Whether or not you agree with Paul Krugman (I'm mostly in agreement...I think), one thing you have to say about him is that he's been constant (relentless even) in his thinking in regard to how to address the recession. His latest New York Times Op-Ed piece nicely sums up just what his thinking is:
[W]hen the economy is deeply depressed, the usual rules don’t apply. Austerity is self-defeating: when everyone tries to pay down debt at the same time, the result is depression and deflation, and debt problems grow even worse. And conversely, it is possible — indeed, necessary — for the nation as a whole to spend its way out of debt: a temporary surge of deficit spending, on a sufficient scale, can cure problems brought on by past excesses.
I have two comments:
- those who acknowledge that World War II ended the Great Depression can't at the same time claim that the stimulus had no effect and that government spending never helps.
- one of the reasons why most people soured on deficit spending, a fact Paul Krugman bemoans in the piece, may be that it was used and abused when the economy was not in a serious slump. Which of course should not justify not using it when it is sorely needed.
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