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Essential Reading: The Truth about the Ongoing Depression,
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This review is from: End This Depression Now! (Hardcover)
End this Depression Now contains Paul Krugman's analysis and prescriptions for the crisis that has gripped America and the world since 2008. The book is very readable and accessible; Krugman is skilled at using descriptive narrative and analogies while avoiding technical jargon.
The most important aspect of the book is its focus on the on-going jobs crisis. Krugman clearly understands that, as far as most average people are concerned, access to a good job and decent wages are the most important gauge of prosperity. The book does a great job of highlighting the devastating human costs of the current unemployment crisis, especially for younger people who are just entering the job market and are unfortunately likely to feel the impact not just in the short term, but throughout their entire careers.
Krugman shows how a lack of demand for products and services is keeping us in the current depression and may ultimately cost us at least $5 Trillion (and perhaps much more) in lost productive output and earnings. He also explains the "saltwater v. freshwater" rivalry in economics and suggests that conservative economists who argue against action to revive the economy are ignoring reality and relying on a "quasi-religious" faith in markets. Next he looks at how soaring income inequality resulted in policies such as excessive deregulation of the financial industry that directly led to the crisis. There's also a section on the problems in Europe and the role a common currency has played.
Krugman argues effectively that the stimulus was insufficient and that we need more spending on infrastructure as well as more action by the Fed and revised rules to make it easier for homeowners to take advantage of low mortgage rates. As he points out, getting the economy growing and improving the job market should be our TOP PRIORITY. The best way to avoid a long term debt crisis is through economic growth. Austerity is going to make things worse, not better. (Evidence of this is already obvious in the UK economy after stringent austerity measures).
The one thing that I dislike about the book is Krugman's willingness to sweep aside any discussion of structural, technological issues in the job market. There is no doubt that today's technology is having an impact, and not just for low skilled workers. That impact will only become more important in the future.
Liberals are often very quick to dismiss any talk of structural employment issues because they believe (probably with justification) that conservatives will grasp onto that issue and use it as an excuse to do nothing. However, that does not have to be the case; it should be possible to have an active policy response and still incorporate an awareness of the changes occurring because of rapidly advancing technology.
Nonetheless, the cyclical issues that Krugman talks about are certainly the most important immediate term consideration, and everyone would do well to read and understand this book. This crisis does not have to continue ruining lives and destroying the prospects for our young people. We can do something about it if we have the political will.
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Showing 1-10 of 133 posts in this discussion
Initial post: May 8, 2012 10:51:01 PM PDT
James G McCarthy says:
I have only one minor problem with your review. You say
"The one thing that I dislike about the book is Krugman's willingness to sweep aside any discussion of structural, technological issues in the job market. There is no doubt that today's technology is having an impact, and not just for low skilled workers. That impact will only become more important in the future."
As Krugman points out, this is a separate issue. Although it needs to be addressed it has little to do with the lack of demand that is devastating our economy now. He wants to end the recession NOW, which is a short term goal. Addressing structural issues is long term, and will be far easier in a better economy.
In reply to an earlier post on May 14, 2012 8:23:14 AM PDT
Sea Rover says:
"The United States and the European Union have a combined market of 830 million of the wealthiest consumers in human history. That is the golden prize that we offer entrepreneurs, and it is not unreasonable of us as a society to ask them to pay, through taxation, an entry fee for access.
Many on the political right will look aghast at such ideas as socialist or "big government." They should look to history. From the Industrial Revolution onward, it has been progressive politicians of the center and left who have adjusted capitalism to save it from revolution. Mill owners said an eight-hour day wasn't economically viable. Plutocrats said banning child workers or slavery would destroy the free-enterprise system, and that the welfare state would end capitalism.
But is it a coincidence that the period of intervention in the free-market system, not to control it but to regulate it, has been the period of its greatest triumph? During the U.S.'s golden age of the 1950s, oft harked back to by conservatives, the top marginal income tax rate was an eye-watering 91% under that well-known arch-pinko Dwight Eisenhower. From the creation of National Insurance in 1911 in the U.K. to FDR's New Deal to Clement Attlee's welfare state in 1945 to Johnson's Medicare and Medicaid in 1965 to Obama's saving of General Motors, the center-left across the West has taken just enough cream from the top to fund the social stability that is vital for the free-enterprise system to prosper in.
In short, is it the progressive and thoughtful centrists who will once again save capitalism?" -Marketwatch quoted. BUY THIS MAGNIFICENT BOOK!
In reply to an earlier post on May 17, 2012 12:07:35 PM PDT
I have not yet read this book, but you've answered one of my questions about it. Technology is having a huge impact. It's wiping out whole industries. Not only is technology allowing businesses to be more efficient with fewer people, it's allowing businesses to offshore workers, including educated white collar workers at a shocking pace. It deserves discussion in a book about the economy.
