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Paul Krugman's Misguided Moral Crusade Against Austerity

Getty/Jeff Zelevansky

Feeling perhaps that columnist Paul Krugman hasn't made the point emphatically enough, The New York Times Monday published an op-ed shocker by two academics with the title, "How Austerity Kills." Kills? Yes, kills.

"Austerity" is the label for one side of the current debate over what to do next for the economy. People who favor austerity are “austerians,” a clever Krugman coinage that makes adherents sound like aliens from another planet. Krugman and his followers are anti-austerians, or sometimes “Keynesians.”

It’s easier to describe what the anti-austerians believe than the austerians themselves. Anti-austerians believe that governments around the world need to stop worrying about their debts for a while and continue pouring money into the economy until the threat of recession or worse is well and truly over. Austerians want the opposite. But what is the opposite? Is President Barack Obama, for example, an austerian? To Republicans and conservatives, no: He pushed through a stimulus package of almost a trillion dollars early in his first term, and remains a symbol of “big spending.” To liberals and Democrats, yes: They feel we need a second and much larger stimulus and Obama has let us all down.

This debate has been going on enjoyably since about 2008, with Krugman almost single-handedly swatting away one feral-looking austerian after another, maddened by their failure to do as he says. He did not write the paper about how austerity kills, but it fits comfortably with everything else he’s been writing on the subject.

The paper at issue, by social scientists from Stanford and Oxford, uses statistics, anecdotes, and international comparisons to demonstrate an unsurprising correllation between unemployment and suicide. They predict that the "sequester" resulting from the most recent budget crisis will increase infant mortality because it cuts off money for child nutrition programs. Prescriptions for antidepressants are up, and 750,000 people, mostly young men, have taken up binge drinking. The authors say that in the United States there were 4,750 "excess" suicides—suicides over and above the number you would expect based on earlier trends.

Meanwhile in Greece, there has been a "public health disaster" because of a 40 percent reduction in medical spending. Thirty-five thousand Greek doctors and other health care professionals have lost their jobs. The authors attribute these upsetting numbers not just to the recession but specifically to the austerity response.

By contrast in Iceland, according to the authors, they held a couple of votes about how to spend IMF bailout money. "Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity." That is one of the least remarkable poll results of all time. But Iceland is better off, they say, than if its citizens had voted the other way.

Bottom line: Austerity is immoral.

What’s more, the authors of this paper are right, in a way. And Krugman is right: Bad economic times are bad for your health. People get depressed and commit suicide. They drink and ruin their livers. They don’t buy their prescription drugs or see the doctor when they should in order to save money. They lose their jobs, come home, and murder their spouses. And austerians fairly explicitly favor bad times. Or at least they favor worse times in the short run than do their rivals, the anti-austerians or (why deny him the glory?) Krugmanites. So austerity does kill in this sense.

But only in this sense. Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run. This doesn’t mean that they have forgotten the lessons of Keynes and the Great Depression. It means that they remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to.

I'm not sure how relevant the experiences of Greece and Iceland, as described in this paper, are to the United States. No one here is proposing anything like a 40 percent cut in overall health care spending. On the other hand, "to pay off foreign creditors gradually" sounds more or less like what the austerians in this country have in mind. And no one is suggesting that we start right away, just as no one on the non-austerian side of this debate is proposing that we can run up the national debt forever and we never have to pay any of it back, although they can be hard to pin down on exactly when the payback starts.                                                                                                                                                                                                                                                                    

Krugman now says that what he is against is “premature” fiscal austerity. So is everybody. They just disagree on what is “premature.” You know what they say: Disputes in academia are especially vicious because the stakes are so small. The stakes in the austerity debate—the actual differences of opinion—get smaller and smaller even while the argument itself gets larger and louder.

Krugman sometimes writes as if, right or wrong, his view is the courageous one, held by folks willing to stand up to the plutocrats and their lackies. But his message to all classes is: party on. It’s your patriotic duty. How much courage does that take? The really tough message—once again, right or wrong—is the one the austerians have to deliver, which is that the party is over. And this leads to a question that Krugman finally addressed in a recent column: What’s in all this for the austerians? If Krugman is right that the results of austerity are harmful and potentially catastrophic, why should the elites who he says have the real power be pushing it so hard? No one on either side of this debate actually wants the economy to tank, surely. But before you can have an ulterior motive, you’ve got to have a motive. What is the austerians’ motive?

Krugman’s answer isn’t bad. He writes:

Some [powerful people] have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.

There’s something to this, though not enough. There may be a Snidely Whiplash out there somewhere who is willing to take a recession if that’s what is required to rip apart the social safety net. But surely the Obama administration is not filled with people secretly trying to repeal the New Deal, although it’s the Obama administration whose policies Krugman finds so disturbing. 

Krugman also is on to something when he talks about paying a price for past sins. I don’t think suffering is good, but I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy. Sure let’s raise taxes on the rich. But that’s not going to solve the problem. The problem is the great, deluded middle class—subsidized by government and coddled by politicians. In other words, they are you and me. If you make less than $250,000 a year, Obama has assured us, you are officially entitled to feel put-upon and resentful. And to be immune from further imposition.

Austerians don’t get off on other people’s suffering. They, for the most part, honestly believe that theirs is the quickest way through the suffering. They may be right or they may be wrong. When Krugman says he’s only worried about “premature” fiscal discipline, it becomes largely a question of emphasis anyway. But the austerians deserve credit: They at least are talking about the spinach, while the Krugmanites are only talking about dessert.