Page 1 of 12 12311 ... LastLast
Results 1 to 10 of 111

Thread: Pau Krugman's austerity predictions aren't aging well.

  1. #1
    Sage

    Join Date
    Jan 2013
    Last Seen
    Today @ 06:49 AM
    Lean
    Conservative
    Posts
    7,618

    Pau Krugman's austerity predictions aren't aging well.

    Paul Krugman’s Predictions about “Austerity” Aren’t Aging Well - Foundation for Economic Education

    But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

    Britain, Krugman’s “demonstration that the Austerians had it wrong,” has, in fact, shown the opposite.

    The Conservative government implemented a program of budget cuts. Over a 5-year period exogenous fixed measures amounted to almost three percent of GDP, two-thirds expenditure cuts, and one-third tax hikes. It was harshly criticized by the IMF, which predicted a major recession. The latter did not materialize and the IMF later publicly apologized. The UK grew at respectable rates.

    comments welcome.

  2. #2
    Sage
    Mycroft's Avatar
    Join Date
    Oct 2011
    Last Seen
    Today @ 10:43 AM
    Gender
    Lean
    Conservative
    Posts
    47,460

    Re: Pau Krugman's austerity predictions aren't aging well.

    Perhaps Krugman should return his Nobel Prize.
    TANSTAAFL

    Liberal turned conservative David Mamet famously said: In order to continue advancing their illogical arguments modern liberals have to pretend not to know things…

  3. #3
    Guru

    Join Date
    Dec 2015
    Last Seen
    Yesterday @ 07:10 PM
    Lean
    Undisclosed
    Posts
    4,592

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by KLATTU View Post
    Paul Krugman’s Predictions about “Austerity” Aren’t Aging Well - Foundation for Economic Education

    But as Austerity’s authors show, in some cases austerity was expansionary. And, in large part, it happened for exactly the reason Krugman denigrated. Where austerity is based on spending cuts rather than tax increases, “private investment rises within 2 years,” and by the third year is above the previous level. Contra Krugman, Alesina, Favero, and Giavazzi attribute this to increased business confidence.

    Britain, Krugman’s “demonstration that the Austerians had it wrong,” has, in fact, shown the opposite.

    The Conservative government implemented a program of budget cuts. Over a 5-year period exogenous fixed measures amounted to almost three percent of GDP, two-thirds expenditure cuts, and one-third tax hikes. It was harshly criticized by the IMF, which predicted a major recession. The latter did not materialize and the IMF later publicly apologized. The UK grew at respectable rates.

    comments welcome.
    A more sensible, much less partisan assessment of that book:

    Has Austerity Been Vindicated? by Robert Skidelsky - Project Syndicate
    "The amount of energy necessary to refute bull**** is an order of magnitude bigger than to produce it." -Alberto Brandolini

  4. #4
    Sage

    Join Date
    Jan 2013
    Last Seen
    Today @ 06:49 AM
    Lean
    Conservative
    Posts
    7,618

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by Surrealistik View Post
    A more sensible, much less partisan assessment of that book:

    Has Austerity Been Vindicated? by Robert Skidelsky - Project Syndicate
    fee.org is far from partisan.

  5. #5
    Guru

    Join Date
    Dec 2015
    Last Seen
    Yesterday @ 07:10 PM
    Lean
    Undisclosed
    Posts
    4,592

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by KLATTU View Post
    fee.org is far from partisan.
    Foundation for Economic Education - Wikipedia

    Quote Originally Posted by Wikipedia
    The Foundation for Economic Education (FEE) is a libertarian economic think-tank dedicated to the "economic, ethical and legal principles of a free society."[4] FEE publishes books, daily articles, and hosts seminars and lectures.[5]
    Foundation for Economic Education - SourceWatch


    Sounds like a classic partisan thinktank.
    "The amount of energy necessary to refute bull**** is an order of magnitude bigger than to produce it." -Alberto Brandolini

  6. #6
    Sage

    Join Date
    Jan 2013
    Last Seen
    Today @ 06:49 AM
    Lean
    Conservative
    Posts
    7,618

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by Surrealistik View Post
    Sounds like you don't know what you are talking about.
    "Founded in 1946, FEE was the first modern think tank established in the United States specifically to promote, research and promulgate free market and libertarian ideas."

