New York Times columnist Paul Krugman has called Ireland’s recovery by cutting jobs and spending largely an illusion.
In his column he stated that the right wing in America had trumpeted Ireland as their poster boy for harsh austerity policies that cut government spending and employment and balanced the budget.
However, he claimed, such claims had been revealed as false.
“They should have known better even at the time: the alleged historical examples of 'expansionary austerity' they used to make their case had already been thoroughly debunked. And there was also the embarrassing fact that many on the right had prematurely declared Ireland a success story, demonstrating the virtues of spending cuts, in mid-2010, only to see the Irish slump deepen and whatever confidence investors might have felt evaporate.
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“Amazingly, by the way, it happened all over again this year. There were widespread proclamations that Ireland had turned the corner, proving that austerity works — and then the numbers came in, and they were as dismal as before." Krugman wrote.
Krugman says the GOP and Ireland are missing the message of economist John Maynard Keynes who wrote “The boom, not the slump, is the right time for austerity at the Treasury.”
Krugman stated “So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.”