Saturday, September 24, 2011

Krugman Barbeques Cowen

After gutting and spitting him.

I’ve noted that Tyler Cowen and others seem, mysteriously, to believe that any uptick in Irish GDP somehow refutes Keynesian analysis; I’ve been seeing a lot of similar stuff about the Baltic nations, whose experience is supposed to prove that austerity works.

Some graphs of the Baltic "success" follow.

The more crucial point is that those who seem to think that such limited successes somehow challenge Keynesian economics are utterly mistaken - such limited successes are exactly what Keynes predicted, and the justification for more direct action.

Again, it’s a stunning indictment of the austerian, anti-Keynesian position that those who hold it have to claim Ireland and Latvia as success stories, and have to invent an imaginary version of Keynesian economics to claim that it has failed.