Paul Krugman has been waging a lonely war against austerity politics around the globe for years. So he was especially excited about Justin Trudeau's victory in Canada this week. (What, you thought he'd be writing about #Benghazi?)
"(W)hat strikes me most is (the) clear rejection of the deficit-obsessed austerity orthodoxy that has dominated political discourse across the Western world," he writes today in the New York Times. "The Liberals ran on a frankly, openly Keynesian vision, and won big."
After the 2008 collapse, right-wing politicians tried to choke government further, rejecting the Keynesian model of government stimulus and pump-priming to compensate for the retrenchment of business. Krugman warred with this notion when Republicans fought the size of the Obama stimulus, he fought it in Greece, and battled it in other European nations as well.
So there was vindication in Canada's embrace of government investment -- especially with interest rates globally remaining low.
"There was never any evidence for this view; after all, those low interest rates showed that markets weren’t at all worried about debt. But never mind — it was what all the important people were saying, and all that you read in much of the financial press. And few politicians were willing to challenge this orthodoxy. ... Even President Obama temporarily began echoing Republican rhetoric about the need to tighten the government’s belt."
That's bad governing, he argues, but also bad politics for the liberals:
Austerity rhetoric comes naturally to right-wing politicians, who are always arguing that we can’t afford to help the poor and unlucky (although somehow we’re able to afford tax cuts for the rich). Center-left politicians who endorse austerity, however, find themselves reduced to arguing that they won’t inflict quite as much pain. It’s a losing proposition, politically as well as economically.
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