from c&l:
It's the strangest thing, to listen to two intelligent progressives talk about the economy without using talking points or jargon, isn't it?
Since Krugman has a new book ("End This Depression Now!"), he's out making the rounds on all the talk shows and it's so refreshing to hear him speak at length. It appears that His Shrillness is finally making some inroads with the Very Serious People, despite the austerians who still insist the obvious path to fiscal health is to cut harder! Faster! Longer!
This Bloomberg piece points out his position and that of other economists like Joseph Stiglitz and Larry Summers are beginning to filter into the European power centers:
Europe’s shifting emphasis from enforcing austerity to seeking economic growth marks a hollow victory for Nobel laureate Paul Krugman.
“I wish I’d been wrong for the sake of the world,” Krugman said in an interview with Bloomberg Television’s Carol Massar. “You can see that there has been a definite shift in opinion.”
The euro area’s push to revive confidence in its economy and financial markets by attacking budget deficits will be challenged at the ballot boxes of France and Greece on May 6 as the region’s economy skids toward its second recession in three years and unemployment nears 11 percent.
Leading demands for a revised strategy, French Socialist Francois Hollande, a reader of Krugman, tops President Nicolas Sarkozy in the polls with the warning that putting debt-cutting over expansion is “bringing desperation to people.” Elsewhere, Greeks are turning to anti-austerity parties, recession-wracked Spain and Italy are relaxing deficit targets, the Dutch government is splintering and European Central Bank President Mario Draghi is calling for a “growth compact.”
The U.K., which the International Monetary Fund reckons accounts for a third of the budget cuts in the 10 largest European Union countries, is already back in recession.
“You can’t do deficit reduction without the people” understanding and endorsing it, said Paul Martin, who as Canada’s finance minister through most of the 1990s turned a C$36 billion ($36 billion) shortfall into a surplus in three years. “Deficit reduction has to be balanced with growth and it’s pretty clear Europe (BEBANKS) has lost that balance.”
The debate has split policy makers, investors and academics alike as Europe pursued a cocktail of tax increases and spending cuts to beat a sovereign debt crisis that raged from Greece through Ireland and Portugal to the very heart of the single currency bloc.
[...] “Francois Hollande has read Krugman,” Michel Sapin, one of Hollande’s economic advisers, said in an interview. “His writings show that Hollande’s proposals are not a whim and that this idea that growth is key is spreading.”
To Krugman, advocates of fiscal retrenchment such as German Chancellor Angela Merkel are ideological “austerians” who by misunderstanding the ills they’re trying to cure risk “Europe’s economic suicide.” He calculates that paring government spending by one euro ($1.32) generates only about 40 cents in reduced debt in the short-run and 1.25 euros in lost production.
“Aggressive fiscal austerity is self-defeating if you can’t grow,” said Andrew Balls, the London-based head of European portfolio management at Pacific Investment Management Co. (PTTRX), which oversees the world’s largest bond fund. “Krugman is a highly respected economist with a prominent platform who provides a very clear explanation of that view.”
20 Comments
dystopianfuturetodayKrugman's new book is great.
siftbotBoosting this quality contribution up in the Hot Listing - declared quality by dystopianfuturetoday.
Double-Promoting this video and sending it back into the queue for one more try; last queued Sunday, May 6th, 2012 11:30am PDT - doublepromote requested by dystopianfuturetoday.
aaronfrRight at the end there, Krugman advocates bringing labor back as if it were a government policy which could be simply enacted. While I agree that we need to repeal a variety of laws which have restricted and broken up labor unions, government policy doesn't 'create' unions. Advocating for an increase in minimum wage and healthcare coverage, as they do, is a policy position. Labor is only effective if it is coming from the people, if there is a massive, popular push for these things. Government can grant this or that all they want, but until the great mass of workers actually stand up and fight for themselves, labor unions won't be back.
brycewi19Krugman really should be Obama's next financial policy adviser.
Kallesays...That was great..
Boise_Lib>> ^aaronfr:
Right at the end there, Krugman advocates bringing labor back as if it were a government policy which could be simply enacted. While I agree that we need to repeal a variety of laws which have restricted and broken up labor unions, government policy doesn't 'create' unions. Advocating for an increase in minimum wage and healthcare coverage, as they do, is a policy position. Labor is only effective if it is coming from the people, if there is a massive, popular push for these things. Government can grant this or that all they want, but until the great mass of workers actually stand up and fight for themselves, labor unions won't be back.
"...We need to recreate an environment in which union organizing is possible." (8:10).
I live in a "Right-to-Work" state and he's absolutely correct.
