79 of 124 people found the following review helpful
on February 2, 2009
I understand that we are in difficult times but this is no reason for recycling relatively old materials with the help of a catchy and recent title. I purchased this somewhat thin book, lured by a very promising title: "The Return of Depression Economics and The Crisis of 2008". Much to my surprise, the book is mainly about 10 year old events and the author only reaches the current crisis in the LAST CHAPTER (Chapter 10). Chapter 10 has only 10 pages in a book with 191 pages. So only 5% of the book is dedicated to the current crisis. Hence, i believe that the title is HIGHLY misleading. I believe that Mr Krugman leveraged his Nobel Prize with a book that is only tangentially relevant to the current crisis. I am sorry to say but my perception of Paul Krugman has been negatively altered by this book. It gives a new meaning to the familiar saying"don't judge a book by its cover"!
33 of 64 people found the following review helpful
on June 11, 2009
What is Krugman's agenda? Krugman is supposedly a "liberal".. What is the function of mainstream liberals and conservatives? Both frame "philosophies" into boundaries which are acceptable within mainstream thought. Krugman is living proof of how economics has been Hijacked by Wall Street via the Chicago School of Economics. Monetarism has been pushed so far that Krugman gives the illusion of a reformer when in fact he is nothing more than a damage control specialist for Goldman Sachs and the other 5 or so wall street firms which created a whole series of monetary crises from 1971 to current events.. The only industrial policy/national planning which Wall Street is agreeable to is military spending. How else to enforce through carrot and sticks foreign purchases of unpayable US debt and 3rd world loan sharking? Ironically China,the 2nd largest holder of US foreign debt finances a big chunk of US military spending. We see Repeated confrontation/tension between China & the US in the sea lanes and space based military advancements...what a crummy way to start the 21st century.
For starters, I suppose winning the Nobel Prize somehow exempts Krugman from using footnotes? Does anyone get the feeling "Depression Economics" is more of a political tract to enhance the possiblity of a future appointment e.g.,Treasury Secretary.
Krugman willfully obfuscates,dances around issues and spins facts. This book could be used as a "how to" guide by the PR industry to provide damage control for Multinational Banks and the "Shadow Banking Industry".
On page 27 top paragraph Krugman states "In 1975 South Korea or Taiwan wages have reached advanced-country levels (in 1975 the average hourly wage in South Korea was only 5% of that in The US; by 2006 it had risen to 62%)" The following sentence Krugman states "The benefits of export-led growth to the mass of people in the newly industrialized economies were not a matter of conjecture"..What krugman fails to mentions is South Korea i.e., the "Asian Tigers" success was based on import substitution/protectionist measures to build a manufacturing base and increased wages through unionization.. Korea's wage structure/manufacturing base increased due to rules which prevented capital flow/currency manipulation. Krugman states on Page 26 "Lower tariff barriers " "reduced the disadvantages of producing in developing countries"...This statement is a generalization which takes protectionism/industrial policy out of context. Yes, South Korea benefited from lower tarrifs e.g., US.. but at the same time domestic protectionism was the instrument which "grew" South Korea's economy.
How did the "Asian Crisis" start? The principle reason was lifting financial sector barriers which allowed currency/paper trading = "selling short" i.e., allowing hedge funds to destroy S Korean currency and create a depression. Who benefited? After the crash the Multinational Banks via the IMF placed conditionalities which permited foreign investors to buy up Korean compnaies and public infrastructure on the cheap. The Korean people sufferd via unemployment decreased wages. Another excersise in half truths.. Krugman's states that wages increaased from 1975 -2006.. This is highly misleading. The Asian crisis doubled the suicide rate in 1998, unemployment skyrocketed. From the start of the asian crisis to 2006 korean standards of living have dropped dramatically...
Krugman is nothing more than a Glorified Wall Street hack.. He does not address fundamental issues. BTW.. Current Fed Chairman Ben Bernanke hired Krugman while head of Princeton Univeristy's Economics Dept.
