Liberal thinkers, Paul Krugman most notably, realize that advanced economies are unlikely to undertake the massive fiscal stimulus they favor. That war is probably lost. But with a major policy victory out of reach, they are taking some comfort in apparently winning the intellectual fight. Flaws have been found in the famous Reinhart-Rogoff anti-debt study. And at least in Europe, politicians are apparently backing away from more austerity. As Krugman uncharitably puts it, “What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was.”
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