  7. #7
    Sage

    Join Date
    Jan 2018
    Last Seen
    Yesterday @ 09:57 PM
    Lean
    Private
    Posts
    8,657

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by Mycroft View Post
    Perhaps Krugman should return his Nobel Prize.
    Him and Obama...

  8. #8
    Guru

    Join Date
    Dec 2015
    Last Seen
    Yesterday @ 07:10 PM
    Lean
    Undisclosed
    Posts
    4,592

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by KLATTU View Post
    Sounds like you don't know what you are talking about.
    "Founded in 1946, FEE was the first modern think tank established in the United States specifically to promote, research and promulgate free market and libertarian ideas."
    Looks like I know exactly what I'm talking about per your own quote.

    It's a think tank designed to promote, research and promulgate free market and libertarian ideas; it is thus absolutely a partisan, politically charged entity.
    "The amount of energy necessary to refute bull**** is an order of magnitude bigger than to produce it." -Alberto Brandolini

  9. #9
    Sage



    Join Date
    Dec 2013
    Last Seen
    Today @ 11:16 AM
    Gender
    Lean
    Liberal
    Posts
    17,387

    Re: Pau Krugman's austerity predictions aren't aging well.

    Let's all take the wayback machine to early 2009, when the WSJ, the Austrians, and the other usual suspects were screaming about soaring rates and runaway inflation. Those, like Krugman, who understood IS-LM [IS-LM stands for investment-savings, liquidity-money] were predicting that interest rates would stay low and that even a tripling of the monetary base would not be inflationary. Events since then have been a huge a vindication for the IS-LM types, including Krugman.

    I read the OP's article, it appears to me to be a mixture of revisionist history and misrepresenting Krugman. The part about the "Confidence Fairy" isn't even explained properly. The term comes this column, nine years ago:
    This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

    Bond vigilantes are investors who pull the plug on governments they perceive as unable or unwilling to pay their debts. Now there’s no question that countries can suffer crises of confidence (see Greece, debt of). But what the advocates of austerity claim is that (a) the bond vigilantes are about to attack America, and (b) spending anything more on stimulus will set them off.
    What the argument was for austerity back then was that unless the U.S. controls its debt, these bond vigilantes will stop buying U.S. debt because they will lose confidence. This would in turn drive U.S. debt to high levels and cause hyperinflation and debase the dollar. Well, what happened? The U.S. issue a large amount of debt. Investors were willing to buy U.S. debt at zero interest and the none of the gloom that the austeritans claimed would happen, happened.
    And current examples of austerity are anything but encouraging. Ireland has been a good soldier in this crisis, grimly implementing savage spending cuts. Its reward has been a Depression-level slump — and financial markets continue to treat it as a serious default risk. Other good soldiers, like Latvia and Estonia, have done even worse — and all three nations have, believe it or not, had worse slumps in output and employment than Iceland, which was forced by the sheer scale of its financial crisis to adopt less orthodox policies.
    Instead, the U.S. economy grew because of actual expansionary policies, while the European economies that believed in austerity didn't have the growth until years later. Yes, contractionary policy is contractionary.

    The last ten years are a complete vindication of Krugman and other Keynesians.
    “Those who can make you believe absurdities, can make you commit atrocities.” ― Voltaire

  10. #10
    I'm not-low all the time
    Kushinator's Avatar
    Join Date
    Jan 2006
    Location
    lincoln park
    Last Seen
    Today @ 08:57 AM
    Gender
    Lean
    Independent
    Posts
    18,354

    Re: Pau Krugman's austerity predictions aren't aging well.

    Quote Originally Posted by KLATTU View Post
    comments welcome.
    The Bank of England's base rate is still less than 1%, or 0.75%.

    What about the inflation, dollar debasement, debt spiral, etc... that was predicted by economic pundits right-of-center that did not materialize? Hell, there are multiple posters in this thread that warned and predicted this very thing.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

Page 1 of 12 12311 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •