Britain can’t afford to fall for the charms of the false economics Messiah Paul Krugman

Telegraph (UK) ^ | 24 May 2012 | By Jeremy Warner

[DeaconBenjamin]

The UK's fiscal consolidation was always likely to have a negative impact on output, at least in the short term. To make it work, the Government needed decent growth elsewhere in the world economy. Instead, it’s facing a hurricane. We look set to be broken by the storm.

But fear not – salvation is at hand. Next week, there comes to these shores a Messiah, a prophet of great wisdom and understanding whose teachings promise to vanquish despair and “end this depression”. He is Prof Paul Krugman, a superstar polemicist who has been described by The Economist as “the most celebrated economist of his generation”. Actually, “celebrated” is not exactly the right word, for Krugman divides opinion like no other. To his followers, he’s a saint; to his detractors, he’s a false prophet with satanic intent.

Krugman is an economist with attitude, and he thinks Britain is in the midst of a “massive blunder” in economic policy. The UK is the very worst example of austerity economics, he believes, for unlike the poor beleaguered nations of the eurozone periphery, we’ve not had this misery forced on us by the ghastly euro, but have opted for it as an unnecessary penance for the sins of the boom. If only we could be persuaded to forsake “Osbornomics” and tread the path originally set out by our dearly beloved former leader, Gordon Brown – that of spending our way back to growth – then all would be well again.

Put like that, of course, it sounds ridiculous, but the fact that Krugman is a Nobel prize-winning economist gives Labour’s calls for a U-turn on the economy an intellectual credibility they would otherwise struggle to attain.

[Jim Scott]

A trenchant analysis of Paul Krugman’s Keynesian approach to the U.K.’s economic problems with appropriate criticisms included. Well put.

[RetiredTexasVet]

Sure, they want to bet the farm on Krugman who has been wrong 100% of the time. If you want to use Krugman, just do exactly the opposite of what he recommends.

[Moltke]

but the fact that Krugman is a Nobel prize-winning economist gives

...me intestinal cramps.

[BfloGuy]

Well. I certainly owe an apology to Jeremy Warner. I'd always thought him a dyed-in-the-wool Keynesian for his insistence that printing money is Europe's only way out of its current mess. Evidently, he's a monetarist à la Friedman.

Only slightly better, but still not a Keynesian. These are important distinctions.