Thread: Paul Krugman: Why would anyone bother to listen to him?

Originally Posted by attaboy

They're afraid people will realize that the quickest most efficient way to stimulate the economy is to provide tax cuts

Extending the Bush tax cuts to those earning above 250K has negligible Multiplier effect on the economy (as shown after they were instigated in the first place), but a very tangible effect on the Deficit. No true deficit hawk would support this, but the GOP are far from being deficit hawks.

With the post election balance of power, 'Krugmanism' is out of the window now anyway. It could indeed have helped- there are plenty of examples of this, from the New Deal to 'Thaksinomics' to the recent Chinese government stim. But concerns over the growing US deficit are also valid, and there is always a degree of uncertainty how effective another government stim would be.

So dear Paul has painted himself into a bit of a corner, unless he's an accurate Doomsayer. Divided Houses & Pres Office have been the norm in US politics for a long time- so Krugmans advice to 'be very afraid' isn't the sort of stuff for which he won the Nobel. Hopefully.

He's not exactly optimistic on the Fed's move either-

Think of it this way: Mr. Bernanke is getting the Obama treatment, and making the Obama response. He’s facing intense, knee-jerk opposition to his efforts to rescue the economy. In an effort to mute that criticism, he’s scaling back his plans in such a way as to guarantee that they’ll fail.

And the almost 15 million unemployed American workers, half of whom have been jobless for 21 weeks or more, will pay the price, as the slump goes on and on.
http://www.nytimes.com/2010/11/08/op...rssnyt&emc=rss

And of course he thinks Stim 1 was much too small- although it still saved 3.5mm jobs, and appears to have profitably bailed out the big banks & auto industries. So at the moment he's sitting in the peanut gallery moaning about what should've been.

The Chinese infrastructure projects were probably already slated. I don't trust a word out of the Chicom leaderships edicts. As far as the New deal goes. It didn't do much other than provide hope.

WWII lifted the economy.

Mr. KRUGMAN: You know, to a large extent, it's more important that it gets spent somehow than where it gets spent. But we clearly have really big needs in infrastructure. I mean, it's just crazy that we're talking about possibly canceling a much-needed tunnel under the Hudson River, at a time when we have mass unemployment. And those construction workers, if not employed building that tunnel, will not be employed doing anything else.

Jobless After 50? You May Be Out Of Luck : NPR

Attaboy, just blow the dough and it will naturally wind and find its way.


I'm told deficit spending during WWII pulled us out of the Depression. And what happened after the war? Federal spending was reduced dramatically.



What kept the economy rolling? Domestic demand? European demand via the Marshall Plan? What is going to pick up the slack after the present Obama stimulus package shoots its wad? Chinese demand? The Chinese xenophobes aren't going to buy from the US. They are busy developing their own domestic demand so they can maintain their insular ways.

On a side note can we safely call the Chinese racists? Racism against the Japanese is institutionalized and promoted. Americans are depicted as lumbering giant brutes once defeated by the slight and nimble Chinese, the hulking giant become an amiable ally taking his position at the side.