Wasn’t it just like a week ago that Paul “Wrong Way” Krugman was praising Argentina? And wasn’t it this week that he gushed over Japan’s growth, stimulated by tsunami reconstruction?
Oops:
Recently, two more countries have felt the bite of Keynesianism. Today, the credit ratings agency Fitch downgraded Japan’s economy and the AP reported that the Argentinian economy is likely to decline sharply. While Japan and Argentina might be different kinds of economies performing differently in different markets, their recent bad news can be attributed in part to a fondness for government spending.
These countries have used two different approaches to Keynesianism, but it amounts to the same thing: gushers of debt, oceans of spending and rivers of “stimulus” producing … bad economies. And that’s ignoring, for the moment, the recent downgrades of all the other economies trying to spend their way into prosperity (the US) or raising taxes and calling it “austerity” (most of Europe). They have not acted as dramatically as Japan and Argentina have, which is probably they aren’t hurting as much. Yet.
Is Keynesianism ever wrong? Really, it’s only a matter of time until they drag out the Phillips Curve again.
