A New York Times best-selling call to arms from Nobel Prize–winning economist Paul Krugman.
The Great Recession is more than four years old—and counting. Yet, as Paul Krugman points out in this powerful volley, “Nations rich in resources, talent, and knowledge—all the ingredients for prosperity and a decent standard of living for all—remain in a state of intense pain.”
How bad have things gotten? How did we get stuck in what now can only be called a depression? And above all, how do we free ourselves? Krugman pursues these questions with his characteristic lucidity and insight. He has a powerful message for anyone who has suffered over these past four years—a quick, strong recovery is just one step away, if our leaders can find the “intellectual clarity and political will” to end this depression now.
Click Here For More Information
Tags:Depression
Essential Reading: The Truth about the Ongoing Depression End this Depression Now contains Paul Krugman’s analysis and prescriptions for the crisis that has gripped America and the world since 2008. The book is very readable and accessible; Krugman is skilled at using descriptive narrative and analogies while avoiding technical jargon.The most important aspect of the book is its focus on the on-going jobs crisis. Krugman clearly understands that, as far as most average people are concerned, access to a good job and decent wages are the most important gauge of prosperity. The book does a great job of highlighting the devastating human costs of the current unemployment crisis, especially for younger people who are just entering the job market and are unfortunately likely to feel the impact not just in the short term, but throughout their entire careers.Krugman shows how a lack of demand for products and services is keeping us in the current depression and may ultimately cost us at least $5 Trillion (and perhaps much more) in lost productive output and earnings. He also explains the “saltwater v. freshwater” rivalry in economics and suggests that conservative economists who argue against action to revive the economy are ignoring reality and relying on a “quasi-religious” faith in markets. Next he looks at how soaring income inequality resulted in policies such as excessive deregulation of the financial industry that directly led to the crisis. There’s also a section on the problems in Europe and the role a common currency has played.Krugman argues effectively that the stimulus was insufficient and that we need more spending on infrastructure as well as more action by the Fed and revised rules to make it easier for homeowners to take advantage of low mortgage rates. As he points out, getting the economy growing and improving the job market should be our TOP PRIORITY. The best way to avoid a long term debt crisis is through economic growth. Austerity is going to make things worse, not better. (Evidence of this is already obvious in the UK economy after stringent austerity measures).The one thing that I dislike about the book is Krugman’s willingness to sweep aside any discussion of structural, technological issues in the job market. There is no doubt that today’s technology is having an impact, and not just for low skilled workers. That impact will only become more important in the future.I’d also suggest reading , which looks at the increasing affect of technology and globalization on the job market and economy. Liberals are often very quick to dismiss any talk of structural employment issues because they believe (probably with justification) that conservatives will grasp onto that issue and use it as an excuse to do nothing. However, that does not have to be the case; it should be possible to have an active policy response and still incorporate an awareness of the changes occurring because of rapidly advancing technology.Nonetheless, the cyclical issues that Krugman talks about are certainly the most important immediate term consideration, and everyone would do well to read and understand this book. This crisis does not have to continue ruining lives and destroying the prospects for our young people. We can do something about it if we have the political will.
A Succinct Accessible Argument for Fiscal Stimulus Written for Laymen In this book Dr. Krugman puts forth the very conventional neo-Keynesian argument for monetary and fiscal stimulus written in a non-technical manner. The intended audience is laymen. For those, even with one macroeconomic class under their belts, this book would not present anything new. It also does not discuss the causes of the current economic crises but, instead, only solutions within the neo-Keynesian framework.Dr. Krugman’s posited solution is the mainstream “middle of the road” advice that would be given by the overwhelming majority of academic and professional economists. Due to the fact that the economy is currently in what is called a “liquidity trap” (a combination of a lack demand for products and an accompanying and associated lack of demand for capital [i.e., loans]), monetary policy alone does not suffice. Even if interest rates are very low, as the currently are, as little or no sales are expected, low interest rates cannot, per se, prompt businesses to borrow and invest. Hence the need for an expansionary fiscal policy.Dr. Krugman makes this argument well (and in terms a non-economics major can comprehend) but the book does have a number of serious weaknesses. For one, he does not make explicitly clear how much simulative spending (as a percentage of gross domestic product or otherwise) is needed. This is ironic as an important thrust of this book, if not the main one, is that there has not been enough of a stimulus.A second major problem is that he does not discuss what form, in terms of spending, the stimulus should have to maximize its impact. The answer to this is in spending which ends up in the hands of those with relatively high marginal propensities to consume (i.e., unemployment compensation, propping up employment for state employees such as high school teachers) as opposed to spending that eventually makes its way into the hands of those with lower marginal propensities to consume (i.e., highly paid software engineers who would spend smaller percentages of money than the unemployed).A third problem is that Dr. Krugman also does not state how long this spending has to continue other than to say when the economy is out of the recession. This sounds nice but the fact of the matter is determining this is, until well after the fact, is extremely difficult. Even Dr. Krugman would agree with this. Additionally, and related to this, is that there is no discussion of a point at which debt levels may reach which may slow down future growth. Reinhart and Rogoff, in their “This Time is Different: Eight Centuries of Financial Folly”, posit that at 80% of GDP debt starts to negatively impact growth. A short academic paper and book that this book itself was based on is “decade of debt” and can be found on sale on Amazon. This reviewer has posted a short review of it for those interested.Despite the above stated problems this reviewer still recommends this book. It provides a short succinct non-technical case for expansionary fiscal stimulus written in a manner that makes the argument accessible to laymen, unlike so many other books written on the subject.
Worth Reading I’ve enjoyed Krugman’s previous books and have been reading his New York Times blog for the past five years now because, quite frankly, he’s been almost always right about major economic policies. In this book, Krugman lays out the case for spending more money in order to pull the economy out of its economic doldrums quickly and with as little pain as possible to regular Joes/Janes like you and me.Krugman’s point isn’t that the U.S. government should ALWAYS spend lots of money (or “print” lots of money, as some angry reviewers have put it). Krugman’s argument is that in a recession where the Federal Reserve can’t lower its rates any further, the government MUST continue spending money. The alternative is called austerity, and that policy is having disastrous effects in Europe even as we speak. Why? Because when the government cuts spending, it’s cutting JOBS.Krugman lays out his argument in the book on government spending and a higher inflation target, which–again!–he clearly states isn’t supposed to be permanent or by any means debilitating. He also discusses the economic discussions that have thrown us back into this “Dark Age” where previously debunked theories have now become the mainstream way of thinking. In his sections on the ramifications of an economic depression, Krugman also points out just how much suffering goes along with these periods and makes a strong case for ensuring that our government does everything it can to pull the economy back on track. Learning from the mistakes of the Obama administration is a good thing and could help us in the future … and Krugman has no problem pointing out President Obama’s economic mistakes.I strongly recommend this book even if you disagree with Krugman’s policy prescriptions. Why? Because he’s been right so far, and the people who have given this book negative reviews seem to have no idea what the book is actually about.