Three years after the turn to austerity, then, both the hopes and the fears of the austerians appear to have been misplaced. Austerity did not lead to a surge in confidence; deficits did not lead to crisis. But wasn’t the austerity movement grounded in serious economic research? Actually, it turned out that it wasn’t—the research the austerians cited was deeply flawed.Krugman also takes apart the motivation of austerians and finds emotions rather than rationality; a flawed impulse to treat macroeconomics as if it were a morality play instead of a technical malfunction.
It is not as if we did not have the knowledge to prevent such misjudgements. But as Krugman concludes:
To the extent that policymakers and elite opinion in general have made use of economic analysis at all, they have, as the saying goes, done so the way a drunkard uses a lamppost: for support, not illumination.