The Speed Read: Paul Krugman’s ‘End This Depression Now!’
On inflation:
Krugman calls inflation “the phantom menace” — a necessary part of a healthy recovery that economists and policymakers sweat for no reason. “All that inflation fearmongering has been about a nonexistent threat,” he writes. “Underlying inflation is low and, given the depressed state of the economy, likely to go even lower in the years ahead. And that’s not a good thing. Falling inflation, and even worse, possible deflation, will make recovery from this depression much harder.”
On the debt:
While tea partyers — and, increasingly, Democrats and President Obama — focus on reducing deficits instead of reducing unemployment, Krugman says rumors of American insolvency are greatly exaggerated. “There was and is no evidence to support the shift in focus away from jobs and toward deficits,” he writes. “Where the harm done by lack of jobs is real and terrible, the harm done by deficits to a nation like America in its current situation is, for the most part, hypothetical.”
On Obama:
Krugman is frustrated by the president’s willingness to accommodate conservative deficit hawks. “Those who had more or less the right ideas about what the economy needed, including President Obama, were timid, never willing either to acknowledge just how much action was required or to admit later on that what they did in the first round [of stimulus] was inadequate,” he writes. “People with the wrong ideas . . . were vehement and untroubled by self-doubt.”
On Ben Bernanke:
Saying that the Federal Reserve chairman hasn’t learned from the Great Depression, Krugman invokes a much-loathed “Star Trek” villain. “Bernanke was assimilated by the Fed Borg,” he writes. “The pressures of groupthink and the lure of camaraderie pushed Bernanke over time into a position that gave higher priority to keeping the Fed’s goals modest, thereby making life easier for the institution, than to helping the economy by any means necessary.”
On Alan Greenspan:
Krugman takes the former Fed chairman to task for his failure to anticipate the financial crisis and his post-Lehman hubris. “Just after Lehman Brothers fell, Greenspan declared himself in a state of ‘shocked disbelief,’ ” Krugman writes. “By March 2011, however, he was back to his old position, calling for a repeal of the (very modest) attempts to tighten financial regulation in the wake of the crisis. . . . Hey, what’s an occasional world-economy-destroying crisis?”
On Robert Rubin:
Krugman criticizes Rubin, the Treasury secretary who oversaw financial deregulation under President Bill Clinton, for his ties to the banking industry that scored him a job at Citigroup. “I’ve met Rubin a number of times, and doubt that he’s a bought man — if nothing else, he was already so rich that he didn’t really need that postgovernment job,” he writes. “Still, he took it.”
On CEOs:
Unconvinced that highly compensated chief executives add value to companies, Krugman takes aim at corporate overlords. “For the most part, we’re looking at executives at firms that they didn’t themselves create,” he writes. “They may own a lot of stock or stock options in their companies, but they received those assets as part of their pay package, not by founding the business. And who decides what goes into their pay packages? Well, CEOs famously have their pay set by compensation committees appointed by . . . the same CEOs they’re judging.”
On voters:
Worried that opinion polls have too much sway over lawmakers, Krugman believes that the public would embrace unpopular policies once they saw them in action. “What they notice, and vote on, is whether the economy is getting better or worse,” he writes. “What this says — a lesson that the Obama team unfortunately failed to learn until very late in the game — is that the economic strategy that works best politically isn’t the strategy that finds approval with focus groups, let alone with the editorial page of the Washington Post.”
— Justin Moyer, Outlook editorial aide
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