Liberal Pundit not so Liberal Actually

Michael Kinsley is the latest pundit to join the austerity brigade. In his latest screed he accuses Paul Krugman of conducting a moral crusade against austerity.  That is rich, when it is the advocates of austerity who have been on a moral crusade telling us  to live within our means and not spend our children’s fortunes, ever since Obama took office in 2009.

For Kinsley to accuse Krugman of going on a moral crusade is like the pot calling the kettle black, when in the same article he goes on to write,

But the austerians deserve credit: They at least are talking about the spinach, while the Krugmanites are only talking about dessert.

The bad bets made by the big banks and investment houses caused the financial crisis, which resulted into the subsequent slowing down of the economy.  The financial sector has rebounded but the rest of the economy has not.

Forget about morality, austerity is the wrong policy prescription in a recession or in economy that is growing slowly. Mainly because it does not work. It does not make the economy grow, which many advocates claim that it will do. When the aggregate demand is low, in the midst of a recession, businesses pull back, they don’t hire more workers or spend as much. So if the government tries to cut back as well, by laying off workers or not spending as much as it used to, it adds to the problem, because the economy contracts even further. So if you want the economy to grow austerity makes no sense.

Michael Kinsley (Credit: Reuters/Keith Bedford)

Kinsley never bothers to explain how austerity is going to help jumpstart the economy.  He also tells us to implicitly trust the people who are advocating for austerity because they know what’s best for all of us just like the  Austerity Cat.