Joseph Stiglitz, Nobel Laureate in Economics, put it simplest and best when, in response to a question from a youngster about what was the most important lesson a young person could learn about economics, said: “That you can’t grow an economy with either tax cuts or spending cuts.”
Politicians have never learned this lesson. If they had, we wouldn’t still be putting up with notions like austerity and tax cuts. No economy, anywhere at any time, has ever grown through austerity measures. Similarly, the evidence is overwhelming that injudicious use of tax cuts fails to create economic growth.
Paul Krugman, another Nobel Laureate in Economics, opined some time ago, in the depths of the recent recession, that we are in a dark age of macroeconomics. Krugman meant that lessons hard won in previous downturns were being ignored. Similarly, things that every econ 101 student learns were being overlooked for political expediency.
Getting out of our current situation will require more than political will – it will require unlearning the very things we purposefully do that are destructive for society as a whole.