Sir, – Shortly before he died, Dr Garret FitzGerald argued that competent economists should be employed by the Department of Finance to bring the required expertise to bear on the array complex economic problems facing this country.
In your own pages every Tuesday (Business) you publish articles by one such prize-winning economic expert, Prof Paul Krugman. On several occasions recently Krugman has argued that it makes no economic sense to respond to economic depressions with a raft of austerity measures.Looking back over the history of depressions, Krugman argues that, though austerity has often been the response, that policy has rarely worked – rather has it tended to deepen the depression.
The key reasoning in his position can be summed up as follows: in depressions, for a variety of reasons, consumers don’t spend and this further reduces economic activity. If the response is austerity then spending is further reduced as is economic activity in general so deepening the recession.
In his recent book End This Depression Now, Krugman laments that the movers and shakers in our economies have failed to take note of the findings of economists on this issue and he comments: “too many people who matter . . . have for a variety of reasons, chosen to forget the lessons of history and the conclusions of several generations’ worth of economic analysis, replacing that hard-won knowledge with ideologically and politically convenient prejudices”.
Maybe we can’t afford to hire economists for the Department of Finance now, but is it not time our Government began to take notice of expert opinion publicly available on this matter and to alter the policy of austerity before it is too late? Surely we can afford to make a few copies of Prof Krugman’s book available to the Minister and those working for him – or, at the very least – encourage them to read Prof Krugman’s pieces in your pages! – Yours, etc,