Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations [Paperback]

Paul Krugman (Author)

Book Description

Publication Date: April 17, 1995

Newsweek hailed Paul Krugman as "a superstar among economists" and went on to praise Peddling Prosperity as "the best primer around on recent U.S. economic history." Others joined the chorus.

This wonderfully received book finds him in top form, observing the years he's dubbed "the age of diminished expectations." The past twenty years have been an era of economic disappointment in the United States. They have also been a time of intense economic debate, as rival ideologies contend for policy influence. But strange things have happened to economic ideas on their way to power: they've been hijacked by policy entrepreneurs—economic snake-oil salesmen, right or left, who offer easy answers to hard problems. Supply-siders rose to power with Ronald Reagan and not only cured nothing but left behind a $3 trillion debt. Krugman finds an unhappy parallel in those who shape policy within the Clinton administration.

Editorial Reviews

From Publishers Weekly

In this intellectual history of recent American economic thought, Krugman ( The Age of Diminished Expectations ) maintains that there is "a constant market for doctrines that play to popular prejudices, whether they make sense or not. In times of economic distress, the search for politically useful ideas . . . takes on a special intensity." He deftly analyzes liberal and conservative academic economists, Keynes and "new Keynesians," as well as "policy entrepreneurs" who, he contends, often offer stylish answers unencumbered by logic or data. Krugman caustically denigrates supply-siders as "ideologues whose economic concepts were cartoonlike in their simplicity." Yet the author, a professor of economics at MIT, is also apprehensive about the pervasive influence of conservative academic economists and of "strategic traders" who have "sold the American public . . . on the idea that our most crucial economic problem is our struggle with other advanced nations for global markets." This benchmark study will stimulate much needed discussion in both academia and Washington, D.C.
Copyright 1994 Reed Business Information, Inc. --This text refers to the Hardcover edition.

From Library Journal

The major problem addressed in this book is that, when choosing between good economics and good politics, policy makers usually choose good politics. Krugman ( The Age of Diminished Expectations , MIT Pr., 1992) asserts that, just as Reagan became enamored of the dubious ideas of supply-siders, Clinton is in danger of being captured by another economic nostrum, strategic trading. The book also contains a most worthwhile exploration of the last 20 years of macroeconomic theory, policy, and performance. Krugman tells a coherent story rooted in economic commonsense accessible to all readers. His thesis of the good politics of bad economics is challenging and often convincing. Highly recommended for all libraries.
- Richard C. Schiming, Mankato State Univ., Minn.
Copyright 1994 Reed Business Information, Inc. --This text refers to the Hardcover edition.

See all Editorial Reviews

Product Details

• Paperback: 320 pages
• Publisher: W. W. Norton & Company (April 17, 1995)
• Language: English
• ISBN-10: 0393312925
• ISBN-13: 978-0393312928
• Product Dimensions: 8.7 x 5.6 x 0.8 inches
• Shipping Weight: 6.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (33 customer reviews)
• Amazon Best Sellers Rank: #67,765 in Books (See Top 100 in Books)

More About the Author

Paul Krugman is the recipient of the 2008 Nobel Prize in Economics. He writes a twice-weekly op-ed column for the New York Times and a blog named for his 2007 book "The Conscience of a Liberal." He teaches economics at Princeton University. His books include "The Accidental Theorist," "The Conscience of a Liberal," "Fuzzy Math," "The Great Unraveling," "Peddling Prosperity," and two editions of "The Return of Depression Economics," both national bestsellers.

Customer Reviews

Most Helpful Customer Reviews

42 of 46 people found the following review helpful:

5.0 out of 5 stars Outstanding look at economics, February 9, 2000

By 

Michael J. Berquist - See all my reviews

This review is from: Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (Paperback)

I read "Peddling Prosperity" over a vacation, expecting to read a few pages, put it down, and pick up something more entertaining. (I had the latest Grisham waiting in the wings.) How interesting can a book about economics be? Answer- my Grisham never got read. I couldn't put this down.

Typically economic treatises are uniformly dull, the author spending pages re-stating his thesis, over and over and over. As one of my college professors told me, economists have two basic rules-

1) The market can decide best. 2) Anyone who questions rule #1 is a communist.

I would add a third-

3) bore the reader with technical jargon.

Krugman, mercifully, avoids these traps. He distills economics down to its most basic elements in plain English. Krugman is also a more critical thinker than most of his counterparts, carefully making the argument for Keynesian economics and debunking the myths of Reaganomics. Even the most ardent free market enthusiast will find it difficult to explain away Krugman's notes about wealth distribution during the 1980s (the rich got richer, the poor got poorer) and about the disastrous effects of Reagan overseas. Protectionists will have difficulty as well in refuting Krugman's analysis of the disastrous effects of tariff barriers and the insignificance of America's trade deficit.