15 of 33 people found the following review helpful
on March 24, 2009
I was looking for a current day presentation on where things are/could be and how we might function/behave in a "Depression Era" given todays socio-economic circumstances and globally coupled economies. However, all this book really is, is a history lesson of other economies, old news if you will. Even the history lessons were not well tied to our current situation so one could extract relevant behavioral value. To me it seemed like a series of short stories with little to no relevancy to todays conditions. For me a waste of time. I read it while traveling and it had such little value to me I left the book in my hotel room. Not even worth carrying it home. But....that's just my opinion. Maybe I was looking for something more and that was my problem and not the Author's.
36 of 80 people found the following review helpful
on March 7, 2009
I just finished reading Tom Woods' Meltdown book about why the Austrian School thinks the economy tanked. In that book, Woods mentions Krugman in a rather unflattering way. Because of that, I decided to read Krugman's Depression book, just to get another point of view.
In the beginning of the Krugman talks about a baby sitting co-op, which is pretty much the same story he has used here [...] and he says the fix for the recession this co-op has was to simply print more money. He further expands the point to say all recessions can be fixed by printing money.
The problem with the story is that the co-op was a one good, fixed price system that doesn't come close to describing a real economy. Further more, the problem experienced in the co-op could have been resolved simply by allowing people to charge as much as they wanted or by offering other services in exchange for babysitting or even by buying babysitting on credit, i.e. promising to babysit two times in the future in exchange for someone babysitting tonight.
The other problem with this story is that the effects of inflation are not addressed (increasing the supply of money is inflation). Let's say we decide to print money to fight our way out of our current economy. Let's say the FED decides to print every person in the world a billion dollars. After everyone has a billion dollars, Krugman would say no one would hoard money and that everything will be wonderful. But would it really be? How many people would stay home from work since they are now billionaires? How many people would quit their jobs altogether? If people are quitting their jobs, what is going to happen to the supply of goods? Certainly, the cost of all goods in existence would be much higher. After all, it will cost much more to employ people to produce and sell goods. No one is going to flip burgers in a fast food restaurant for $8.00 an hour when they are billionaires. No way. I am not sure what the new price would be but it would be much higher. The result of increasing the money supply in a real economy is higher prices and a reduction of supply. Goods and services simply have less value now that more money is in the economy.
I haven't finished the book yet but based on his analogy and his stated idea for fixing a depression, I have to rate the book a one. I am going to finish the book and if I think he deserves a higher score, I'll rate him again.
26 of 72 people found the following review helpful
on September 21, 2009
Paul Krugman advocated the depression economics back in 2002-2003 when he called for even more debt and consumption and spending which contributed to our current crisis.
"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
Paul Krugman August, 2002
I do not understand why this guy still has any credibility. He believes that you can print or spend wealth into existence which is utter nonsense.
He also said the 9/11 attacks were good stimuli in his 9/14/01 NYT article because they'd require rebuilding, which is not only RUDE and shameful, but WRONG.
If that was true then why din't we nuke the entire world to provide world stimulus.
1 star, for Krugman's belief in Keynesian fallacies.
13 of 58 people found the following review helpful
on February 22, 2011
This is the first time in my review series on the financial crisis of 2008 that I am doubling up by covering two books in one review. On the other hand, neither of these books are specifically about the 2008 crisis either, though neither of them would have come out if it were not for the crisis. On one hand, we have a re-tread from Paul Krugman of his 1999 bomb, The Return of Depression Economics. Originally written to evaluate Japan's disastrous decade, Krugman re-worked the book in 2008 to lay out his prescription for what plagues the U.S economy (and when I say he re-worked the book, what I mean is that he added about 10 pages through one additional chapter). It should be no surprise that in both cases (Japan then, and the U.S. now), Krugman says that the entire issue comes down to "aggregate demand". And for a committed Keynesian like Krugman, this demand can only be created by the federal government during tough economic times. The private sector goes into retreat, foolishly trying to protect their own interests. But with the right amount of deficit spending and government stimulus, demand can be re-ignited, and the overall economy can be saved from the pains of recession. We can drink all night, and not even need Aspirin in the morning. What a deal ...
And what a farce.
I am not going to let the fact that Paul Krugman is one of the most belligerent, lazy, disproven, toxic "economists" in the world today get in the way of this brief review. The reason I am including Hunter Lewis's book in the review is that this is not really a critique of Krugman at all, but really a broader critique of the true source of his line of thinking: the deceased British economist, John Maynard Keynes.
