Krugman Is Right - But It May Not Make A Difference

Business Insider has a well-written article summarizing the intellectual triumph of those economists like Paul Krugman and Brad DeLong who advocated more economic stimulus instead of more austerity.

Readers of my blog know I have agreed with that assessment all along. But I have to take issue with part of the BI article. "Over the course of this debate," the article emphasized, "evidence has gradually piled up that, however well-intentioned they might be, the "Austerians" were wrong." 

I don't buy into the "well-intentioned" argument. Many of the "Austerians" were simply pandering to the preferences of the wealthy and powerful. Yesterday economist Jared Bernstein posted an article about "The Preferences Of The Wealthy And Their Role In American Politics." None of what he says will come as a surprise to anyone who has paid attention. Nor is it new in our history. But from around 1935 until around 1975, it was under control. 

Things began to change while working Americans were paying attention to something (or somethings) else.

Now it will take a sustained effort to undo the work of the wealthy and powerful over the past four decades.

It is not accidental that wages of working Americans have stagnated for the past four decades while income and wealth of the wealthy has soared. And it was not due to efforts I would call "well-intentioned."

Krugman himself doubts that the thorough discrediting of studies by Reinhart/Rogoff and Alesina will make a difference. Our Congress continues applying discredited medicine. Currently the sequester. What destructive economic leeches will they apply next?