The last week has been a flurry of headlines decrying the complete and utter failure of the 'austerity experiment' across the globe, with an influential academic paper from Harvard economists becoming the poster-child not only of poor scholarship but also failed common sense.
As New York Times columnist and Nobel economist Paul Krugman notes:
"The austerian position has imploded; not only have its predictions about the real world failed completely, but the academic research invoked to support that position has turned out to be riddled with errors, omissions and dubious statistics.
The academic research mentioned is the work of Harvard economists Carmen Reinhart and Ken Rogoff, which was revealed last week to be riddled with spread sheet errors that vastly undercut the paper's conclusion. Those faulty conclusions, however, were widely used by pro-austerity policy-makers on both sides of the Atlantic to justify slashing public spending, imposing harsh cuts on social programs and worker benefits."
In a Bloomberg interview earlier this month Columbia University's Joseph Stiglitz was blunt about the historical record. “There is no instance of a large economy getting to growth through austerity," he said. "Austerity leads the economy to perform more poorly. It leads to more unemployment, lower wages, more inequality.”
The Reinhart and Rogoff paper was not used only to argue for cuts to popular social insurance programs, it was also used to argue against government efforts to boost the economy and create jobs.
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1% wants becomes what economic science says we must do.
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