We Are All Austerians Now

There's virtually nobody left who credibly argues that austerity is a good remedy for a weak economy. But there is still some debate as to why, in the aftermath of the economic crisis, a number of smart people/business leaders/politics/etc. jumped aboard the austerity bandwagon, when the most conventional textbook economics said that that was a bad idea.

The OBR has published a long report on why it got its GDP forecasts wrong. This is an exercise in missing the point. We don't need a 99 page document to tell us why the forecasts went wrong. They went wrong because that's what forecasts do. The future is inherently unknowable, so forecasts will very often be wrong.

But the frustration in her voice was clear enough after a week in which several European allies broke ranks, and in a public challenge to Germany, effectively declared the era of deficit reduction in Europe to be over, reports The Telegraph.

TYLER COWEN is quick to link to pieces calling into question the extent to which austerity plans have been austere. Here is the latest example. He quotes a Washington Post story, which reads:

Yves here. I have to confess, it is frustrating to see Krugman say many of the right things but not be willing to go to far afield of orthodox thinking.

When Jon Chait and I were BHTVing about the merits of calling people racists, he agreed that it’s valid to discuss racism as, in a statistical aggregate sense, a driver of opinion dynamics. So without making any accusations about what motivates any particular individuals, I thought it would be useful to discuss two anecdotes in the news in light of some statistical findings.

OTTAWA — The Harper government’s budget cuts to scientific research at Environment Canada have compromised the department’s capacity to crack down on cancer-linked pollution and its mandate to enforce clean air regulations, say enforcement officers in a collection of internal emails obtained by Postmedia News.

It’s being reported that Elizabeth Taylor has left a billion-dollar fortune - not bad for someone who barely worked in the last 30 years. If this is even remotely correct, it contains a lesson for economic policy.