Why Paul Krugman Needs to Run a Teach-in for Ignorant New York Times Business Reporters

Paul Krugman Economist

International business reporters are helping the economic quacks who prescribe austerity snake oil.

May 7, 2012

To know the Washington Consensus as a regular citizen is to hate the Consensus.

The Washington Consensus, as the name implies, was an “inside the beltway” series of neo-liberal policies embraced by the IMF, the World Bank, and the U.S. government. It called for a minimal state and an all-powerful private sector. The private sector and de facto private central banks would discipline the State by insisting on balanced budgets – perpetual austerity. Democracy was unreliable, indeed dangerous, so the central banks had to be “independent” of the democratic process (and wholly dependent on the largest banks). Only the private sector had the proper incentives that could be relied upon to create vibrant growth and a self-correcting economy. The Consensus was developed in the context of the policies that should be imposed on Latin America -- and Latin Americans were the guinea pigs of Consensus. (This metaphor was particularly troubling for Latin Americans who knew that their ancestors raised guinea pigs as a reliable source of meat.)  READ MORE