I am travelling today and over the next few days and so I am stealing moments at airports etc to write the blog in between other commitments. Today we consider the research evidence available which bears on the question of national government debt default. The question is becoming increasingly pressing in the failed Eurozone and there is clear resistance among the elites to the proposition that Greece, Ireland, Portugal – for starters – might ease their domestic economic woes by defaulting. It is clear from the actions and statements of the political and economic leaders that they are more interested in protecting the private interests of capital than they are in advancing the welfare of the citizens in the nations under attack from bond markets. It is also clear that they have lost grip of the an essential aspect of capitalism – private return means private risk. The boundaries between private and public have become so blurred in the EMU as the elites strive to socialise losses. The reality is the evidence that is available doesn’t support the conservative arguments being used to eschew the default option and, instead, impose fiscal austerity on these economies. The evidence suggests that the costs of default while significant are short-lived and evaporate quickly. It is also clear that austerity also imposes significant costs on a nation that span generations. The comparison in the context of adding up these costs over the long-run is a no-brainer – these nations should default and follow a domestic-led growth strategy by expanding their budget deficits. That would require them to leave the EMU which is also essential if they are to regain their capacity to advance the interests of their citizens. Default is the way forward.