As economies around the world continue to struggle to come out of the recession that began in 2008 it seems that (with apologies to Sam Cooke) not only do they not know much history but they have not learned or have forgotten economics.
Economics is a science, maybe not a hard science, but at least a social science. As such it must be studied and learned from, with concrete examples and economic models. Also as with history people must learn from economic actions of the past or they are doomed to repeat the mistakes of the past. As was recently pointed out, austerity by governments in times of economic downturns does not work to revive an economy. Today more proof that governmental austerity in an economic downturn does not work and makes the recovery from a recession slower and more painful. This is nothing new, as the austerity doctrine has been debunked for years and debunked again.
It is time for Milton Freidman’s 1965 quote that we are all Keynesians to come true. If not we are bound to continue to have a very slow and painful recovery from the Lesser Depression.
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