The New Statesman magazine had a good idea this month — it went to 20 British economists who had all signed a letter in early 2010 calling for immediate austerity and asked them whether they still supported George Osborne’s policies now that Britain is in a double-dip recession.
Only one of those who replied said yes, while nine urged Mr. Osborne, the chancellor of the Exchequer, to reconsider his opposition to stimulus. Good on them.
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I was, however, disappointed to see so many of the prodigal economists asserting that they were responding to changed circumstances rather than admitting that they had simply gotten it wrong.
For circumstances really haven’t changed; Britain had a depressed economy then and it still does now. Fiscal austerity while the economy is depressed, and in particular when conventional monetary policy has reached its limits, was an obviously bad idea from day one. Not to put too fine a point on it: what I was writing about austerity back in 2010 looks just fine a couple of years later.
The fact of the matter is that the austerians chose to throw basic macroeconomics out the window.
And that, not failure to anticipate negative surprises, is where they went wrong.
In his blog, the economist David Glasner recently ragged on Art Laffer, also an economist, over his terrible op-ed on stimulus published earlier this month in The Wall Street Journal; the economist Brad DeLong did too, for different reasons.
Oddly, neither of them caught Mr. Laffer’s extraordinary assertion that Estonia and Ireland are the leading examples of failed stimulus: “Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in G.D.P. rates before and after the stimulus,” he wrote. “The four nations — Estonia, Ireland, the Slovak Republic and Finland — with the biggest stimulus programs had the steepest declines in growth.”
Weren’t Estonia and Ireland supposed to be heroes of austerity? How incompetent do you have to be not to get that story straight?
But then, it’s become clear that The Wall Street Journal and the right in general have spent so long prioritizing loyalty over competence that they don’t even notice when they’re using people known for being wrong as supposed experts.
How dense do you have to be to roll out James Glassman, co-author of “Dow 36,000,” as your authority on the wonders of Mitt Romney’s economic plan?