Sunday, April 12, 2015

Jeffrey Sachs’ Feeble Defense of David Cameron

Greg Mankiw reads this as a defense of David Cameron:
Finally, there is output growth. In the UK, real (inflation-adjusted) GDP fell by 3.8% from the fourth quarter of 2007 to the second quarter of 2010. It then rose by 8.1% from that point until the fourth quarter of 2014. In the US, real GDP fell by 1.6% from the fourth quarter of 2007 to the second quarter of 2010, and then rose by 10.5% from then until the fourth quarter of 2014. Thus, both countries have experienced moderately high and broadly similar growth rates since May 2010, when Cameron’s government took power.
I have no idea what Paul Krugman did to tick off Jeffrey Sachs so I’ll let him speak for himself. But let’s note the fact that the real GDP in the US was a mere 8.7% higher in 2014QIV than it was in 2007QIV. That is by any measure a terrible economic performance. We should also note that real GDP in the UK has increased only 3.7% over the same period. For anyone to suggest that such a dismal economic record justifies fiscal austerity leaves me wondering where this person learned their macroeconomics.


Jonathon Martin said...

I took Sach's argument to be that Krugman cannot praise Obama and criticise Cameron based on outcomes, since they are comparable. If you want to praise Obama's approach because the economy is doing okay, fine, but then you must praise Cameron too. Krugman wants to have his cake and eat it.

Denis Drew said...

I think the difference is that Obama suffered under as much austerity as the Republicans could stick him with -- not his idea.

Thornton Hall said...

Maybe Sachs learned macroeconomics from Paul Krugman:

PS I know JW Mason comments here, so let me say all errors are mine if his post is not apropos.