Friday, 28 January 2011

Krugman and Lauzon: Fiscal Lies and Wrong-Headed Analysis of Lessons from Europe

Two interesting discussions of "debt crises" and the effect of corporate tax cuts this week, one from Paul Krugman today in The New York Times, and the other in one of the free tabloids given out around Montreal's transit system, Métro.

In his column "The Own Private Europes," Krugman takes off from the response of Republican respresentative Paul Ryan to President Obama's State of the Union address, pointing to the alleged failure of European countries' economic policies, particularly their social programs. "American conservatives have long used the myth of a failing Europe to argue against progressive policies in America. More recently, they have tried to appropriate Europe’s debt problems on behalf of their own agenda, never mind the fact that events in Europe actually point the other way," Krugman writes.

In the tabloid, Léo-Paul Lauzon, a maverick professor of accounting and social-econmic studies at the Université du Québec à Montréal, lays it on the line: corporate and fat cat tax cuts like those whose continuation was just approved in the US, do nothing to encourage economic growth. Quoting several fiscal conservative sources to back up his analysis, he says that the only winners in this kind of economic game is business and not the economy as a whole. To say otherwise is to lie, he says.

Both men appear voices in the wilderness, despite their good economic credentials. They should be heard and heeded.

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