Paul Krugman is off on a typical rant this morning in the New York Times.
He observes that unemployment will probably grow in the years ahead but
says that there is "growing evidence that governing elite just doesn't care?"
Of course they care! They care for their own skins in the coming years.
Every conceivable type of government cares about unemployment, and has done
so throughout history if it wants to maintain power and sleep easy.
Paul Krugman refuses to entertain the idea that high and growing
unemployment is structural. Why? Because, even after writing hundreds of
op-eds over the years, he still thinks that Keynesianism can supply the
solution. It might have done so in the 1930s when there was still a large
tranche of still-expensive consumer goods awaiting mass production and
purchase by a substantial proportion of the population. That's no longer
the case. There's no long line of desirable consumer goods visible ahead of
us. As regards existing goods, automation still proceeds.
So "Congress is sitting on its hands" is it? And the Fed is not repeating
inflation out of some sort of malignant obduracy, is it? (At least there
are some officials who learn from their mistakes!) What's needed is not
emotionalism on Krugman's part but some objective analysis in order to
restore his status as a Nobel prize-winning economist and not a tub-thumper.
Well, I'll give him some pointers. What we need -- and pretty soon, too --
is a total currency reform so that all advanced governments can write off
their existing debts and not cripple our children and grandchildren with
paying for their profligacy in the past few decades. And, from then
onwards, a currency system that will make governments keep to sensible
annual budgeting. We also need a substantial educational reform so that
there'll be a demand pressure to expand or share the most interesting and
highly-paid jobs. We also need substantial administrative/political reform
so that we don't have a system whereby politicians have to selectively
bribe this or that section of the electorate in order to remain in power.
Keynes himself said something to the effect that governments always fall
prey to outmoded ideas of a previous generation of economists. Well . . .
that applies to economists, too.
Keith
Keith Hudson, Saltford, England
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