In the past few days, Russ Roberts, of Cafe Hayek has posted on his blog asking John Cassidy and Paul Krugman to back up their claims that European governments have cut spending. Both claim that “cuts” in government spending are making these economies worse. For example, Cassidy wrote:
Republicans say they want to slash government spending and focus on the deficit regardless of the immediate economic situation. The Europeans have carried out that experiment, and, to say the least, it hasn’t turned out very well.
Roberts asks a good question. If you want to claim that government spending has been cut, show your work so we can know what meaning of ‘cut’ you are using. Is that cut in absolute amounts? Cuts in growth rates of spending? Cut as a percent of GDP? Or just talks about cuts?
I’d also like to ask Cassidy why he focuses only on what he believes to be the spending “cut” experiments, while completely ignoring the big government experiments that have led these European countries to the brink of financial disaster.
Let’s assume the spending cuts are real. Saying they’re not working while ignoring all that came before is a bit like observing a drug addict going into withdrawal and concluding that quitting the drugs is causing the problem and everything would be fine if he were just to resume taking drugs and, maybe, up his dose.
- KRUGMAN: Here’s How To Fix The Economy… (businessinsider.com)
- Nobel Laureate Economist Doesn’t Accept Slow Recovery (theepochtimes.com)
- Austerity Lives on in Our Minds and Hearts… (reason.com)