Paul Krugman: Cockroaches at the European Commission


 

I’ve written several times about cockroach ideas in economics — ideas that you try to flush away, but keep coming back. (Are cockroach ideas the same as zombie ideas? Not quite, I would say; I think of cockroach ideas as misconceptions held because the people holding them are just unaware of basic facts, while zombie ideas are held by people who refuse to acknowledge contrary evidence).

Anyway, Ambrose Evans-Pritchard catches Olli Rehn with a cockroach:

While the tone is changing, there is no sign yet of a retreat from fiscal belt-tightening. “Given that average debt exceeds 90pc of GDP in the EU, I don’t think there’s any room for manoeuvre to leave the path of budgetary consolidation,” said EU economics chief Olli Rehn.

“We won’t solve our growth problems by piling new debt on top of our old debt,” he said. Defying his critics, Mr Rehn said John Maynard Keynes himself would not be a Keynesian today’s circumstances.

Ah yes, the old “when Keynes wrote in the 1930s, governments weren’t deep in debt the way they are now” claim. Been there, done that:

The amazing thing is the way men who know neither theory nor the history of previous crises are utterly convinced that they know what to do in our current crisis; and how their confidence in their prescriptions has been unaffected by the fact that they have been wrong about everything so far. Of course, what’s even more amazing is the fact that these men are actually running things.

Cockroaches at the European Commission – NYTimes.com

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