Robert J. Shiller
Policymakers cannot afford to wait decades for economists to figure out definitively how government austerity affects growth. But, judging by the evidence that we have, austerity programs in Europe and elsewhere appear likely to yield disappointing results.
NEW HAVEN – In his classic Fable of the Bees: or, Private Vices, Publick Benefits(1724), Bernard Mandeville, the Dutch-born British philosopher and satirist, described – in verse – a prosperous society (of bees) that suddenly chose to make a virtue of austerity, dropping all excess expenditure and extravagant consumption. What then happened?
The Price of Land and Houses falls;
Mirac’lous Palaces, whose Walls,
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