Paul Krugman railed against the Very Serious People, as he's deemed them, who forced the Obama administration to stop printing and borrowing money and embrace austerity measures in 2010, writing that the sudden concern with budget deficits "was very much at odds with basic economics."
The "dangers of deficits" became an object of discussion by sheer inertia, Krguman argued, saying that it was "something everyone said because everyone else was saying it," and that no matter how vehemently people like him criticized the ascendant "deficit fetishism," their warnings went unheeded by the Very Serious People.
Moreover, the response to the financial crisis has severely hampered the recovery. The United States is "far poorer than precrisis projections suggested [it] would be at this point," he wrote, adding
the bitter irony of the story is that this catastrophic policy was undertaken in the name of long-run responsibility, that those who protested against the wrong turn were dismissed as feckless.
There are a few obvious lessons from this debacle. “All the important people say so” is not, it turns out, a good way to decide on policy; groupthink is no substitute for clear analysis. Also, calling for sacrifice (by other people, of course) doesn’t mean you’re tough-minded.
But will these lessons sink in?