The New Statesman had a good idea — it went to 20 British economists who signed a letter back in early 2010 calling for immediate austerity and asked them whether they still supported the Osborne policies now that Britain is in double-dip recession. Only one of those who replied said yes, while nine urged Osborne to reconsider his opposition to stimulus.
Good on them. 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 simply got it wrong.
For circumstances really haven’t changed; the UK 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.
Posts
No comments:
Post a Comment