March 7, 2013

The Krugman-bashing on Morning Joe continued unabated Wednesday, following Joe Scarborough and Paul Krugman's debate the other night on Charlie Rose's show. It seems the right has been looking for countries to prop up to prove that their calls for more austerity measures in the United States are not going to harm the economy and they've found at least one in the tiny Baltic nation of Estonia.

Scarborough started things off in the clip above by writing off our current economic circumstances as just another "period of deleveraging" where the United States needs to get its fiscal house in order with absolutely no reference to the fact that we should not be taking a series of booms and busts as the norm, or the part that deregulation and the dismantling all of the protections that were put in place following the Great Depression to attempt to prevent these types of cycles from happening again have played.

After Scarborough pointed out the fact that Americans and particularly young people are not longer racking up debt, but are also not spending and pumping money into the economy, his guest and CNBC regular Miles Nadal then moved onto the Krugman bashing:

NADAL: So when you say, are you positive on the economy, I'm positive in a cautious kind of way, but as Joe articulated on The Charlie Rose Show, which I thought was really a terrific debate, there are things on the horizon that are very scary. And I thought Paul Krugman's perspective was kind of, a little frightening in the sense that he didn't see any possibility of any Black Swan on anything that's happening and if you talk to any informed business person, that's not possible that you could completely eliminate the probability that nothing, including this multi-trillion dollar deficit would have no impact.

And as we articulated in the green room, nobody could run a company or a home the way the government is running things.

I'll just interject here briefly with this note to Miles Nadal: The Federal Budget is Not Like a Household Budget: Here's Why. It is also ridiculous to compare a government budget to running a business for a list of reasons too long to go into here. But I digress and back to the segment where NASDAQ CEO Robert Greifeld was asked to weigh in:

BRZEZINSKI: Bob, do you agree with that?

GREIFELD: Yes I do, completely. One, a side note, one of the markets we run is Estonia and I've had the opportunity to spend some time there and they have their own set of issues with Mr. Krugman in that they practice austerity and they grew by 8.3 percent. So they have as a religious faith that you can have austerity and growth and they're living proof of that.

I always get upset with people who deal in absolutes because there's always gray involved here. So certainly to say austerity will limit growth or prevent growth, cannot be correct, we have a living, breathing role model in Estonia who has done it.

So who is the one who is dealing in "absolutes" here? We're comparing apples to oranges when it comes to the economy of the United States and a country with a population of just over a million people. And as Think Progress has pointed out, that austerity has not worked out so well for the majority of the countries in the Eurozone, but what the hell -- let's cherry-pick one of the tiny ones as an example of why we should be following that path in the United States: Europe Falls Even Deeper Into Recession As Austerity Keeps Taking Its Toll:

The economic news in Europe continued to get worse on Thursday, as the Eurozone fell even deeper into recession, contracting by 0.6 percent in the fourth quarter. This is the first time since 1995 that the Eurozone has produced no quarters of growth over a full year:

It marked the currency bloc’s first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, gross domestic product (GDP) fell by 0.5 percent.

Economic output in the 17-country region fell by 0.6 percent in the fourth quarter, EU statistics office Eurostat said on Thursday, following a 0.1 percent output drop in the third.

The quarter-on-quarter drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4 percent drop in a Reuters poll of 61 economists.

Even supposedly mighty Germany saw its economy contract by 0.6 percent. Across the whole of the Eurozone, only Estonia and Slovakia experienced economic growth.

This is more evidence showing that European austerity has been an utter failure. Instead of ushering in prosperity, attempts to slash deficits and debt have actually caused more debt by depressing economic growth. As this chart from Paul Krugman shows, austerity goes hand in hand with unemployment:

I did a little searching around and it appears the right has been attacking Krugman for his article on Estonia for some time now: Estonian Rhapsody. And they've been having a bit of a feeding frenzy over the President of Estonia going after Krugman as well. So this is apparently nothing new for the talking heads over at CNBC and their peers who do reporting on the financial markets, who are all too often more than happy to take stenography for CEO's and Wall Street executives.

Here's more from a few others who have written about Estonia and their austerity measures.

Estonia and Latvia: Europe's champions of austerity? Severe pay cuts, job losses and raised taxes helped the Baltic states to recover, but only in context of their previous collapse

Growing Estonia Has 16.2 Percent Unemployment

Austerity That Never Was? The Baltic States and the Crisis

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