Paul Krugman: Cameron and the Confidence Fairy


Cameron and the Confidence Fairy, by Paul Krugman, in NY Times:

As the Brits get prepared for my satanic intervention, I’m hearing the line that Cameron can’t be to blame for the double dip because there hasn’t been any actual austerity yet.

First of all, that’s not true. As Jonathan Portes says, public investment has already plunged.

But the main point, which I’ve already made, is that even if much of the austerity has yet to happen, the austerity story has already failed:

Now, the defense I hear from Cameron apologists is that the austerity mostly hasn’t even hit yet. But that’s really not much of a defense. Remember, the austerity was supposed to work by inspiring confidence; where’s the confidence? Basically, the expansionary aspect should already have kicked in; it’s all contraction from here.

 Policy disaster in the making.

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