It's damn near Dickensian. The Ghost of the Great Depression past keeps haunting us with devastating lessons once thought learned, just a couple of which Krugman reminds us this morning--a seemingly insignificant, 1931 Austrian banking emergency turned global crisis; and six years later, here at home, a premature transition from "fiscal stimulus to austerity, plunging the recovering economy back into recession."
History fills Krugman with "a growing sense of dread," which unquestionably results from his acting the part of the Ghost of the Great Depression present. Economists may be undistinguished as political theorists, as Krugman is the first to admit of himself, but the better ones are the very best of empiricists. While the free-market fools and sap-headed supply-siders who got us into this mess are content to stagger through the apocalypse on more and more and yet more faith, the empiricist soberly insists that the proper analysis is right in front of us--in the past.
Which of course points to the future, whose greatly depressed Ghost is by now, I should think, deeply skeptical of that free will concept he once hawked. In more ways than one, we seem determined to repeat the past's mistakes.
But here's the really depressing part. In the past--for our purpose, especially the 1930s--the error-prone actors often acted in innocent ignorance. Keynesianism, then, was theoretical economics; there was not yet the successful history of Keynesianism to analyze empirically. Today we know better, much better; the historical evidence of effective fiscal stimulus over grinding austerity is virtually Himalayan. Yet on we grind, out of habitual stupidity and aggressive poltroonery and institutional paralysis.
As a triumvirate of enlightened despots, Obama, Krugman and Keynes would have us out of this stupidly protracted mess before the Ghost of Christmas 2013 could say "infrastructure." And yet here we sit, or rather lie, like Dickens' Ghosts tied to the ground by Swift.
For a "rational" species, it's all rather peculiar.