Hi Jeffrey,



I'm a great admirer of both Profs. Sach and Krugman and there is always room for differing points of view, at least in my world.



Jeffrey Sachs is known for citing accurate stats, I don't even bother the check them anymore. Yet, the same is true of Paul Krugman.



So where's the disconnect?



Prof. Sachs sees the UK glass as half full, while Prof. Krugman sees the same glass as half empty. Both views are equally valid, but represent a different viewpoint.



My own take on the UK situation is that because the UK government of PM David Cameron led people to believe that they were going to be under very strict austerity, yet that UK style austerity was much milder that the Eurozone austerity, it led to a better result -- as compared to the Eurozone, and led to a similar statistical result as the U.S.A. stats, but for different reasons.



In the UK, the austerity/doom-and-gloom -mood of the public affected the buying patterns of consumers moreso than in the United States.



In the U.S.A., the late stimulus rallied the economy, and perhaps more profoundly, rallied consumers to spend more than if austerity had been imposed on them.



That old confidence fairy again, Prof. Krugman! (The only thing that I've ever publicly disagreed with Paul Krugman about, is his funny 'confidence fairy' commentary)



The confidence fairy is real, because in a time of doom-and-gloom austerity, consumers will spend less, or hold off on major purchases for a longer time period. When millions of non-1%'ers do that, it affects the economy negatively.



See Paul? I'm right. (All in good fun)



That difference in consumer outlook due to the three responses to the 2008 financial crisis, has played out exactly as the confidence fairy might suggest...



1. Nation with the strictest austerity (the Eurozone nations) are taking longer to recover, their currency is devalued against the U.S. dollar and the eventual and inevitable recovery will be somewhat less than the U.S. recovery -- mainly due to the mood of those with disposable income, including businesses.



2. Nations with the mild austerity, (Germany, the UK) performed better than their Eurozone counterparts in all economic indicators, but not quite as well as the U.S. (and I accept that these nations did not all start from the same economic 'place' but percentages are telling, nonetheless)



3. The U.S. which employed generous stimulus (slightly later in the crisis than I suggested, but still, it was a goodly amount of thrust added to the economy) performed better than the previous two categories above, and in all likelihood will continue to perform better for a time, all else being equal.



The one problem I have with U.S. stimulus packages is that against the advice of Keynes, those stimuli are never repaid. Those accumulated deficits are never paid back, rarely paid down (I can only think of one time since the Eisenhower administration that U.S. debt was ever paid down, and that was during the Clinton administration)



All those deficits combine into the national debt load that the U.S. is carrying, which is an obscene amount of debt to carry -- even for the U.S.A. in all its glory.



Think of all the debt servicing costs on all those accumulated deficits (and interest on top of interest) since the Eisenhower administration!



The U.S.A. could've bought 10 entire (non-G20 and non-BRICS) nations in the world, for the price of all that debt servicing.



Keynes said that, "The boom, not the bust, is the time for austerity."



Which means, don't try to pay down your debt during the bust, and don't refrain from running deficits during the bust. But it does also mean to pay down those accumulated deficits during the boom times.



Obviously that is what has been lacking with U.S. economics in recent decades -- that's why the United States has spent multi-billions (trillions?) servicing debt, instead of buying southeast Asia, or Australasia, for future generations of Americans to enjoy!



(I'm only half joking. The United States waited for the right timing to purchase 'Aleskya' from Czarist Russia and renamed that territory and later state, Alaska)



I hope the next American administration recognizes the merit in not saddling future generations with unserviceable debt, or debt that prevents taking advantage of opportunities as they arise.



That doesn't mean that I support Republicans over Democrats, as the last Republican to run surplus budgets and pay down debt was Eisenhower (and he made it look easy) although President Reagan was certainly on that path, but due to the economy at the time (although his work was monumentally successful) it did not occur.



President Clinton is the last president to run both surplus budgets and pay down U.S. debt.



President Obama has certainly addressed the economic conditions he inherited, now if he can also run surpluses and pay down even a token amount of debt, that would give the next Democrats up an excellent boost to their presidential campaigns.



(Although, in fairness to Mr. Obama, considering the scope of the 2008/09 financial crisis / aftermath and pressing matters such as TTIP, and TPP, it could be too much to hope for)



But not starting another war could certainly be good for the U.S. economy / U.S. taxpayer, when each war these days costs $1 trillion dollars of borrowed money... per each warzone!



No wonder President Obama was looking for a viable agreement with Iran.



I always appreciate your fine essays, Jeffrey.

Cheers, JBS