It's a well known fact that Niall Ferguson is in highly competitive race to become the Dumbest Man Alive. Whether it's his seminal Newsweek article "Please Obama, Talk More Harshly To The Egyptians, As Though They Could Give A Flying Fuck," or his deeply entertaining follow-up "The Real Problem With Obama Is That He Lacks The Delicate Political Touch Of Richard Nixon" Ferguson has been on a one-man quest to roll back the last shreds of his dignified reputation as a historian.
But these all pale in front of his latest effort, which ran in the June 6 Newsweek. In it, Ferguson excoriates Paul Krugman (the one with the Nobel Prize in economics) for focusing on how darn bad fiscal austerity has been for Ireland, Greece, Portugal, and now Britain.
Sure, Ferguson says. As these countries have cut budgets in the midst of a staggering recession, their economies have stagnated and fallen deeper behind. But no need to worry! Things are fucking cheesy in Switzerland, in spite of some modest budget cuts. So austerity is actually expansionary!
Let us dwell on that for a second.
Switzerland is an incredibly well-educated, export oriented economy that (surprise!) controls it's own currency. Personally, if I were in that situation, I would drive my interest rates to near zero and engage in a coordinated expansion of my monetary base. Plus, I'd let everyone know that since exports are FTW and my currency is a bit on the strong side, I'm planning on keeping them there for as long as I damn well felt like it. But I'm sure Switzerland has done nothing of the sort.
But of course, that's the whole point. Switzerland is nothing like the PIIGS. It's a one-off. More than that, it's not very much like us, either. So after trolling the world economies of 2008-2011, Ferguson has come up with one example where austerity has proven sort-of successful, and asked us to politely ignore Britain, Ireland, Greece, and Portugal.
What's really galling is that Ferguson plainly ignores the rest of Europe. If economics is such a morality tale, then why not look at Spain? Spain was the bees knees, budgetarily speaking. They had slashed their deficit and paid down their debts by half, but it sure didn't help them when the recession came calling. It's almost like the recession had nothing to do with deficits and everything to do with a worldwide collapse in aggregate demand precipitated by a financial crisis and exacerbated by household deleveraging. Funny, that.
So shorter Niall Ferguson: Ignore Britain, Spain, Ireland, Portugal, Italy, Greece, the counterexample of Iceland, the devaulation of the Canadian dollar in the 90s, the Japanese lost decade, and the effect of fiscal stimulus in China. It worked for Switzerland. Ferguson says so.
I have a headache.
