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Friday, December 30, 2011

No, he really wasn't

Paul Krugman is once again desperately trying to rewrite history, resurrect a rotting Keynesian economics, and cover his exposed posterior:
Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash.
He is not only at odds with conventional reality, but with history as well. Krugman is being shamelessly dishonest here. As I, and others, have chronicled, the stimulus package that he now claims was too small was actually $187 billion bigger than the $600 billion stimulus his "back-of-the-envelope calculations" recommended and described as "huge".

Keynes was not right. He, and his General Theory, are still dead. Keynesian economists are not only still completely and entirely wrong, but are still in complete denial about the problem of debt, as I shall subsequently demonstrate in a forthcoming post.

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