Krugman: “Keynesians have been completely right, Austerians utterly wrong”

“The results are in: Keynesians have been completely right, Austerians utterly wrong - at vast human cost” - so wrote Nobel laureate Paul Krugman today.

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“The results are in: Keynesians have been completely right, Austerians utterly wrong – at vast human cost” – so wrote Nobel prize winning economist Paul Krugman in the New York Times following yesterday’s announcement Britain is in a double-dip recession.

He is, of course, absolutely right; for starters, compare our own austerity-driven failure to the fate of the US economy. As Left Foot Forward reported yesterday, the US economy is now 0.8 per cent above its pre-crisis peak, while the UK economy is 4.3 per cent below, as Graph 1 shows.

Graph 1:

GDP-UK-US-eurozone-2003-2012
Krugman adds:

“It’s important to understand that what we’re seeing isn’t a failure of orthodox economics. Standard economics in this case – that is, economics based on what the profession has learned these past three generations, and for that matter on most textbooks – was the Keynesian position.

“The austerity thing was just invented out of thin air and a few dubious historical examples to serve the prejudices of the elite…

“I wish I could believe that this would really be enough for us to move on and consider what can be done, now that we know that the ideas behind recent policy were all wrong. But that’s wishful thinking, I suppose.

“Nobody ever admits that they were wrong, and Austerian ideas clearly have an emotional and political appeal that is resilient to any and all evidence.”

 


See also:

Krugman savages the “austerity debacle” 30 Jan 2012

Krugman: Coalition is “bleeding” Britain dry 1 Dec 2011

Obama/Cameron love-in comes unstuck over cuts 25 May 2011

Krugman joins chorus for Tobin tax 30 Nov 2009

Krugman: balanced budget would be “worst thing for future generations” 29 Sep 2011


 

And it’s not just progressive economists saying so – some on the right are finally coming round to recognising the insanity of extreme austerity.

The Daily Beast’s Andrew Sullivan writes:

If austerity kills growth and thereby revenues, the debt problem can worsen. And Britain, remember, isn’t in the eurozone; it has some currency flexibility to ride some of the shocks. Even so, the passage this ship has to pass through to growth and lower debt is getting narrower and the rocks and tides more treacherous.

“The goal of structural fiscal balance within one five-year parliament has already been abandoned in the face of reality.

“As I’ve said before, I have a long record of fiscal hawkishness. I’m a Tory and want them to succeed. But the one time I worry about fiscal retrenchment is in a period of global recession, where premature austerity can hurt, not help.

“The key is to stimulate enough to get the economy moving on its own momentum and then phase in serious long term structural budget cuts and tax reform.”

 


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134 Responses to “Krugman: “Keynesians have been completely right, Austerians utterly wrong””

  1. Kate Ardern

    Via @TimSwift: Keynesian policies proved right. Austerity fails. //t.co/xLmyjhhM #SDOH

  2. Ben O'Brien

    Via @TimSwift: Keynesian policies proved right. Austerity fails. //t.co/xLmyjhhM #SDOH

  3. Mike Leaf

    Via @TimSwift: Keynesian policies proved right. Austerity fails. //t.co/xLmyjhhM #SDOH

  4. grpavlou

    RT @leftfootfwd: Krugman: “Keynesians have been completely right, Austerians utterly wrong” //t.co/gvhvVjYr

  5. Hurstingstone

    Keynesian policies proved right. Austerity fails. //t.co/0AVmhuUr

  6. neontetrafilms

    RT @leftfootfwd: Krugman: “Keynesians have been completely right, Austerians utterly wrong” //t.co/wl5u3dTp

  7. Daniel Bueno

    RT @leftfootfwd: Krugman: “Keynesians have been completely right, Austerians utterly wrong” //t.co/wl5u3dTp

  8. Andrew Croft

    Krugman: “Keynesians have been completely right, Austerians utterly wrong” //t.co/H3LB0z4T by @ShamikDas #DoubleDip #economy #recession

  9. Shamik Das

    Cameron: "Our focus is the economy!" Course it is, Dave, course it is… //t.co/9qVhOniz //t.co/j5w8HlJ1 //t.co/CFO5k4a5

  10. Michael

    Cameron: "Our focus is the economy!" Course it is, Dave, course it is… //t.co/9qVhOniz //t.co/j5w8HlJ1 //t.co/CFO5k4a5

  11. Shamik Das

    …And here are the graphs: //t.co/j5w8HlJ1 & //t.co/j5w8HlJ1 Look at the evidence!

  12. Alex Braithwaite

    Cameron: "Our focus is the economy!" Course it is, Dave, course it is… //t.co/9qVhOniz //t.co/j5w8HlJ1 //t.co/CFO5k4a5

  13. Deborah Segalini

    Cameron: "Our focus is the economy!" Course it is, Dave, course it is… //t.co/9qVhOniz //t.co/j5w8HlJ1 //t.co/CFO5k4a5

  14. Amarit Bains

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  15. Isobel waby

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  16. Sarah Shoraka

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  17. UK Uncut

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  18. Carlos Adama

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  19. SkippyTaylor

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  20. Randall G.

    RT @UKuncut / Krugman: #austerity has failed //t.co/OezG9ofd demand the alternative on 26 May //t.co/WuWYO2nO
    / #p2 #UK

  21. TeamsterNation

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  22. laura bristol,

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  23. Nick H.

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  24. Fraser Neasham

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  25. Lou Bleier

    “@porsche4848 “@UKuncut Krugman: #austerity has failed //t.co/qnX3BxDp demand the alternative on 26 May //t.co/kpEtEAm3””

  26. mom pants

    Krugman: #austerity has failed //t.co/ROx8E3pV demand the alternative on 26 May //t.co/Hzi9sG5f

  27. Kate Hunter

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  28. It's The Sarge

    As Krugman said: The results of the experiment is in and austerity has failed: //t.co/YKhNdX1N #PMQs

  29. Michael H.

    Austerity driven approaches to economics have been proved wrong : Krugman //t.co/0ya6htzo

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  31. william haymes

    RT @leftfootfwd: Krugman: “Keynesians have been completely right, Austerians utterly wrong” //t.co/RrSZ25f4

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