The Economic Consequences of Mr. Osborne
In the wake of the 2010 British election, Keynesians like Robert Skidelsky predicted that Chancellor of the Exchequer George Osborne was gravely wrong in seeking to reduce the budget deficit. It turns out that it is the Keynesians who were mistaken, with the main question being why they refuse to admit it.
CAMBRIDGE – “If the facts change,” John Maynard Keynes is supposed to have said, “I change my opinion. What do you do, sir?” It is a question his latter-day disciples should be asking themselves now.
Long before the United Kingdom’s recent general election, which the Conservatives won by a margin that stunned their critics, the facts about the country’s economic performance had indeed changed. Yet there is no sign of today’s Keynesians changing their minds.
Because I admire him as an historian, not least for his Keynes biography, I omitted Lord Robert Skidelsky’s name from my post-election commentary critiquing the contemporary Keynesian take on the UK economy. Opprobrium was best heaped, I believed, on Paul Krugman, as he makes such a virtue of heaping it on others. Unwisely, Skidelsky has leapt to Krugman’s defense.