The author has it all correct- the fallacy of protectionism (the strategic traders), the failure of Reaganomics, the positive role government can play in American economic life. What makes "Peddling Prosperity" such a good book is Krugman's skill in translating his thoughts into passages a reader without a Phd can understand. Good work.

14 of 14 people found the following review helpful:

4.0 out of 5 stars Down-to-Earth Analysis of Past & Present Economic Ideas, January 17, 1999

By A Customer

This review is from: Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (Paperback)

Economics concepts are frequently difficult to convey, but Krugman is to be commended for his ability to deliver these concepts in an intelligible, coherent, and concise manner. One does not have to be an economic wizard to understand what he has to say. However, I would advise readers to have at least a basic knowledge macroeconomics before diving into the book. As far as content, Krugman is refreshingly balanced. He admits early on that he leans "left," but he pulls no punches when it comes to bad economic policy - whether practiced on the left or the right. He takes the reader through the rise and fall of conservative economic theory from the 70s through the 80s, that peaked during the reigns of Ronald Reagan on the home front and Margaret Thatcher abroad - when "liberal" Keynesian economics was thought to be dead. However, Krugman explains why the conservative theories: monetarism, rational-expectations, and supply-side economics fail on academic grounds and also provides evidence of how and why they failed in reality. He describes the resurgence of Keynesian economics that took academic root during the reign of Reagan, but did not become a real contender until the competing conservative theories were permitted to follow their course of self-destruction. Krugman then goes on to make the case that international trade is not the cause of our slow productivity growth or stagnating wages. He believes that economic policies should focus on domestic causes and domestic solutions, and to resist overplaying international influences, which could ultimately lead to trade wars, having long-term consequences on our economy. Krugman attacks Clinton for subscribing to the ideologies of "strategic traders" in the same manner that Reagan subscribed to "supply-side economic theorists." Both are based on poor academic evidence and both are an oversimplification and inaccurate representation of our problems. Overall, the book is well organized and enlightening. I certainly learned a lot about our economy and the competing economic theories that have been proposed to explain how it works and how to go about effecting changes in that economy. I also learned quite a bit about international trade issues and I must admit that I was a victim of the myth that "productivity growth = international competitiveness," which Krugman eloquently dismisses as misguided and factually incorrect. A must read for those intrigued by economic theories and ideas; but who wish to avoid the academic jargon and gibberish that one would find in an economic textbook!

12 of 12 people found the following review helpful:

5.0 out of 5 stars What we know and what we dont, June 25, 2004

By 

Øystein Sjølie "Øystein Sjølie" (Oslo, Norway) - See all my reviews
(REAL NAME)   

This review is from: Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (Paperback)

To many, Krugman's emphasis on what we don't know about economics is probably disappointing. A whole lot of Peddling Prosperity is devoted to the puzzle of the non-existing productivity growth during the 70s and 80s, and Krugman's conclusion is: we just don't know why productivity had fallen so abruptly. Written in 1994, the productivity surge of the 1990s was just starting, and PK had of course no idea that the high productivity growth would recover.

There are some things economist do know, and PK's introduction to Keynes, the attack on Keynes by the monetarists, and the revenge of keynesianism is excellent. Like most real experts, PK is fully able to explain complicated matters in an understandable manner. The story is well written, with plenty of anecdotes to spice it up.

PK's distinction between the `professors' and the `policy entrepreneurs' is a main theme in the book, but he is taking himself too seriously. Anybody really interested in economics is because it is about people, their needs, their wants, their motivations and so on. That clever economist/professors engage in and policymaking or public debate (as PK himself is heavily into), shouldn't lead to lack of credibility. Krugman is also missing the bottom line in the tax debate: people disagree about the best tax and redistribution policy, not mainly because someone believe this or that system is more efficient, but because it is fairer. And it is quite possible to argue, on the grounds of fairness, both that rich people should pay an awful lot in taxes and that they should pay a little, both coercive sharing and keeping their income.

Krugmans brilliant and well-written story about the rise of monetarism during the 1970s earns, and of neo-Keynesians in the late 80s, is great. The best part, though, is his clear explanation of the huge misconception of comparing a nation with a corporation. The comparison is so far-fetched and leading to so much bad policy, yet so normal, that the issue should be dealt with at primary school. And Krugman's explanation is a very good place to start.