So it’s official. The New York Times, or at least columnist Paul Krugman, has declared us to be in a worldwide depression. And just in time for Christmas.
Democracy is at stake, Krugman alleged in his Dec. 11 column, and Europe, economically and socially, will tip into fascism if it doesn’t cease pursuing “ever-harsher austerity, with no offsetting effort to foster growth.”
Those are big assumptions and scary forecasts. But Krugman is comfortable making them, he says, because he has evidence. His evidence that European democracy is teetering in favor of repression is the case of Hungary, which is a member of the European Union but still has its own currency, the forint. There, the governing Fidesz party is pursuing policies that suppress free expression, judicial independence and the news media.
As for the theory of austerity slowing growth, Krugman evokes the Great Depression. Doing so has an authority all by itself, because the Great Depression is mysterious and its hold on the public imagination is strong.
The columnist frequently references the standard three-stage narrative of what happened. In the late 1920s or early 1930s, President Herbert Hoover committed a fatal error and imposed austerity in the form of tax increases and budget cuts. The U.S. economy failed. President Franklin Roosevelt came in and spent, and we commenced recovery. After 1936, Roosevelt hesitated and tightened the government’s belt -- austerity again. We plunged back into depression. The economy didn’t return to its 1929 rate of growth until the spending run-up to World War II.
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