A great post from Scott, when he goes after my favorite Keynesian. Here’s the zinger from Scott:
[Scott quoting Krugman:] The one sense in which Ireland has made some progress is that it has somewhat reassured bond investors that its population will continue to sullenly acquiesce in austerity; as a result, Irish 10-year rates, while still at a large premium, are now 60-80 basis points below those of Italy and Spain.
But the repeated invocation of Ireland as a role model has gotten to be a sick joke.
[Scott:] I’m not sure the Irish feel “sullen” about the 9.2% RGDP growth announced last week:
Scott of course can easily handle the Irish success story in his own worldview. Ever since Ireland left the outrageously restrictive euro in 2013, and went to its own central bank that bought and sold futures contracts to ensure expected 5% NGDP growth, the Irish economy has been doing awesome–thereby demonstrating once again that it is a problem of Aggregate Demand that has been holding back the Western nations since 2008.
UPDATE: To avoid confusing my non-cosmopolitan readers, let me clarify that I am kidding. Ireland is still on the euro, and subject to the “eurozone disaster” as diagnosed by Sumner. So my point is, whatever rhetorical device Scott uses to explain why Ireland is capable of 9.2% RDGP growth even though the ECB is doing the opposite of what Scott recommends, is presumably what Krugman would say too. And then, whatever smirk Scott (and I) would use to see Krugman trying to hammina hammina hammina explain his way out of the hole he’d dug for himself, would likewise be applied to Scott’s explanation.