In 2002, Paul Krugman wrote, "Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble". This comes close to reflecting the honesty and self-awareness of Keynes himself who once wrote that the economy could be served by "paying workers to dig ditches and then fill them up again." Hearing Krugman advocate the purposeful creation of one bubble as a means of handling the pain of another is music to my ears. I think it is important to use the words of actual Keynesians like Krugman and Keynes himself to indict them. Rductio ad absurdums are fun, but they are not fun when they are really lame straw men. However, accusations of straw man fallacy do not come easily when one is using someone's own words (in context) against them.
Hunter Lewis does a fine job of this in his Where Keynes went Wrong. It is not the best critique of Keynes I have ever read, but it does include more anecdotal proof of what Keynes said and believed than anything I have seen. Keynes was a radical statist, probably guilty of more eccentric and inconsistent economic posturing than anything else. Lewis feels no need to let Keynes off the hook for his remarkable hypocrisy, and he doesn't. My complaint is that the book is quite hard to read from a formatting standpoint. Though Lewis was trying to make it easier for readers, it didn't work. But complaints about layout notwithstanding, the book is a valuable reference for those who want to see in Keynes own words what he really believed. If two generations of Presidents are going to buy into his premises and conclusions about economic theory, the least we can do is better understand the man and the economic philosophy guiding American leadership. Suffice it to say, you will exit your study of the subject rather convinced that our own leaders have not themselves studied it.
To throw in my own contribution to the subject, Krugman and Keynes are wrong in premise #1, which is that a third-party entity, namely, the federal government, is more qualified to determine what to spend and when to spend it, than the actual market participants themselves who may be increasing or decreasing their own activity. Any drunk who tries to solve a hangover with more booze leaves himself with a bigger problem: an even worse hangover. Krugman and Keynes, however, end up in such a ridiculous economic place because their very first premise is so tragically flawed: faith in the wisdom of the almighty state to make these decisions for us all.
Of course there is another tragic flaw in the most fundamental of Keynesian beliefs, and it might even be worse than the fact that the state is not qualified to do what they have ordained them to do. This flaw is: the government can not do what they have asked them to do, because they do not have any money. The only way for the government to try and make up for what the private sector is doing (or not doing) is to take from or borrow from that very private sector. This is fine (even if I do not like it) as a collectivist political philosophy, but it does not help those looking for genuine economic recovery solutions. Krugman now states that the $800 billion stimulus President Obama signed into law has been such a huge failure because it was not big enough. This is "convenience" economics, which rhymes a bit with Keynesian economics. Spend and borrow. If that does not work, spend and borrow some more. Repeat ad infinitum. Die before your children come seeking your head.
Those last few sentences truly do summarize the economic philosophy of nobel-winning Paul Krugman and his mentor, John Maynard Keynes. In reality, the solution for falling prices is, and always has been , falling prices. For when prices fall, they end up finding buyers. Producers and consumers do business on their own terms. When the government decides that they will "help them along", they need neither "help" them, or move anything "along". Anything, that is, besides the national debt.
I believe that one of the great aftermaths of the 2008 financial crisis will be the final nail in the coffin for Keynesian economics. We are coming out of that recession with far, far more debt than we had going in (debt that has to be paid back, and probably in a much higher interest rate environment than we are in now), and yet there is not an iota of evidence that the government-sponsored spending played any role in the economic recovery. This has been a recovery driven by globalization, by corporate earnings, and by economic decision-making. The government's own actions have done nothing but impede that very recovery, not advance it. The 1970's were supposed to be the end of the Keynesian experiment. The 1980's and 90's should have been. I suspect that as long as we have big-government-collectivism we will always have the convenience of Keynesianism to fall back on ("Dear Americans, times are so tough, and we are so determined to do something, and not be like Japan, that we are going to go back to the old Keynesian formula of inane government spending again"). I wish these people would stop. We would not need to try and ease the pain of a bubble burst if these people would quit creating bubbles (and now I am talking both to the Keynesians and politicians in D.C. as well as the Greenspans of the central banking world who all seem to bathe in the land of unintended consequences). We are in need of some real grown-ups in Washington D.C. to make some very tough political decisions. And beyond moral fortitiude and mental maturity, we are doing to need them to have been educated at the feet of some other economist than John Maynard Keynes.