Paul Krugman on How to Fix the Economy - and Why It's Easier Than You Think

[MindMover]

Four years after the start of the Great Recession, nobody would mistake U.S. economy for a thrumming engine of growth, prosperity, and human flourishing. Sure, we're officially out of "recession." But the recovery is painfully slow and uneven, and 24 million Americans are still unemployed or underemployed. There's a lot of pain out there, and a lot of potential going to waste.

The worst part? It doesn't have to be this way. Or so says Paul Krugman. In a new book, End This Depression Now!, the Nobel-winning economist and New York Times columnist makes an urgent, even passionate case that our economic problems are, at root, fairly simple, and we have the knowledge and the tools to solve them. We've been here before, Krugman argues, during the Great Depression, and the actions that got us out of that crisis will get us out of this one, too.

The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren't spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman's solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it "stimulus" if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses. Whatever you call it, it worked in the nineteen-forties, when the U.S. government started shelling out on the military in the build-up to World War II, bringing an abrupt end to years of economic misery and laying the foundation for decades of prosperity. Krugman is not calling for an increase in military spending, much less a global war! But the WWII example shows that large-scale government spending can kick-start the economy. It worked then, he says, and it will work now.



Read more: http://www.rollingstone.com/politics/blogs/national-affairs/paul-krugman-on-how-to-fix-the-economy-and-why-its-easier-than-you-think-20120502#ixzz1tjxB134F

[FogerRox]

1. Oh please, tax breaks for the rich and corporations and austerity is what we need.... Puh Lease..

We hold these tuths to be self evident, yet Krugman and Stiglitz are among the few who speak the truth.

[msongs]

2. there he goes again, attacking the past 3 years of republican-lite economic policy lol nt

[lib2DaBone]

3. The rececession could be ended in one week.. he is correct...

Businesses will not hire one person.. unless there is demand. Demand comes from customers having money to buy things.

Federal spending is not bad.. it is WHAT they spend on.

The govt can spend $40 Billion per month on the war lords in Afghanistan.. but they can't find a penny to fix the roads and bridges?

If you give a million dollars to a millionaire.. it ends up in a bank in the Cayman Islands.

You give working people $10.. and they buy shoes for their kids.. food.. tires for the car.. clothing.. the dollar circulates... jobs are created.

It's a simple matter of priorities. Right now.. it's all for the 1%... and has been for the last 40 years.

[Brigid]

8. You aced Econ 101, didn't you?

Krugman is right: It really isn't that hard.

[MannyGoldstein]

4. Krugman is an extremist Firebagger

The reality is that only by the 99% eating peas and ripping off band aids can the 1% continue to make more zillions.

[pedex]

5. current policy makes it more profitable and legal to be

a criminal, especially a banker

until the systematic and structural corruption is reigned in and debt levels come down stimulus isn't gonna do much

Then there's always the perpetual problem with keynesian thinking, at some point growth has to be able to outrun growth in debt and we have about 40 years of debt outgrowing growth in our economy cause we keep using all the wrong artificial means to screw with it. Malinvestment adds up, at some point it has to be allowed to clear.k Of course this ignores any limits to growth which we are already facing which Krugman avoids which blows his schtick to pieces anyway.

[Lydia Leftcoast]

6. I know from personal experience that when you come out of poverty

you do a lot of "catch up" buying of products and services.

Say a young person who has had to live with their parents to survive gets a job that pays a living wage. In a short time, that young person moves into an apartment where he or she will need all kinds of things to furnish it with, as well as nice clothes for work. He or she can go to movies and restaurants more often, pay off those student loans faster, get the car fixed, put some money aside. All these things help the economy.

[n2doc]

7. And yet it is impossible

Because of the stranglehold the right wing has on this country. No such plan could ever be passed through this congress. The only deficit spending allowed is to support wars and tax cuts for the rich. One could offer a plan that had 0% taxes on income above 1 million in exchange for massive stimulus and the repubs would still shoot it down. But if you offered the same plan with massive military spending increases instead of useful things, they would be on it in a second. Particularly if they could shut down social security and blame it on Obama.

Krugman is smart enough to know this. He also knows that he has to keep saying the truth because nearly everyone else is saying lies.