Tuesday, June 29, 2010

Krugman Sees Third Depression


Award winning economist and NY Times columnist sees G-20 Summit Meeting as very disappointing. Imagine Tom Emmer trying to understand this!
by Charlie Leck

I can perform no better service this morning than to send you to NY Times columnist, Paul Krugman, and his recent comments about the disappointing G-20 Economic Summit. He feels the Summit is doing exactly what it should not and is pushing us toward a third great depression that will see long, long-term unemployment and severe economic times ahead. I strongly suggest you read Krugman's column.

Governments, Krugman explains, "are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."

Conservatives, following this trend, have a tight grip on American politics right now and they are calling for belt tightening, cuts in spending and no new taxes. You'll see why Krugman thinks that is exactly what should not be done.
"It's almost as if the financial markets understand what policy makers seemingly don't: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.
"So I don't think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times."

The conservative voice appears to be in control right now and and those who vocalize it have no inclination toward "rational analysis."

Try to imagine the Republican candidate for Governor of Minnesota, Tom Emmer, even beginning to understand what Krugman is talking about!
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1 comment:

  1. Charlie,
    I helped a friend of my dad prep a letter to the STRIB in response to this column. Apparently, the STRIB didn't print the entire column from the Times. Here's Burt's letter:
    Paul Krugman’s June 29th opinion piece, “The Third Depression”, succumbed to inartful editing of its original appearance in the New York Times by the Star Tribune. The point of Mr. Krugman’s article was contained in his final paragraph, deleted in the Star Tribune version.
    The Star Tribune version ended with “So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.”
    But Mr. Krugman went on to point out “And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.”
    The omission is significant because we have recent examples of how Republicans, eager to take control of Congress after November, handle “this triumph of orthodoxy”.
    • A debate on the Senate floor Monday, March 1, 2010 over unemployment compensation crystallized when Sen. Jon Kyl of Arizona, argued that unemployment benefits dissuade people from job-hunting "because people are being paid even though they're not working. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."
    • The US Senate Republicans have recently stopped any extension of unemployment compensation.
    Presumably, jobs will now be created because people are not receiving extended unemployment compensation! But, if not, we should count each day the ways the Republican orthodoxy leads us to the long-term depression warned of by Mr. Krugman as we consider our choices for November!

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