Another “Oops” Moment for Paul Krugman
January 27, 2016
“Spend your way to prosperity”, didn’t work then, doesn’t work now!
I’m tempted to feel a certain degree of sympathy for Paul Krugman.
As a leading proponent of the notion that bigger government stimulates growth (a.k.a., Keynesian economics), he’s in the rather difficult position of rationalizing why the economy was stagnant when Obama first took office and the burden of government spending was rising.
And he also has to somehow explain why the economy is now doing better at a time when the fiscal burden of government is declining.
But you have to give him credit for creativity. Writing in the New York Times, he attempts to square the circle.
Let’s start with his explanation for results in the United States.
…in America we haven’t had an official, declared policy of fiscal austerity — but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments.
If you define…
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