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Published On: Fri, Mar 16th, 2012

Sean Rosenthal on Krugman’s claim on British ‘austerity’

On a number of occasions, Paul Krugman has claimed that “austerity” measures are hurting the British economy and should be ended immediately in favor of more spending. Sean Rosenthal demonstratesthat the British government has both raised taxes (which Krugman ignores) AND run large budget deficits.

Rosenthal writes:

Interestingly, Krugman neglects to provide any data on British government actions. In particular, although he asserts that British policies have simply been to “slash spending,” he neglects that Britain ignored the advice of free-market supporters by increasing tax rates significantly, such as raising the top marginal income-tax rate to 50 percent, the capital-gains-tax rate to 28 percent, and the value-added-tax rate to 20 percent. More damaging to his view, as can be seen on tables 25 and 27 of this Organisation for Economic Co-operation and Development (OECD) document, British spending has experienced no significant cuts and still represents a sharp increase compared to prerecession levels.

This does not exactly square with Krugman’s claims, but that hardly is unusual.


Check out the “Krugman in Wonderland” posts here the Disptach – click here


William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

Read more at “Krugman-in-Wonderland”

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About the Author

- William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

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