Krugman Prevails Again over Austerity

Thomas Herndon devastates
GOP fantasy economics

Updated - 'The really guilty parties here are all the people who seized on a disputed research result, knowing nothing about the research'

"(L)ast week, a startling discovery (by Thomas Herndon, a Ph.D student at the University of Massachusetts-Amherst) obliterated one of the key premises upon which the whole austerity movement was based. ... The discovery of (a) simple math error eliminated one of the key 'facts' upon which the austerity movement was based," notes Henry Blodget.

Economists, notably Paul Krugman, have been tearing out their hair for years trying to reason with Republicans and too many Democratic policymakers.

But facts, like evidence, logic, science and other liberal constructions mean nothing to many Republican policy makers, aka the austerians, no matter how badly Americans families suffer.

Don't look for this new development to change policy radically and immediately; Repubs such as Paul Ryan and company are not easily swayed.

Here's Krugman on the austerity agenda:

You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.

Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.

And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

I hope not; I’d like to believe that ideas and evidence matter, at least a bit. Otherwise, what am I doing with my life? But I guess we’ll see just how much cynicism is justified.

As John Nichols notes: "Nobel Prize-winning economist Paul Krugman suggests that an essential underpinning of the 'the intellectual edifice of austerity economics' has been called into question. But, adds Krugman, 'the really guilty parties here are all the people who seized on a disputed research result, knowing nothing about the research, because it said what they wanted to hear.'"

See also UMass Econ in the News.