Posted on May 23, 2012 9:10:13 AM PDT
Last edited by the author on Jun 10, 2012 5:03:05 AM PDT
EASY TRAVELER says:
What everybody leaves OUT is the fact that manufacturing and it's jobs has shifted to China, Vietnam, Mexico, and ANYWHERE but here!
New law 1: If you want to sell it here you have to make it here.
New law 2: You can't poison the air, water, soil, the people working for you and the people buying from you. (Regulation)
New Law 3: You have to pay taxes.
New law 4: We the people WILL take care of Health Insurance and Retirements.
New law 5: If you game the system i.e. cheat, rob, steal, you lose everything you have and you spend 25 years in a Federal jail. (Regulation)
New law 6: Until further notice any and all tax deductions, credits and allowances are null and void. We got into this mess together and together we're GOING to get out of it!
Oh WAIT, this is the exact opposite of what the goofy conservatives want to do! Does that tell you anything???
In reply to an earlier post on May 31, 2012 6:04:14 AM PDT
Charles Maurer says:
"The US debt just passed 100% of GDP in February. But if you factor in state and local debt, and the GSE's Fannie Mae and Freddie Mac, our contractual, binding debt obligations today stand at 170% of GDP. That's the same as Greece before its default. So that's a problem."
-- Rob Arnott
In reply to an earlier post on May 31, 2012 1:31:48 PM PDT
M.K. Reiner says:
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crises should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
-Ludwig Von Mises
In reply to an earlier post on Jun 4, 2012 5:10:37 PM PDT
In reply to an earlier post on Jun 9, 2012 8:56:24 AM PDT
[Deleted by the author on Jun 9, 2012 8:57:34 AM PDT]
Posted on Jun 14, 2012 3:09:43 AM PDT
Last edited by the author on Jun 14, 2012 3:12:07 AM PDT
Julian Jaynes says:
There is a difference between public sector and private sector employment. Imagine:
I am the owner of a company. I hire a worker. Why? Because I think that worker will make me money. The way they make me money is by increasing the value of the goods or services my company provides to other private individuals or companies. Maybe the worker is someone who will add database functionality to applications my company designs for cell phones. Maybe they carve ornaments onto furniture I sell. Whatever it is that worker does, the owner will evaluate whether it is increasingly their bottom line, and yes they will factor in things like health care costs, matching SS taxes, etc. into that decision. If the employee adds value, they are kept. If they add substantial value they are given a raise. If they don't add value they are fired. That's how a private company works. Successful private companies are only successful because they make a society more wealthy.
I am a politician. I direct funding and contracts to a company or individual. I do so because they will reward me with campaign contributions or because my constituency loosely supports these sorts of initiatives (although not enough to spend their own money on them). I don't care whether the company is efficient, profitable or productive. Example? Solyndra. The government spent $500M of our (tax payer) money so that Solyndra could hire 1,000 people for one year and build a big building. After that year, everyone was fired and the building junked. NO value was created. In general, public sector investment does NOT make the country wealthier.
People like Krugman and the reviewer (and most of the other commenters) don't understand this very simple concept. They think that if only we would take $1T and fund 2000 Solyndras and create 2M jobs for one year things would be better. They wouldn't. We would still have wasted $2T of our money to accomplish nothing.
Except it gets worse. Those 2M workers could have been trying to find real, productive work instead of wasting their time. And someday our children would have to pay that $2T back. And what would they use? The discarded old buildings that were never functional? The TVs consumed by the workers who were hired to do nothing?
That's what politicians do. They sell our children's future to buy votes today. Take a step back and understand how and why this happens. And don't fall into the trap.
In reply to an earlier post on Jun 15, 2012 5:56:18 AM PDT
EASY TRAVELER says:
Julian Janes, what you leave out or overlook is the fact that since Richard Nixon and Ping Pong diplomacy MILLIONS of USA jobs have gone to China. In fact those wonderful employers seek out the cheapest labor they can find. Add cheap apathetic labor and the cheapest materials you can find and you get.... Wal-Mart! There are very few good paying jobs in the USA. The object of a job is to earn enough to live on the economy here. Those old jobs did that. There was nothing wrong with that arrangement! Of course the greedy few did not like it. Their view is if you pay anything for labor you paid to much. The greedy few hate to pay taxes. Taxes are for "little people"! That is where we are today!
I do agree with you on Politicians! Yes, this is a total waste. Now ,it's all about them! THAT"S what we need to fix...
I love my country. I hate what's been done to it the last 40 years. Not everyone can become a business person. Not everyone can be an over paid "professional". The bulk of "other people" punch a clock for a living!