Today Paul Krugman returns to his oft-repeated mantra that recent badly chosen economic policies have vindicated Keynesian economics both in the US and in Europe. Specifically, Keynes argued that government spending should be cut during economic booms, not during economic slumps – that it should be countercyclical to the economy. Krugman asserts that the disastrous results of Europe’s new commitment to “economic austerity” (and, to a lesser extent, our failure to enact a sufficiently large economic stimulus package back in 2009), validate this basic Keynesian principle.
I read Krugman’s column as yet another reminder that human evolution did not gift us with a brain designed to be very good at either (i) dealing with very complicated situations, or (ii) events that take place on something other than the human scale. To be sure, our brains can learn to handle complicated situations and events on macro and micro scales, but learning how to do something is not the same as instinctively knowing how to do something.
