Weekend Reader: Paul Krugman’s End This Depression Now!
The National Memo's Weekend Reader will bring you excerpts, interviews, and reviews every Saturday, aiming to illuminate issues of current interest through books, mostly but not always new. We hope you will enjoy this weekly feature and look forward to your comments.
It's no surprise that the economy has continued to rank at the top of the list of important issues to Americans, but comprehending the problem is no easy task. We are inundated daily with input from experts, commentators, and some politicians who think they're experts. Allow me to offer a better option—Paul Krugman's End This Depression Now! Originally published electronically and in hardcover last spring, it's been brought to our attention again with its forthcoming release in paperback on January 28.
As a leading economist, New York Times columnist, distinguished Princeton professor, and 2008 Nobel laureate, Krugman's solution to the nation's expanding deficit is stunningly simple: Spend more, at least for now. That's right — while politicians are warning of excessive government spending, Krugman says that federal spending is what got us out of the Great Depression, and can quickly return us to prosperity today. “Now is the time for the government to spend more, not less, until the private sector is ready to carry the economy forward again—yet job-destroying austerity policies have instead become the rule," he says. Krugman's enduring Keynesian outlook and his hopeful, progressive approach to growth are an essential contribution to a national discourse dominated by deficit “hawks."
This past week on Capitol Hill, for example, Speaker John Boehner (R-OH) and his Republican colleagues passed the No Budget, No Pay Act, a measure that not only prolongs the U.S. reaching its debt limit until mid-May by holding Congress members' pay hostage until a budget is passed, but is also a collective refusal by Republicans to make concessions until Democrats and the White House agree to enormous spending cuts. This is the opposite of what Krugman believes we need — and he was delighted that the president ignored such demands in his inaugural address. In End This Depression Now! he suggests that the president understands how to move the economy forward, but has often conceded too much to the right-wing (and centrist) deficit mania.
In his new preface to the paperback edition, Krugman points out, somewhat regretfully, how events have vindicated these arguments. Using a simple two-line graph, he shows how “Austerian" policies of fiscal contraction in Europe, even more deficit-driven than the United States, have led to a worsening depression there — while U.S. spending, by no means adequate, has nevertheless allowed us to avoid their fate. The latest economic news from the United Kingdom, which has slipped back into negative growth, likewise bolsters Krugman's criticism of the Tory government, which has enforced severe austerity at grave cost to the British people.
Krugman argues passionately that when unemployment is still floating near eight percent here, our government must give priority to jobs in shaping the budget, rather than succumbing to fear of higher deficits. While the deficit is a long-term problem, according to Krugman, the government now needs to spend and invest where private companies have failed to do so. He wants to drive the discussion toward viable ideas that can facilitate results instead of political gain. And he want to do it now: “Every time you hear some talking head declare that we have a long-term problem that can't be solved with short-term fixes, you should know that while he may think he sounds wise, he's actually being both cruel and foolish."
Most of all, End This Depression Now! is a powerful call to action. Somehow the national conversation has taken a turn toward economic irrelevance. To achieve results, the debate in Congress has to change rapidly. “The strange thing is that there was and is no evidence to support the shift in focus away from jobs and toward deficits," Krugman writes. “Where the harm done by lack of jobs is real and terrible, the harm done by deficits to a nation like America in its current situation is, for the most part, hypothetical. The quantifiable burden of debt is much smaller than you would imagine from the rhetoric, and warnings about some kind of debt crisis are based on nothing much at all."
Here, as in his previous works — The Return of Depression Economicsand the Crisis of 2008 and The Conscience Of A Liberal — Krugman once again displays his ability to make complicated concepts clear and compelling while providing critical insight into the state of our economy that every reader can understand.
The National Memo's Weekend Reader will bring you excerpts, interviews, and reviews every Saturday, aiming to illuminate issues of current interest through books, mostly but not always new. We hope you enjoy this new weekly feature and look forward to your comments.