by Ben Cohen
An interesting spat has developed between intellectual giants Paul Krugman and Niall Ferguson, pitting progressive Keynesian thought against Friedmanite monetarism.
The argument centers around the cause and remedy for inflation, and the opposing views give wildly different prescriptions to save the world economy from its current crisis.
It boils down to this: Krugman believes that the government must spend its way out of the crisis, while Fergusson believes we must cut.
The most compelling argument is that Paul Krugman correctly predicted a massive recession while Fergusson didn't (he has come out swinging against economists who failed to predict it, but failed to mention he didn't either). Krugman has been consistently right about the state of our economy, while Fergusson has continued to analyze the economic downturn in a language that every serious economist now rejects. The Friedmanite view of economics is dead, and for good reason. It has failed everywhere it has been tried.
The notion that a country can cut its way out of a very serious recession was disproved during the great depression, and most recently during the 1980's when Central America was subjected to severe cuts and privatization that devastated the region and caused the very thing it was supposed to curb: Inflation.
Niall Ferguson is an unapologetic supporter of free market capitalism, and his formidable debating skills have masked the fact that he is totally and utterly wrong about everything. Should we listen to economists like Fergusson, we would have no stimulus package, no real healthcare reform agenda or plan to kick start the economy. Tax cuts and spending cuts have proved a recipe for disaster in the real world, but a massive benefit for the academics who promote it. Fergusson makes a pretty penny propagating an economic system that benefits the wealthy, and he's unlikely to stop any time soon. Thankfully, we have heavyweights like Krugman who can help put him in his place.