Maybe I’m a masochist, but I read Krugman’s blog every day. My reasoning for this is mostly that I place great importance on trying to understand the views of those who I disagree with. This isn’t simply about open-mindedness — although that plays a big part — but the only way to really win an argument is to understand the views of your opponent better than they do, and then explain to them why they are wrong.
I also hate how the political internet has evolved in two directions: self-congratulatory back-rubbing niches where everyone agrees with one another, and on the other hand flame wars where nobody tries to understand anyone else’s perspectives. Nothing breeds stupidity like polarisation.
Anyway, Prof. Krugman has an interesting graphic today:
I’ve been playing around with the IMF’s historical public debt database, which has long-term information on ratios of debt to GDP. And you really have to marvel, given that historical record, at the deficit panic now so widespread. Here’s debt as a percentage of GDP in Britain, back to 1830:
That uptick at the end — you’ll see it if you squint — is what’s driving the Cameron government’s insistence on slashing spending in a liquidity trap.
It’s also interesting to note — contrary to what you often hear — that at the time Keynes was writing, and calling for fiscal stimulus, Britain was substantially deeper in debt than Britain or the United States are now.
No doubt, Cameron’s deficit-reduction obsession is not sound. George Osborne might wax about Britain having the lowest CDS spreads in Europe, but that’s really the result of Britain having its own currency, not the result of austerity. That’s not to defend Labour’s record — they did waste a lot of money, and more than anything else that money was wasted on “liberal interventionism” in the middle east — a policy which Cameron doesn’t seem to have any problem continuing.
The point on this issue is that the UK’s infrastructure needs investment in a number of areas — roads are overcrowded, fibre optic broadband does not reach many areas, the youth faces a housing crisis, etc — and an economic contraction like this is probably the best time to do this spending, to reduce unemployment, and put money in workers’ pockets.
But that graph doesn’t really say much about this issue — the graph’s true meaning is a tale of imperial overstretch, a tale of debt acquired by a colonial power playing world policeman, and trying to maintain the status quo of the old world order.
Imperial Britain’s debt load hit its peak at the very point when its empire crumbled into the sand. This is not a co-incidence, and the good news for America is that once Britain ended its global role, growth soon returned, and Britain’s debt-to-GDP ratio fell back to a sustainable level.
Of course, Britain’s change of course happened in the context of a global conflict that ended with the use of nuclear weapons.
I hope American imperialism does not end within a similar context.