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

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

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A related New York Times story about investor reactions to Hollande’s victory buys into austerity and the assault on working class wages even more wholeheartedly.

It cites no contrary views by economists. It does not even mention austerity throwing the euro zone back into recession and periphery into depression. It embraces TINA and the Road to Bangladesh strategy. It sees no irony in this, warning that unless France makes deep cuts to working class wages: “‘France runs the risk of becoming more of a periphery country than remaining in core,” Mr. Kirkegaard of the Peterson Institute said.” So the only way for France to avoid becoming like the periphery is to force cuts in working class wages to levels where France can outcompete China – and Germany and Bangladesh. And what does Kirkegaard think the Spanish will be forced to do under this strategy? They’ll have to make deeper cuts than the French. And what will the French do in response to the Spanish working class wage cuts? And what will Vietnam and Bangladesh do if the EU nations cut their working class wages to levels that allow them to “win” the race to the bottom? Won’t they be forced to react by further cuts in their working class wages? Who is going to buy Germany’s VWs under this strategy? To sum it up: in order to avoid becoming a part of Europe’s periphery France’s working class must become part of the third world.

I will close by using the medical metaphor. Bleeding patients, or nations, to cure them is quackery that harms the patient and the nation. Economists pushing the Berlin Consensus violate the first principle of the Hippocratic Oath – do no harm. Paul Krugman needs to run a teach-in at the New York Times for its international business reporters. They are helping the economic quacks who prescribe the snake oil of austerity and have as their real objectives (1) gutting Social Security, (2) destroying unions, (3) slashing working class wages, and (4) making the one percent ever richer and more politically dominant.

Bill Black is the author of 'The Best Way to Rob a Bank is to Own One' and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.

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