Girl from Southern Europe with a napkin (Photo credit: SCA Svenska Cellulosa Aktiebolaget)

Paul Krugman, Laureate of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 at a press conference at the Royal Swedish Academy of Sciences in Stockholm (Photo credit: Wikipedia)

One of a number of posters created by the Economic Cooperation Administration to promote the Marshall Plan in Europe (Photo credit: Wikipedia)

…………………………………………………………………………………………………………………………………………………………Here is another excellent article by Nobel Prize winning, liberal economist, Paul Krugman, writing in his Op-Ed blog in the NYT. It’s well worth a read.Check it out!

The Chutzpah Caucus – NYTimes.com.

The article is focused on the US but the conclusions are transferable.

The article explores why the totally discredited arguments in favor of austerity in recession or low growth is still the policy of choice by Governments and their conservative sponsors.

The article makes the point that conservatives do not trust Governments sufficiently to:

• Reflate their economies wisely to stimulate growth; and
• When the economies recover to re-introduce good economic housekeeping (austerity).

Transferring this argument to Europe, there is another dimension. In Europe, because of the economic straitjacket of the Euro conservatives in Germany seem to be dictating policy for the whole of Europe.

Surely, there is room for common ground, finding policy options for reflation that will address the concerns of conservatives?

For example, there seems to be an overwhelming case favor of stimulating massive capital spending in properly costed infrastructure projects. Within the Eurozone, there is also the need for North Europe to invest in suitable capital projects in Southern Europe, like for example offshore gas and oil in Cyprus. In effect, this is similar to a modern-day Marshall Plan.

However, to satisfy the conservatives, the reflation into capital spending must contain safeguards for prudent financial housekeeping as argued by German Chancellor Angela Merkel.

Do you have any other suggestions on how we can overcome the fears of conservatives and give the recovery a chance to grow, creating much needed jobs? One option is a massive war to stimulate economic growth, but I am inviting other more peaceful options, please?

Any thoughts?

Related articles

• The Jobless Trap – NYTimes.com – Paul Krugman
• Not Enough Inflation – NYTimes.com – Paul Krugman
• The Ignoramus Strategy – NYTimes.com – Paul Krugman
• The Story of Our Time – NYTimes.com – Paul Krugman
• The 1 Percent’s Solution – Paul Krugman – NYTimes.com
• Why I don’t like Paul Krugman
• Paul Krugman Responds To Critics: ‘Maybe I Actually Am Right’
• links for 2011-07-30
• Paul Krugman: After the Flimflam