Paul Krugman: The Chutzpah Caucus

At this point the economic case for austerity — for slashing government spending even in the face
of a weak economy — has collapsed. Claims that spending cuts would actually boost employment
by promoting confidence have fallen apart. Claims that there is some kind of red line of debt that
countries dare not cross have turned out to rest on fuzzy and to some extent just plain erroneous
math. Predictions of fiscal crisis keep not coming true; predictions of disaster from harsh austerity
policies have proved all too accurate.

Yet calls for a reversal of the destructive turn toward austerity are still having a hard time getting
through. Partly that reflects vested interests, for austerity policies serve the interests of wealthy
creditors; partly it reflects the unwillingness of influential people to admit being wrong. But there
is, I believe, a further obstacle to change: widespread, deep-seated cynicism about the ability of
democratic governments, once engaged in stimulus, to change course in the future.