By Daniel Foster
January 2, 2013 1:32 P.M
(NRO)—Some vindictive bastard at the New York Times has ensured that Paul Krugman’s New Year’s hangover is maximally painful with this headline: “Used to Hardship, Latvia Accepts Austerity, and Its Pain Eases”.
The article itself is basically fiscal erotica for the libertarian set. When we had newly-minted Cato president John Allison into NRHQ a couple months ago I remarked that it was a shame we didn’t have a live laboratory to test the hands-off approach to the fiscal crisis he’d long advocated. And we still don’t, really, not for the part about whether letting financial-sector consolidation run its brutal course sans bailouts would have resulted in a deeper recession but a quicker and more robust recovery. But Latvia has shown that tough austerity measures,in a population with an insanely strong work ethic and a high capacity for sacrifice, can work [...]