I back Paul Krugman and Richard Layard.

There is a great article by the above two in yesterday’s Financial Times. It says (my summary):

1. The crisis was caused by excessive private borrowing not excessive public borrowing,

2. That we need more demand,

3. The idea that deficits are excessive is nonsense,

4. Attacks the confidence fairy,

5. Attacks structural arguments,

6. Says the anti-stimulus arguments being cited nowadays are the same ones that exacerbated the 1930s decade long depression.

In their final paragraph they say, “We therefor urge all economists and others who agree with the broad thrust of this manifesto for economic sense to register their agreement online. OK I’ve done that.

They also insert the reservation that “The best policies will differ between countries….” Quite right. For example sorting out the Eurozone is not as simple as the above five points suggest. But the “broad thrust” of the article is right.


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