Monday, October 21, 2013

Krugman On Austerity: How About Looking At The Facts For A Change?

New York Times economist and editorial writer, Paul Krugman, has headed the Left’s crusade against austerity, both in the United States and across the industrialized world. To Krugman, “austerity” does not denote a careful husbanding of government money. Rather austerity denotes unwisely large cuts in government spending that, he claims, threaten economic growth and recovery. Krugman bases his opposition to austerity on an empirical assertion that we can test; namely: “Across the advanced world, big spending cuts have been associated with deeper slumps.”

Krugman’s testable hypothesis, therefore, is: Countries that experience large reductions in government spending grow more slowly (or not at all or worse).

Just as some people speak before they think. Krugman seems to believe his asserting something to be true makes it true. The scientific method does not work this way, however. It requires that we first gather the facts on government spending and growth. Second, we must use these facts to test the Krugman hypothesis of a positive relationship between government spending and growth.  

The scientific method, so applied, shows Krugman’s facts to be wrong (where are the “big spending cuts”) and it refutes his hypothesis. Not a good day for Mr. Krugman. Next time, he should gather and test the facts before he writes.

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