Dan Mitchell is in Estonia to give a speech about economic reform;
Last month, I exposed some major errors that Paul Krugman committed when he criticized Estonia for restraining the burden of government spending.
My analysis will be helpful since I am now in Estonia for a speech about economic reform, and I wrote a column that was published today by the nation’s main business newspaper.
But just in case you’re one of the few people in the world who isn’t fluent in the local language, the Mises Institute Estonia was kind enough to post an English version.
Here are some of the key points I made. I started by explaining one of Krugman’s main blunders.
Krugman’s biggest mistake is that he claimed that spending cuts caused the downturn, even though the recession began in 2008 when government spending was rapidly expanding. It wasn’t until 2009 that the burden of government spending was reduced, and that was when the economy began to grow again. In other words, Krugman’s Keynesian theory was completely wrong. The economy should have boomed in 2008 and suffered a recession beginning in 2009. Instead, the opposite has happened.
I then pointed out that Estonia’s long-run performance has been admirable.
Ah yes, this is the same Paul Krugman who got into a twitter fight with Toomas Hendrick Illves, President of Estonia.
Mr. Krugman has been much in the blogosphere of late. Just yesterday, he made it onto the pages of AOSHQ in a video of an economic conference in Spain where he basically got his ass handed to him by Pedro Schwartz;
An economist named Pedro Schwartz reviews Krugman’s book — which I believe is this recently-released one, End This Depression — to his beady-eyed, trollish face.
This is a debate, but each speaker gets to speak his entire thesis (15 minutes or so) while the other just sits silently.
Krugman is red-faced in anger, and reportedly did not shake Pedro Schwarz’s hand at the end of the debate.
Pedro takes the stage at 35:00 (or thereabouts). Krugman begins responding at around 48:00. Worth watching; maybe mark it for later.
Keynesians got us into this mess and now we (non-Keynesians) have to sacrifice our principals so that they can get us out of this mess.
Of course I’m gonna
steal borrow the video and thank Ace for it. (I should warn you that not all of the video is in English.)
It’s nict to see Krugman embarrassed and by someone who knows how.