Krugman’s claim that the stimulus should have been bigger is consistent with his view that for every macroeconomic problem there is a correct answer that it is within the power of one man to calculate. Not only is such a claim unfalsifiable, but our experience with fiscal stimulus indicates that this particular form of voodoo economics simply steals demand from the future and leaves us worse off in the long run. Krugman urges us to ignore that history: He argues that real fiscal stimulus has been tried only once in recent memory, when massive government borrowing during World War II pulled America out of the Depression. But there are many competing explanations for the post-war boom — too many to allow us to gamble our prosperity on a World War II–sized stimulus on the chance that the Keynesian view is right this time.
Paul Krugman: Professor Ahab - Stephen Spruiell - National Review Online
Monday, October 18, 2010
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