The biggest policy mistake of the last decade

The evidence is in: Austerian economists got everything wrong

Stock brokers walk around a destroyed exchange floor after the 2008 economic crisis
(Image credit: Spencer Platt/Getty Images)

In the great economic battle of the past decade, the winner is the tried and true — in a rout.

After the 2008 financial crisis, old-fashioned Keynesians offered a simple fix: Stimulate the economy. With idle capacity and unemployed workers, nations could restore economic production at essentially zero real cost. It helped the U.S. in the Great Depression and it could help the U.S. in the Great Recession too. But during and immediately after the crisis, neoliberal and conservative forces attacked the Keynesian school of thought from multiple directions. Stimulus couldn't work because of some weird debt trigger condition, or because it would cause hyperinflation, or because unemployment was "structural," or because of a "skills gap," or because of adverse demographic trends.

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