Paul Krugman: The Austerity Decision

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    Paul Krugman: The Austerity Decision

    http://www.nytimes.com/2011/03/25/op...gman&seid=auto

    Is he right? Is he wrong? Why?
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    yes

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    woodsrider's Avatar
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    Don't know if he is right or wrong because he offers no evidence to back up his claims. He is basing his opinion almost entirely on the fact that Irelands unemployment is 13.5% since 2009 when they started cutting the deficit. What was it in 2009? What else has changed since then? Did they raise taxes? Like I said he offers nothing to back up his opinion.

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    He is spot on. This is a time for big spending on infrastructure. We have roads, sewers, rail and bridges that we need to build and that we will build at some point. The only question is when we build them. Why not build them now when we need the work. If anything they would be cheaper since the construction industry needs the work.

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    FDR had a massive government run jobs program that never ended the Great Depression. Why do you think it would work today?
    And please do not use that old line "they didn't spend enough'. If an individual does not have money, borrowing and going deeper into debt is not the answer.
    It will not work on a larger scale either.

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    Quote Originally Posted by Trinity alum View Post
    He is spot on. This is a time for big spending on infrastructure. We have roads, sewers, rail and bridges that we need to build and that we will build at some point. The only question is when we build them. Why not build them now when we need the work. If anything they would be cheaper since the construction industry needs the work.
    I was channel surfing yesterday and watched part of a program called something like "The Crumbling of America". Very disturbing just how poor a condition our infrastructure is in.

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    Quote Originally Posted by mcpapa View Post
    I was channel surfing yesterday and watched part of a program called something like "The Crumbling of America". Very disturbing just how poor a condition our infrastructure is in.
    While that may be the case, government job programs do not revive the economy. They cost money and to pay for them taxes are usually raised, instead cutting other programs. The higher taxes take money from those who might invest in businesses or others do not buy goods, because they have to pay their higher taxes

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    Quote Originally Posted by bballfamily View Post
    While that may be the case, government job programs do not revive the economy. They cost money and to pay for them taxes are usually raised, instead cutting other programs. The higher taxes take money from those who might invest in businesses or others do not buy goods, because they have to pay their higher taxes
    People are not investing because people are not buying stuff because everyone is being 'austere'. Supply side economics functions only if people are working and can buy the 'supplies' that are there. If people are not working, or they are making less money because of furloughs, etc., then they are not going to buy things and the economy is not going to improve. Companies that have laid people off are functioning with the more streamlined workforce (working time and conditions have deteriorated for those still there) so they are not going to start hiring people until they start selling more stuff. If people aren't working and don't have money then they aren't going to buy things so more people are going to be laid off. Unless someone starts putting money back into the economy it is only going to get worse. I don't see how folks think it will get better by simply cutting spending and paying down the debt. That makes the economy worse. We have had serious tax cuts in place since 2003 . . . I say we go back to the tax rates of the Clinton years and then start rebuilding our infrastructure and I will bet the economy will revive. And to suggest that the WPA and other programs from FDR did not help the economy is simply not true. Those programs may not have ended the depression, but they sure as heck mitigated it.

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    Quote Originally Posted by acemona View Post
    People are not investing because people are not buying stuff because everyone is being 'austere'. Supply side economics functions only if people are working and can buy the 'supplies' that are there. If people are not working, or they are making less money because of furloughs, etc., then they are not going to buy things and the economy is not going to improve. Companies that have laid people off are functioning with the more streamlined workforce (working time and conditions have deteriorated for those still there) so they are not going to start hiring people until they start selling more stuff. If people aren't working and don't have money then they aren't going to buy things so more people are going to be laid off. Unless someone starts putting money back into the economy it is only going to get worse. I don't see how folks think it will get better by simply cutting spending and paying down the debt. That makes the economy worse. We have had serious tax cuts in place since 2003 . . . I say we go back to the tax rates of the Clinton years and then start rebuilding our infrastructure and I will bet the economy will revive. And to suggest that the WPA and other programs from FDR did not help the economy is simply not true. Those programs may not have ended the depression, but they sure as heck mitigated it.
    So your fix is to take more money out of consumers pockets?

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    Quote Originally Posted by woodsrider View Post
    So your fix is to take more money out of consumers pockets?
    My idea is build some infrastructure so that workers - who actually buy things - have money in their pockets to start purchasing things. Close the loopholes on EXXON who made huge profits and GE - who paid no taxes this year. They are not consumers who buy the stuff at your local stores. Closing the loopholes is not going to cost jobs, they made BILLIONS in profits. Not saying that is bad, but if you actually get taxes from them and use it to build infrastructure that is more money in the economy, more work boots and work clothes bought, etc.

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    Quote Originally Posted by bballfamily View Post
    FDR had a massive government run jobs program that never ended the Great Depression. Why do you think it would work today?
    While it might not have ended the depression, those jobs programs built schools, roads, parks, etc. that benefited the United States for years. Why could we not do something similar today? People who suffered in the depression gained work on these projects, and while they didn't become rich they certainly developed skills that could help in the future. Instead, today's version of that spending is hand out checks to people who gain no skills. Those same people never get off the dole.

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    Quote Originally Posted by gchs_uk9 View Post
    While it might not have ended the depression, those jobs programs built schools, roads, parks, etc. that benefited the United States for years. Why could we not do something similar today? People who suffered in the depression gained work on these projects, and while they didn't become rich they certainly developed skills that could help in the future. Instead, today's version of that spending is hand out checks to people who gain no skills. Those same people never get off the dole.
    It did do those things, but it did not end the Depression. If you want to end this era of high unemployment, these massive high dolllar programs, run by the feds, are not the answer. To pay for them you have to raise taxes and take money out of consumers and business investors pockets or print money or borrow money, none of these options are good ones.
    If an individual is short of money, he does not go borrow money or run up the credit cards (kind of like printing your own money) just to buy things that look good and makes him feel good. The bills eventually come due and if he has not worked out a way to provide for more income it all collaspes.

    This is what our government is headed towards. Yet the government has history to look at to see what works and what does not. Four times in the 20th century major tax reductions were passed by Congress and economic growth followed. It was done under the Harding, Kennedy, Reagan and Bush adminstrations. The recent action to not increase taxes was actually an extension of the Bush tax cuts, hoping not to make the recession worse.

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    Quote Originally Posted by bballfamily View Post
    It did do those things, but it did not end the Depression. If you want to end this era of high unemployment, these massive high dolllar programs, run by the feds, are not the answer. To pay for them you have to raise taxes and take money out of consumers and business investors pockets or print money or borrow money, none of these options are good ones.
    If an individual is short of money, he does not go borrow money or run up the credit cards (kind of like printing your own money) just to buy things that look good and makes him feel good. The bills eventually come due and if he has not worked out a way to provide for more income it all collaspes.

    This is what our government is headed towards. Yet the government has history to look at to see what works and what does not. Four times in the 20th century major tax reductions were passed by Congress and economic growth followed. It was done under the Harding, Kennedy, Reagan and Bush adminstrations. The recent action to not increase taxes was actually an extension of the Bush tax cuts, hoping not to make the recession worse.
    our tax rates are the lowest they have been in 30 years. What consumers are losing money?

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    And when the Tappan Zee bridge falls into the Hudson River, maybe we can hire some folks to build a new one.

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    How's that increased spending worked out for us so far? Coming up on 3 years now.

    I do agree that the infrastructure needs serious attention and that would be a good way to create jobs. However, I don't think we can just add that spending to current levels. We have to offset it somewhere.

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