Must-Read: Paul Krugman: Stop-Go Austerity and Self-Defeating Recoveries
…on whether things are improving in the six months or so before the vote. Cameron and company imposed austerity for a couple of years, then paused… the economy picked up… [and so gave] them a chance to make the same mistakes all over again. They’ll probably seize that chance. And… there’s a good chance that the resumption of austerity will usher in another era of stagnation…. There’s a somewhat similar problem in the euro area, as Barry Eichengreen noted…. The policies that pulled Europe back from the brink were made politically possible by fear… of collapse… [and] deflation. But as the fear abates, so does pressure…. My pessimism here could be all wrong…. But my guess is that we’re looking at an era of stop-go austerity, in which politicians who refuse to learn the right lessons from history doom their citizens to repeat it.