Monday, September 3, 2012

End This Depression Now by Paul Krugman *****

I don't usually read economic books because I have a hard time understanding charts and statistics that get thrown in. However this book is presented simply and is an easy read. Krugman explains the causes of our financial distress and offers ideas on how to get out of it.

Some Krugman takeaways below:

  • In April 2011, as it happens, McDonald's announced 50,000 new job openings. Roughly a million people applied.
  • There are now four job seekers for every job opening, which means that workers who lose one job find it very hard to get another.
  • The causes of long-term unemployment clearly lie with macroeconomic events and policy failures that are beyond any individual's control, yet it does not save the victims from bearing a stigma. Does being unemployed for a long time really erode work skills, and make you a poor hire?
  • The Obama stimulus didn't fail, it simply fell short of what was required ago offset the huge private sector pullback that was already under way before the stimulus kicked in.
  • For the past several years, we have been subjected to a series of dire warnings about the dangers of inflation. Yet it was clear, to those who understood the nature of the depression were in, that these warnings were all wrong and sure enough, the great inflation surge keeps not happening.
  • It's not clear, however, whether Romney believes any of the things he is currently saying. His two chief economic advisers are committed Republicans but also quite Keynesian in their views about macroeconomics.
  • All that is blocking recovery is a lack of intellectual clarity and political will. And it's the job of everyone who can make a difference, from professional economists, to politicians, to concerned citizens, to do whatever he or she can to remedy that lack.
  • The evidence is stronger than it as ever been that fiscal policies matter ----that fiscal stimulus helps the economy add jobs, and that reducing the budget deficit lowers growth at least in the near term. And yet, this evidence does not seem to be getting through to the legislative process. That's what we need to change.

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