DEFICIT FREAKS

New Krugman:

The Chutzpah Caucus

At this point the economic case for austerity — for slashing government spending even in the face of a weak economy — has collapsed. Claims that spending cuts would actually boost employment by promoting confidence have fallen apart. Claims that there is some kind of red line of debt that countries dare not cross have turned out to rest on fuzzy and to some extent just plain erroneous math. Predictions of fiscal crisis keep not coming true; predictions of disaster from harsh austerity policies have proved all too accurate.  

Yet calls for a reversal of the destructive turn toward austerity are still having a hard time getting through. Partly that reflects vested interests, for austerity policies serve the interests of wealthy creditors; partly it reflects the unwillingness of influential people to admit being wrong. But there is, I believe, a further obstacle to change: widespread, deep-seated cynicism about the ability of democratic governments, once engaged in stimulus, to change course in the future. 

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Indeed, back in my youthful conservative days, when I rejoiced that my macroeconomics teacher at the University of Texas was a Friedmanite, I was taught straight up that the big problem with stimulus spending is that government just couldn't stop it once a recession had ended--it's interesting to observe in hindsight that Friedman never opposed stimulus spending per se, only that he didn't believe it could be scaled back when no longer needed.  I remember nodding my head as I took notes in class that day.  Why, of course liberals in government couldn't end the spending!  That's what liberals love to do!  Tax and spend, tax and spend!  And really, despite all my leftism and communist sympathies in the years since, I've kind of held on to that unsubstantiated notion, that government couldn't stop stimulus programs once they had outlived their usefulness.  It seemed true so I've essentially believed it until just now. 

Leave it to Krugman to use facts to persuade me.  Very nicely done.

But I would add one more factor influencing the deficit fetishists in addition to the skepticism about cutting back on stimulus spending.  Facts don't matter to a lot of people in this country.  If you give them facts contradicting what they "know" to be true, the immediate conclusion is that your facts are wrong.  No need to look it up just to be sure: I know that government loves to spend, so evidence to the contrary isn't really evidence--it has to be wrong.  That is, a rather large percentage of the country has already made up their minds about how the economy works, and there's not a damned thing you can say to them that will make them change their minds.  You know, it's Colbert's notion of "truthiness."

So many of these people demanding deficit reduction right now as the absolute best course of action, in spite of the fact that not only is this position unsupported by evidence, but that the actual evidence supports taking the opposite position, are driven by nothing more than a deep seated feeling that slashing spending is the right thing to do.  

In this sense, the austerity crowd isn't too terribly different from witch burning mobs in the Middle Ages.




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