The evidence is mounting up that austerity isn't working to revive Europe's sluggish economies – but governments keep on insisting it's the only answer. Why is that?
Paul Krugman, Nobel prize-winning economist and New York Times columnist, may have the answer. He's visiting the UK, home to some of the ideological austerity advocates, and pondering what makes them so damn stubborn.
One reason is this: they've got hold of a bad metaphor. They think that the British economy is like a family that's got into debt. Why is that wrong?
The answer is that an economy is not like an indebted family. Our debt is mostly money we owe to each other; even more important, our income mostly comes from selling things to each other. Your spending is my income, and my spending is your income.
So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.
This is the crisis of bad metaphors.
Further reading: Learn more about the austerity addiction in Paul Krugman's column for New York Times, and then watch him take on a venture capitalist and a Conservative MP who just won't see the problem: