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Sunday, November 04, 2012

'Being Rude about Austerity'

Simon Wren-Lewis tries to get his anger over austerity under control:

How rude should I be about policymakers?...I have to say that the 2010 switch from fiscal expansion to austerity does make me very angry. I’d like to think that this is just because of the immense harm it is doing, but there is something else as well. It represents the abrogation of knowledge: knowledge which, largely through accident, I was particularly aware of. I think this is something that even economists who are not macroeconomists, and not just non-economists, do not fully appreciate. In the mid-2000s my main research was on monetary and fiscal policy interactions, and this was a field that appeared to be characterised by considerable common ground, and certainly not by alternative ‘schools of thought’. Some of this knowledge began to be applied in 2008/9, and even an institution like the IMF which was famed for its fiscal conservatism was quite happy applying that knowledge.
It is as if you are a doctor, treating a patient with proven but also state of the art medication. The patient is not well but the treatment you are applying is working. Then suddenly the hospital administrator tells you to stop, because the drugs are expensive and they would like to try some spiritual healing instead. And, in case you ask, the financial crisis did not suddenly render the sum of macroeconomic knowledge accumulated over the previous decades obsolete (whether embodied in textbooks or DSGE models).
But in a sense all this makes trying to be dispassionate about the reasons for the switch to austerity all the more important. So here is a list. I’ve talked about all of these before, but not in one place. These reasons for advocating austerity are not in order of their relevance (see Farrell and Quiggin (pdf) for the basis of such an assessment), but I am going to give them marks out of ten, where the lower the mark the more rudeness is justified. ...

I think it's also important to ask, beyond what justifies rudeness -- it is certainly justified when it comes to advocates of harmful austerity -- how effective rudeness will be in changing minds. To me, that's the real goal (though the goal may not be to change the mind of the person making a particular claim, rudeness toward the source of an outlandish claim may be an effective way to change the mind of other people, but even then rudeness has its limits).

    Posted by on Sunday, November 4, 2012 at 10:14 AM in Economics, Fiscal Policy | Permalink  Comments (28)


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