Mike Shedlock

I just finished reading The Smith/Klein/Kalecki Theory of Austerity by Paul Krugman and I believe it is the most disingenuous piece he has ever written.

Krugman comes out blazing with the statement "Noah Smith recently offered an interesting take on the real reasons austerity garners so much support from elites, no matter how badly it fails in practice."

He then cites various sources who suggest "business interests hate Keynesian economics because they fear that it might work".

While halfheartedly dissing a similar thesis in Naomi Klein’s Shock Doctrine, Krugman goes on to say the "thesis really helps explain a lot about what’s going on in Europe in particular."

Paul, Please Be Serious

The first problem I have with the article is Krugman knows damn well that no Austrian-minded economist on the planet supports what is commonly, and mistakenly (on purpose) referred to as "austerity".

Please take a look at what Austrian economists want vs. what the nannycrats in Brussels delivered.

What Austrians Want
 

  • Lower taxes
  • Less regulation
  • End of Fractional Reserve Lending
  • Sound money
  • Smaller government
  • Work rule reform
  • Pension reform
  • Free trade

What Brussels Delivered



  • Higher income taxes
  • Higher VAT
  • Proposed financial transaction taxes
  • More regulation
  • No free trade
  • Little if any work rule reform
  • Little if any pension reform
  • Reluctant (at best) cuts in government jobs
  • Reluctant (at best) cuts in government spending
  • No sound money
  • No end of fractional reserve lending
  • Bailouts at taxpayer expense

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.