Paul Krugman: In Britain and the US, Economic Mysticism Endures

Friday, 21 September 2012

In a lot of ways George Osborne, the chancellor of the Exchequer (or finance minister) is Britain's answer to Paul Ryan, the Republican nominee for vice president. True, he's a toned-down version — no Ayn Rand, please, we're British — but other aspects of the package are there in full force: Mr. Osborne is articulate, has a vision that's completely at odds with everything we actually know about macroeconomics, and he was for a while the darling not just of the right but of self-proclaimed centrists on both sides of the Atlantic.

Mr. Osborne's big idea in 2010 was that Britain should turn to fiscal austerity now now now, even though the economy remained deeply depressed; it would all work out, he insisted, because the confidence fairy would come to the rescue.