Our medieval economic policy
A I referred to austerity economics鈥攆iscal or monetary tightening when we need both to be expanding鈥攁s akin to the medicine of medieval times. Bleeding patients was thought to cure them, but it generally made them weaker and less resistant to disease.
Paul Krugman uses the same analogy and I was reminded of an aspect I hadn鈥檛 thought of before, having just finished a (great) historical novel covering the period in history when medicine was just beginning to wake up (World Without End by Ken Follett).
The way Follett tells it, by the end of the 14th century, private hospitals began offering alternative treatments to those in the monasteries. Monks were still practicing bleeding and other 鈥渁usterity鈥� measures, but early physicians were beginning to understand that such practices were鈥m鈥ontractionary to your health.
So people began to migrate away from the monks and their ancient ways.
In other words, there was a market鈥攜ou could choose, and once people were able to assess the different results, the choice was obvious.
And here is where the analogy breaks down. Unemployed workers, families unable to make their budgets on shrinking paychecks and falling incomes, small businesses suffering from a lack of foot traffic鈥攖hey can鈥檛 go across the street and try a different macroeconomic policy.
They have to accept the austerity whether it鈥檚 coming from the Fed (鈥渨e鈥檝e got some other tools here but we鈥檙e just not ready to use 鈥榚m鈥�), the Congress (鈥渢he President鈥檚 jobs plan won鈥檛 work鈥�), the European Central Bank (鈥減rice stability uber alles!鈥�), or the medievalists of Europe (鈥渙nly by contracting will you grow!鈥�).
I guess one could argue there鈥檚 an election market for such choices, and in some sense, the 鈥渢hrow the bums out鈥� dynamic fulfills that role. But it鈥檚 a slow, cumbersome, and noisy process鈥攖here鈥檚 so much misinformation that it鈥檚 hard for people to sort out the facts, so you end up with politicians who claim to be different but have their leeches and bleeding bowls at the ready (see Republican field).
The only way out of this mess is to reach more people鈥攙oters鈥攚ith the evidence-based facts of the case. It won鈥檛 always work鈥攖he noise machine is powerful and well-funded. But the truth will out.
I mean鈥 hope it will鈥t will鈥m鈥ight?? Hello鈥nyone there??!!
