A Man-made Economic Solution
We saw this in an OpEd News piece the other day:
“And now – only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge more than 30 percent and pushed millions of homeowners underwater, threatened or diminished the savings of millions more, and sent the entire American economy hurtling into the worst downturn since the Great depression – J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, excessively risky trades poorly-executed and poorly-monitored, that caused the crisis in the first place.”
Do you buy that? More than 90 percent of Americans accept that garbage as fact because that’s what they read in the newspapers and saw on the six o’clock news, that’s why. But Professor Paul Krugman, who won the Nobel Prize in Economics in 2008, is among those who know otherwise and would prefer to deal with the truth. About a month ago he wrote:
“Consider, if you will, the current state of our nation. Despite hints of economic progress, we’re still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technical know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.
“It’s time to end this man-made economic disaster. It’s time to stop slashing our own economic wrists. It’s time for jobs.”
On May 10th, Professor Krugman began an interesting NY Times commentary this way:
“A few days ago, I read an authoritative-sounding paper in the American Economic Review, one of the leading journals in the field, arguing at length that the nation’s high unemployment rate had structural roots and wasn’t amenable to any quick solution. The author’s diagnosis was that the U.S. economy just wasn’t flexible enough to cope with rapid technological change. The paper was especially critical of programs like unemployment insurance, which it argued actually hurt workers because it reduced the incentive to adjust.
“O.K., there’s something I didn’t tell you: The paper in question was published in June 1939. Just a few months later, World War II broke out, and the United States – though not yet at war itself – began a large military buildup, finally providing fiscal stimulus on a scale commensurate with the depth of the slump. And, in the two years after that article about the impossibility of rapid job creation was published, U.S. non-farm employment rose 20 percent – the equivalent of creating 26 million jobs today.” –