New York Times
February 21, 2012
A while back I read Lionel Robbins’s 1934 book The Great Depression; as I pointed out, it was a Very Serious Person’s book for its era. Its solution was a return to the gold standard — which would have made things worse — and free trade, which was basically irrelevant to the problem of insufficient demand.
So have the VSPs learned anything these past 78 years? No.
When I read headlines about the call by European leaders for action to stimulate growth, I wondered for just a second whether there was a crack in the austerian consensus. But noooo. The answer of the leaders to a severe shortage of demand — the private sector simply isn’t spending enough — is, wait for it, deregulation and trade liberalization.
This is not so much a bad idea as an irrelevant one. What would it do to reduce the burden of household debt? What would it do to narrow the destructive German surplus?
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