can explain ad nauseam that this is wrong, that the reason we have mass unemployment isn’t that we spent too much in the past but that we’re spending too little now, and that this problem can and should be solved. No matter; many people have a visceral sense that we sinned and must seek redemption through suffering — and neither economic argument nor the observation that the people now suffering aren’t at all the same people who sinned during the bubble years makes much of a dent.

There is something in that, as Martin Hutchison explained in his response to my original post. Krugman then goes on to make a tub-thumping but self-undermining argument about class, suggesting that the rich believe in austerity because they think it is in their interest, even though it isn’t. But I’m just as sceptical about the idea of false consciousness when applied to the rich as I am when it is applied to the workers.

Hat tip: Stanley Raffel.

Photograph: Fred R. Conrad/The New York Times

*It’s on the Banned List but he is a Nobel prize-winning professor.

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  • Hill244

    Stagnation in Ireland? Try nepotism with a hefty dose of corruption.

  • mightymark

    He is right – and what is interesting is that there is a lefty/greeny version of the same thing in which we are punished for being too “greedy” (an especially self defeating bit of masochism at the moment) and, my growing favorite, the idea that because the crisis started with the banks somehow a good dose of honest manufacturing will be better for us (this regardless of whether we can compete effectively). Mr Ed said as much the other day!

  • Pacificweather

    The evidence of the 20th century is that the left understood economics better that the right so why would it surprise you that is still true today?

  • reformist lickspittle

    “Mr Ed” was, as he often is, right.

    Why do you think repeating the same thing as before will have different results?

  • duelles

    I can’t believe, well! Yes I can, that you have no concept of the way markets work. They work regardless of the influence of skewing that over spending does. And with the addition of demographics, jobs and a vibrant economy will have to wait for about another 6-8 years. We flat out don’t have people to create the households required to move the GDP up. BUT wait! Let’s revise the GDP calculations to add 1/2 trillion $ to our numbers! there! Problem solved.

  • Pacificweather

    Great solution! I’ll let FDR know.

  • greggf

    “There is something in that….”

    Clearly the man is delusional – he even looks delusional in the pic!
    What’s he proposing to do – MAKE people borrow and spend?
    He must have read about Helicopter Ben’s plan to distribute US $, and Japan’s actual cash handouts (that failed to stimulate anything much).
    Is Laughing-Out-Loud appropriate, or is it on your banned list…..?

  • mightymark

    I merely think it an odd bit of economic sado masochism that we are urged to expand in areas where we have little edge at present seemingly (i.e. on some interpretations as it is that clear what he means) at the expense of sectors in which we are successful. Just to be clear I am very much infovur of expanding any sector of industry in which we can be successful -. I am merely against any suggestion that we do so in areas where we are less successful at the expense of those in which we are. Common sense really.

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