Niall Ferguson Javier Rojas/ZumaPress
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Niall Ferguson’s Wishful Thinking

The Harvard historian Niall Ferguson is right that Keynesians should learn from experience. But until Ferguson explains why he thinks that austerity was a good thing for the UK economy, his critics will be forgiven for seeing his economic pronouncements as nothing more than political propaganda.

LONDON – Niall Ferguson begins his rejoinder to my rejoinder to his interpretation of the results of the United Kingdom’s recent general election by citing an apocryphal Keynes quote: “If the facts change, I change my opinion. What do you do, sir?” But should the fact that the British economy grew last year by 2.6% have caused Keynesians to change their minds? Would it have caused Keynes to rewrite his General Theory of Employment, Interest and Money?

Ferguson seems to think so. I do not.

Keynes never thought that an economy, felled by a shock, would remain on the floor. There would always be some rebound, regardless of government policy. What he emphasized was the “time-element” in the cycle. With depressed profit expectations, an economy could remain in a semi-slump for years. There would be alternating periods of recovery and collapse, but this oscillation would occur around an anemic average level of activity.