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Essential Reading: The Truth about the Ongoing Depression
, April 30, 2012
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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