Gerald (Jerry) Zezas

Home » Business Philosophy » The Myth of Austerity-Thanks Paul Krugman

The Myth of Austerity-Thanks Paul Krugman

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In recent weeks, the housing market is showing a 10% increase. Consumer confidence is the highest it has been in years. Unemployment is slowly working its way down. The stock market has doubled in the last 5 years. The federal deficit is half what it was last year, even though our “socialist” President has been spending money, in direct contradiction to the Republicans, in an effort to jump-start the economy.

It appears that all the austerity programs promulgated by Paul Ryan, the Tea Party, Mitt Romney, Newt Gingrich et al have been completely and thoroughly debunked. Europe followed the recommendations of the two economists, Carmen Reinhart and Kenneth Rogoff, who came up with the austerity mantra that the Republicans were following, only recently having acknowledged that it was based on flawed research.

They are finally realizing the magnitude of their errors. European economies are still in recession, unemployment is high (other than in Germany, which continued spending throughout the recession), with no near-term fix on the horizon. Their demands for austerity and budget cutting were wrong and millions have suffered as a result.

Paul Krugman is the Nobel Prize winning economist who exclaimed, from the beginning of the recession,  that we needed to spend even more, and actually had the courage to say so. He was the only sane voice in the crowd telling us that austerity was the exact opposite of what we needed to do. His theory has been proven prescient, as indicated by the fact that all economic indicators are pointing toward the end of the recession. Spending was exactly what we needed to do. Barack Obama followed Paul Krugman’s message and we’re all better for it.

I was thinking this morning how the country would have reacted if Mitt Romney had been elected back in November and inaugurated last January. By that time, the economic cake put into place by Barack Obama was baked, and all this good news would likely have occurred even though Romney was in office.

Then it hit me…If Romney had been elected, he and his ilk would have been screaming to the heavens that the economy came back because businesses are more confident with a Republican President. They would have been preaching to their minions that the simple fact that there was now a Republican President in office had given people a sense of hope, which, in only 4 months or so, would have manifested itself in a recovering American economy.

To those for whom introspection and rational thought are not parts of their daily routine, it would have solidified the oft-repeated falsehood that Republicans are better for the economy than Democrats. I’m grateful that recent events have categorically proved otherwise.

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