In today’s NYTimes column, Paul Krugman picks up on the coming 10th anniversary of the Iraq War. The problems with the Bush administration’s case for war were obvious in advance, Krugman says, but the elite prowar consensus was able to dismiss all such arguments as the ravings of crazy hippies in the streets.
By analogy, he says (repeating the argument he has made on, shall we say, more than one previous occasion) the problems with the arguments for fiscal austerity during a recession are obvious. The policy has backfired on everyone who has tried it. Now is the time to borrow and spend to stimulate the economy. This excerpt captures his analogy argument:
Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam’s alleged weapons of mass destruction.
Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they’ve been wrong about everything (why do people keep treating Alan Simpson as a wise man?), while critics of the consensus are regarded as foolish hippies even though all their predictions — about interest rates, about inflation, about the dire effects of austerity — have come true.
Krugman’s excuse for this latest iteration is that Fed Chairman Ben Bernanke is now publicly agreeing with the this-is-not-the-time-for-austerity crowd. Thus, his column is headlined: “Ben Bernanke, Hippie.”