The list of ways in which unions are disabled by laws and government regulations (passed and enacted by predominately conservative state congresses) is too long for this comment.
Mikus_Aurelius>> ^Crooksandliars:
Leading demands for a revised strategy, French Socialist Francois Hollande, a reader of Krugman, tops President Nicolas Sarkozy in the polls with the warning that putting debt-cutting over expansion is “bringing desperation to people.” Elsewhere, Greeks are turning to anti-austerity parties, recession-wracked Spain and Italy are relaxing deficit targets, the Dutch government is splintering and European Central Bank President Mario Draghi is calling for a “growth compact.”
.
This attitude strikes me as totally bogus. We think the European voters are voting on macro-economic policy? They're throwing out governments because they're unhappy, and they're installing people who promise them higher spending because they like having the government that spends money on them. Italy and Spain aren't revising their deficit targets because of some new found economic enlightenment, they simply lack the willpower or competence to live within their means.
Maybe stimulative policies are better than austerity. I'm not an economist, so I don't know. What I do know is that voters and politicians haven't stopped being short-sighted.
lantern53says...When Bush was president, Krugman opposed financial bailouts.
Now that Obama is president, he changed his mind. We aren't spending enough.
So...
RFlaggGreat stuff. I really don't understand the conservative view point that to build the economy the guy we have to help is the business owner who over the course of 3 years fired over 1,000 people and didn't give the rest raises so he could have a jet, meanwhile cut the help that we give those people laid off and the others living on minimum wage for 3 years. How does that build? You don't build from the top down. You build from the bottom up. Help the people at the bottom retain more of their income, they spend that money at retailers who then soon have to hire more people, which puts more money into the system, which means shippers have to hire more, and soon the producers have to hire more... build up. The Republican base has been brainwashed into believing an economic theory that hasn't worked for over 30 years and doesn't make sense, but somehow think that sooner or later it will, and to skip stuff that makes logical sense and been proven to work.
rbarThe Dutch government fell because 1 of the 3 leading parties is a radical right party and only does what is popular, not what is smart.
What always surprises me is there is a debate about spending or not in the first place. Spending may or may not help us out of the mess, but its the policies that got us into this that should finally be looked at.
On top of that, the spend more philosophy is a hard one to defend. There is no good evidence it does anything but raise the debt the government is in. Every time it has failed, the believers simply say that it was even more that was required. When it didnt fail, was it truly due to more spending?
In the past, when everyone was still more or less isolated gaining more government debt was fine. You could always print more money. Today the inflation and especially devaluation vs other currencies will make your troubles worse.
Edgeman2112Temporarily waving the requirement to have 20% equity to refinance at a lower rate will only put us back into the position we used to be in. If people can't pay a mortgage, it's still no use. It's likely better for the individual family to leave instead of paying for a property that had its value slashed.
That, and the loss will be put on the back of the taxpayer. The bank won't take it.
bmacs27says...Why does everyone think the debate is "spend more" or "spend less?" The debate is "spend when?" Keynesians vie for counter cyclic public spending policies. The problem is that nobody wants to be Keynesian when the economy is booming. Instead, they all want a tax cut on top of all the same benefits they've been granted.
lantern53says...RFlagg have you ever run a business?
I doubt it.
dystopianfuturetodayKrugman didn't oppose the bailouts. >> ^lantern53:
When Bush was president, Krugman opposed financial bailouts.
Now that Obama is president, he changed his mind. We aren't spending enough.
So...
ChaosEngine>> ^lantern53:
When Bush was president, Krugman opposed financial bailouts.
Now that Obama is president, he changed his mind. We aren't spending enough.
So...
Citation needed.
Krugman, as he states in the video, felt the bailouts were necessary, but that the "other side" (I.e. mortgage reform) was missing.
Spacedog79says...The question should not be austerity vs spending. It should be who gets to issue money and charge interest on it, the people or the banks? The power to issue a nations money is the single most powerful economic tool it has, and the banks have shown they clearly cannot be trusted with it. It is what gave them the power to cause the mess we are in now. Everything else is a distraction which amounts to choosing how quickly we all get in to complete debt servitude to them.
I suppose it is hardly surprising that in a world run by banks such a fundamentally important issue never gets so much as a mention in the media or by mainstream "experts" like Krugman.
renatojjsays...Bizzaro world.
kymbos"This video is private"?
Is that blocked or dead?
oritteropo*dead
>> ^kymbos:
"This video is private"?
Is that blocked or dead?
siftbotThis video has been declared non-functional; embed code must be fixed within 2 days or it will be sent to the dead pool - declared dead by oritteropo.
Discuss...
Enable JavaScript to submit a comment.