"The crisis imposed a momentary intellectual discipline and a resurgence, a reassertion of Keynesian principles. But that discipline did not extend into decision-making circles, at least not deeply enough, and it was overridden by, let's say, existing protocols, existing habits of thought and action that had developed in policymaking circles. And those protocols and habits precluded taking adequate action. What I mean by that specifically is that you had ways of making forecasts which were intrinsically too optimistic, intrinsically assumed that you were going to return to a baseline over a five-year time frame. And that meant that you were not going to get even presented to the president the possibility that the crisis was on the scale of the 1930's."This has important implications for Europe, which since yesterday, will have a Socialist in charge in France. Also, on what has happened with left of center parties around the globe.
"What were historically left parties both in the United States and Europe, equally true of the Democrats and the SPD and the PS in France have adopted what would have been in earlier times considered to be right-wing orthodoxies, particularly with respect to budget deficits, public debt. So they can pretend to be in favor of solidaristic social policies, but unfortunately unable to do anything in the face of the realities they allegedly face" [italics added].As far as I can tell only in Latin America, some left of center parties, that had moved to the right in the 1990s, returned to the fold in this century. As he notes, in the case of the US and Europe the collapse of the Soviet Union played an important role in the political changes of the 1980s and 1990s. In Latin America the return of left was associated to a more significant collapse of the neoliberal model. One can hope that the obvious collapse of the austerity programs in the developed world would lead to a revival of the left. Hope springs eternal.