The Krugman-Rogoff Feud

Written by Editorial
Wednesday, April 24, 2013

For those of us who spent the Reagan revolution arguing against the idea of austerity and instead in favor of supply-side tax cuts, it’s quite something to cover the eruption in the 21st century of the latest feud among economists. A generation ago we didn’t argue against spending cuts, simply that sometimes it was better to borrow than tax. Today’s dispute has been triggered by the Nobel laureate Paul Krugman, who, in his column in the Times, has been going after Harvard’s Kenneth Rogoff. This for the warnings by Mr. Rogoff that there is a limit to how much debt a country can take on before it begins to have a negative impact on growth.

“Debt hysteria” is the phrase Professor Krugman uses in today’s column to describe the fear that has been driving economic policy in the current crisis. For years he has been criticizing Chairman Bernanke of the Federal Reserve for running a monetary policy that’s too tight. He describes our policy has “monstrously failed.” He warns that there’s a “real danger we’ve ignored: the corrosive effect, social and economic, of persistent high unemployment. And even as the case for debt hysteria is collapsing, our worst fears about the damage from long-term unemployment are being confirmed.”

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