Paul Krugman: Triumph of the Wrong?

Republicans believe that austerity promotes recovery, but when other countries have tried this the results have been disastrous:

Triumph of the Wrong?, by Paul Krugman, Commentary, NY Times: In these closing weeks of the campaign, each side wants you to believe that it has the right ideas to fix a still-ailing economy. So here’s what you need to know: If you look at the track record, the Obama administration has been wrong about some things, mainly because it was too optimistic about the prospects for a quick recovery. But Republicans have been wrong about everything.

About that misplaced optimism: In a now-notorious January 2009 forecast, economists working for the incoming administration predicted that by now most of the effects of the 2008 financial crisis would be behind us... It wasn’t exaggerated faith in the ... stimulus plan; the report predicted a fairly rapid recovery even without stimulus. Instead, President Obama’s people failed to appreciate something that is now common wisdom among economic analysts: severe financial crises inflict sustained economic damage, and it takes a long time to recover.

This same observation, of course, offers a partial excuse for the economy’s lingering weakness. And the question we should ask given this unpleasant reality is what policies would offer the best prospects for healing the damage. Mr. Obama’s camp argues for ... the American Jobs Act. Republicans, on the other hand, insist that the path to prosperity involves sharp cuts in government spending.

And Republicans are dead wrong.

The latest devastating demonstration of that wrongness comes from the International Monetary Fund... What the monetary fund shows is that ... spending cuts appear to have done even more harm than most analysts — including those at the I.M.F. itself — expected.

Which brings us to the question of what form economic policies will take after the election.

If Mr. Obama wins, he’ll presumably go back to pushing for modest stimulus, aiming to convert the gradual recovery ... into a more rapid return to full employment.

Republicans, however, are committed to an economic doctrine that has proved false, indeed disastrous, in other countries. Nor are they likely to change their views in the light of experience. After all,... the ... party remains opposed to effective financial regulation despite the catastrophe of 2008; it remains obsessed with the dangers of inflation despite years of false alarms. ...

And here’s the thing: if Mitt Romney wins the election, the G.O.P. will surely consider its economic ideas vindicated. In other words, politically good things may be about to happen to very bad ideas. And if that’s how it plays out, the American people will pay the price.