This cartoon is no joke: it's the truth.

 

 

 

As Simon Wren-Lewis (former Oxford economics prof) explains in this recent article, a significant proportion of the economics profession is still convinced that government budgets can be compared to household budgets. (Article title: “The reality behind fiscal scare stories…”)

In particular, there is a widespread belief that government debt incurred to provide stimulus during the Covid recession will have to be paid back and that that “pay back” process will involve pain in the same sort of way as a household has to cut back on consumption and save up money if it’s to repay debts that it incurs.

Moreover, there is a very good reason for featuring Harvard in the above cartoon rather than any other university, as the cognoscenti will be well aware: it’s that some of the biggest ignoramuses on the subject of government and household budgets teach at Harvard or used to until quite recently: Kenneth Rogoff, Carmen Reinhart, etc.