Bob Murphy responds to Paul Krugman and Brad DeLong in a massive smackdown, here.
My own take on the attack on Murphy is here.
Although, I am in general agreement with Murphy's response, I was surprised to see that he considers himself an "austerian." From my perspective, an austerian is someone who wants to insure that sovereign debt is paid off by seeing to it that taxes are raised near the breaking point and that "social services" are cut. This is what is going on in eurozone countries, such as, Greece and Spain.
NYT reports on the Greek austerity steps taken in November 2012:
The measures — including sharp cuts to pensions, salaries and social services, as well as tax increases and increases in the retirement age to 67 from 65.
In July 2012, ABC News reported on austerity measures in Spain:
Spain announced a 65 billion euro ($79.85 billion) austerity package that includes tax hikes and spending cuts on Wednesday...Now, I am all for cutting government spending and the shrinking of government, but I am not in favor of increasing taxes---especially given the money goes into the Greek treasury to be then be immediately paid out to banksters in the form of payments on Greek debt. Thus, I would never call myself an austerian. In my view, governments that have over-spent should declare bankruptcy, which would result in the pain being placed on those who propped up the government by buying government debt---as opposed to the people of a country, who had little to do with these crony deals.
Thus, my surprise when Murphy seemed to indicate he was an austerian. In fact, I emailed Murphy to see if I was somehow miss reading him. He replied:
Well it's a tricky point. You are obviously correct that I don't want to have anything to do with the crap that is actually being done in the name of austerity; let the bankers go down, and default on the government debt while we're at it.
But what's hilarious is that the actual peer-reviewed literature makes a compelling case--with lots of historical examples--of governments that were in a fiscal crisis, and got out of it by slashing spending (not relying on tax hikes, though some of them raised taxes a bit too).
So I have written stuff in that spirit, for more mainstream circles.
So I guess what I'm saying is, I have written a lot saying, "Hey, don't let these Keynesians fool you, there is a lot of 'scientific' support for austerity, if that means cutting government spending and running budget surpluses. It doesn't wreck the economy like they claim. Rather, it's the tax hikes that do it."In a follow up email, Murphy writes:
Please acknowledge that it's more an issue of branding, not a disagreement about policy.
I agree with Murphy that it's a "branding issue." Murphy is really not in favor of higher taxes. However, I just don't see how you can be comfortable adopting the word "austerian," to identify oneself, given the way the term generally means cutting spending, raising taxes, and passing the booty along to banksters. It would require major clarifications every time the word is used.
Murphy is going to be my guest on the Robert Wenzel Show next week, so between major league Krugman bashing, I imagine we will discuss this point further.