Customer Reviews

The Age of Diminished Expectations, Third Edition: U.S. Economic Policy in the 1990s

5 star:		(8)
4 star:		(7)
3 star:		(2)
2 star:		(3)
1 star:		(1)

 

 

Krugman's argument in this book is that the US economy, while not doing badly, isn't doing that well. Surely we can do better if only we expect more from our country. He goes on to provide an amazing economics lesson for the lay reader that discusses major economic topics, recent economic issues that are highly political, large problems with our current system, and what the future might hold. The chapters on international finance are particularly well written.

It's not the most recent of books, but it explains quite a lot of stuff, and most importantly, as with many of Krugman's books, you get to have a feel for the way an economist thinks. Economics is a state of mind in the sense that the more you study it, the more difficult it becomes to connect with other people. They just won't understand how your mind is thinking about things. What Krugman does is to make economics quite understandable without dumbing it down to the point where most academics would discard it as popular junk. He has strong political leanings that you are aware of if you read his column in the Times, but he is smart, and the "Age of Diminished Expectations" is definitely a good read.

Paul Krugman is a world class economist. He foresees and understands economic trends better than most. His explanation of fiscal policies, international trade, and macroeconomic concepts are entertaining and clear.

Unfortunately, nothing he foresees comes true. In this book, he makes a case that because of recurring budget deficits causing a decline in our national savings rate, our investment rate will drop. This will cause a decline in productivity, and a resulting decline in the growth of our economy (GDP) and our living standard (GDP per capita). Thus, this will result in "The Age of Diminished Expectations."

The rest is history as they say. The nineties did not turn out the way Paul Krugman envisioned them. The economy increased rapidly, and so did living standards. He did not foresee the huge net foreign investments that bridged the gap between our low domestic savings rate and our high investment rate.

Well, nobody is perfect. Economic forecasting is challenging at best. Overall, it is still a very interesting and informative book. Everything he said in it will eventually be true, it is just a matter of when. But, it certainly was not true during the nineties which was his timeframe target at the time he wrote the book.

I found this an excellent account of the big economic issues facing the US today.It is more measured (and perhaps a little less fun!)than a lot of Krugman's popular writing .One fault with the book is it concentrates too much on macroeconomic and international issues as opposed to say industrial and environmental regualtion,the legal system and so forth.The chapter on corporate governace was among the best in the book and more chapters on microeconomic issues would definitely improve the book.

I recently read this book and "Getting it Right" by Barro, both had been assigned reading while I was an undergraduate economics major that I had carefully avoided. Having finished Mr. Krugman's work I very much regret having not read this book earlier (it was my favorite of the two). He does a very good job of writing a well thought out, easy to understand description of the evils of several aspects of our fiscal policy in the US. Two sections in particular, Section III on Policy Problems and Section IV on Financial follies, really spell out the illogical nature of many of our nation's legal and ethical dilemnas. I particularly enjoyed the section on the S&L scandal, which should be required additional reading to "Funny Money" by Mark Singer. It is, to say the least, a fascinating read.

If you are interested in understanding how US fiscal policy should function, or how we have fallen into a trap of lowered expectations with regard to the work of our elected representatives, then this is a book that you would very much enjoy.

Although this book was written in the early 1990's, it still provides a good economic analysis of key policy issues that even exist today - from the trade deficit, health care, inflation, unemployment, etc. The book begins slowly, and disappointing because it seems like Krugman doesn't really enjoy writing about the subject. Many of his initial policy suggestions are "there will never be any change because it is too politically sensitive subject". The book begins to shine when they talk about his speciality though - international trade and finance. Dr. Krugman won the nobel prize last year for his work in this field, so it should be no surprise that he can explain this topic with more vivid detail and clarity that are lacking in other sections in the book. At the end of his text, he details three possible scenarios for the American economy going further - economic expansion, a "hard landing", and the status quo. He said the most likely scenario was the status quo - which didn't end up being the case. Overall, this was a good quick read and I anticipate reading more works from him.

I think the above review does not do justice to this wonderful book. It doesn't say"Japan is coming, sky is falling" at all, this is exactly the sort of thing he criticizes in the book. One of the great thing about this book, however, is that he does try to give a fair explanation of various theories, even when he doesn't agree with them. You always get the fair and whole picture of the issue at hand. A great book, almost everything you need to know about economics as a layperson is here.

The age of diminished expectations lays out a series of interesting national level economic problems as viewed from the mid to late 1990s. These list of issues are all present and he makes a compelling argument for how little we are willing to do about it. He provides solid justification that we are not willing to take the paint and therefore there can be no gain. Read it.

Thanks to Paul Krugman, I learned things related to economics from his book "The Age of Diminished Expectations" I did not at university. The book discusses possibilities for the American economy from the period 1995 to 2005 (roughly). We are already in 2006 and Paul Krugman's most likely scenario -- that the standard of living and economy would remain more or less the same -- proved correct. It is complacency by Americans regarding their living standards and their limited expectations of what politicians can do for them that makes the description "age of diminished expectations" appropriate for Professor Krugman. In earlier times, Americans were very optimistic on the future, looking forward to ever greater increases in national prosperity.

The book discusses the importance of productivity on the standard of living, and how they tend to correlate. From 2000 to 2004, American productivity growth jumped to 3%, which has helped America move ahead of other industrialized nations with sluggish economies. This achievement likely would have come as a surprise to Professor Krugman when he first wrote the book.

Ominously, Professor Krugman points out the seriousness of the budget deficit and national debt, which will only worsen as Medicare and other costs associated with America's aging population skyrocket, while these same productive workers leave the workforce to retire without being replaced adequately in sufficient numbers by younger workers.

How is America going to pay off its debt, which will only worsen if changes are not made? Eventually there must be major cutbacks on social benefits and services, or an increase in taxes, or both. Letting the problem grow will only lead America to a state of eventual insolvency.

Paul Krugman distills complex economic issues into easy-to-read and comprehend parts. If you want to understand some key economics concepts, but don't have much econ training, his writing is for you. He doesn't "dummy down" the subject, he just uses regular english without an expectation that you know the jargon, and it makes sense.

Had this as a textbook for an MBA course. It's great to say the least. You might need to have some business and financial background to understand it, but it's brilliant. It's a short read, too, which is better!