In an opinion piece in The Atlantic, senior economics editor Megan McArdle suggests that Irish austerity is not the failure some economists are purporting it to be.
Economist Paul Krugman has compared austerity to bloodletting she says.
Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks, Krugman said in the NY Times back in March.
. . . Just ask the Irish, whose government — having taken on an unsustainable debt burden by trying to bail out runaway banks — tried to reassure markets by imposing savage austerity measures on ordinary citizens.
