Thursday 31 May 2012
Krugman - on just about everything
Nobel Laureate Paul Krugman's visit to Britain has given rise to a number of interviews and articles. Click here here to read a full transcript of his very wide-ranging interview with the Independent's Ben Chu. Seperately, in a piece reprinted by Social Europe Journal from the New York Times, Krugman takes a look at that mythical Irish creature, austerity-generated recovery.
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3 comments:
It must be a commentary on our age that an an economist of Prof. Krugman's eminence and capability can succeed in distilling the enormous breadth and depth of Keynes's liberal principles, intellectual insights and policy prescriptions into a cliche: "when all sectors in the economy are saving or deleveraging, governments should spend and central banks should print money without restraint."
The problem is that many governments spent the money when they should have been saving and - even more seriously and stupidly - gave their banks free licence to deliver a mountain of credit to private firms and individuals (a form of 'privatsied Keynesianism') that created asset bubbles.
And even worse - and something of which Prof. Krugman seems have to little awareness (probably not surprising given reasonably efficient and well-functioning product and factor markets in the US) - is that governments in the most severely afflicted EU member-states presided over extremely dysfunctional product anf factor markets.
It is not only in Ireland that Colm McCarthy's injuction rings true: "Fix the fiscal deficit, fix the banks and redcue the cost base of the economy". The last is the most difficult; is the most likely to encounter vocifeous opposition from the well-heeled and well-embedded vested interests; but is the most effective means of kick-starting economic recovery.
By not looking more closely and carefully, I fear Prof Krugman does neither himself nor his audience a great service.
Only in Ireland would McCarthy's saloon bar punditry be offered as wisdom, Krugman's thoughtul analysis dismissed as careless.
I see the fine traditions on this blog of free-thinking, engagement and debate are being upheld. If you can't engage with the thrust of a comment, ignore it, or suddenly find that you haven't time to engage or, better still, have a snide swipe from the safety of anonymity.
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