By now you should probably be bored to tears over the whole stimulus vs. austerity debate, as both sides have been making the same arguments using the same historical examples in the exact same way for at least a year.One of the problems is that the anti-Keynesian arguments are simplistic (and probably wrong). The most common critique of Krugman’s “spend spend spend!” strategy is that America will go the way of Greece, but this argument isn’t all that robust, and the existence of Japan makes this argument tougher.
Here’s a better critique of Krugman: How will spending “fix” the economy? Yes, we understand all that stuff about putting people to work (not wholly illegitimate) and how there’s all kinds of slack in the system, but how will government spending actually make the economy more robust? Or more specifically, where does Krugman actually see the economy in two or three years, such that we can take off the training wheels?
That question is almost never answered.
Now it’s true you could ask the same, too, of the free-market, anti-Keynesians.
In fact, that’s exactly what conservative columnist David Frum does in a recent piece up at The Week. He critiques Krugman, but wonders what, exactly, the GOP proposes to jumpstart the economy.
The question is kind of fair, but then, it’s a contradiction to talk about a “free-market” plan for fixing the economy. Small government conservatives are supposed to believe in spontaneous order, and the ability of private actors to produce growth without some brilliant guidance from intellectuals.
The fact that Frum is concerned about the lack of a free-market plan might be, more than anything else, an indication of his well-known ambivalence towards conservatism.
So ignore the doom talk about how we’re the next Greece, which isn’t analogous, and isn’t helpful, and instead try to figure out how more and more spending will do anything to improve the functioning of the economy, and whether there’s actually plausible end game to the Keynsian madness.