Government spending doesn’t compete with private investment — it actually promotes business spending. Central bankers, who normally cultivate an image as stern inflation-fighters, need to do the exact opposite, convincing markets and investors that they will push inflation up. “ Structural reform,” which usually means making it easier to cut wages, is more likely to destroy jobs than create them. This is neither wild-eyed nor radical, despite appearances, Krugman explains. It is rather what both mainstream economic anaylsis says will happen, and what history tells us. Not that either history nor economics has swayed the Very Serious People who have influenced our policy makers. But one of the most striking aspects of economic debate in recent years has been the extent to which those whose economic doctrines have failed the reality test refuse to admit error, let alone learn from it.
Posted on: Thu, 27 Nov 2014 05:26:56 +0000
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