Attention: This is a BOOK review, not an attempt to engage in a political argument! I can understand the other thread being moved to "Economy" and merged with a different thread since the original thread did not START with a book review, but I added one about half a dozen posts into it, and this is that same review. Consequently, I would appreciate it if the review could stand instead of being buried on post #316 of another thread where nobody could possibly find a review of the book if that's what they were looking for.
I suppose that anyone who knows of Paul Krugman knows he's a columnist for economic and political matters (they're often interrelated) at the NYT, an unabashed Keynesian economist, an author of several books, and a recent recipient of a Nobel Prize in economics in 2008, as well as an occasional TV pundit. He's also routinely denounced by conservatives for many, if not most, of his positions, which is a shame considering that, regarding economic policy, he's routinely taken on Democrats as well as Republicans for years simply because he dislikes bad economic policy, regardless of which political party is pushing it. I get the impression that's because he believes that, too often, public policy is championed for reasons other than its merits. For example, sometimes people push certain policies because they benefit one group or segment of society. Sometimes it's because it's an ideological belief. Sometimes it's simply a lack of a working knowledge of both economics and the historical record of what has worked and what didn't work in previous recessions.
While I've read the occasional column by Krugman, I had never read any of his books. This particular book was just published (April 30, 2012) and it seemed timely considering the current ongoing debate on how to revive the economy. I was also struck by the title (which I don't particular like) because I perceived it as essentially a plea for attention, or at least for serious consideration. But Krugman's title is meant more to describe the human toll that the economic downturn is having on families as opposed to a textbook definition of the state of the economy.
In the book Krugman offers an explanation of our current economic crisis, how we got here, and how best to get out of it. In fact, he states several times that we really don't have to be going through this extended economic downturn at all. He offers historical perspective going back to before the great depression, and an analysis of differing approaches and offers his ideas for how best to solve our current economic problems.
The book is intentionally written for the layperson. While there are a few graphs and charts (I would have preferred more, frankly), there's no math or complicated economic theorems to make the eyes glaze over. It's basically written in a very straightforward style.
Of course Krugman discusses the concept of austerity and the notion of cutting back on national debt immediately as a way of addressing our current problems. And needless to say, Krugman is highly critical of that approach. He offers several example of how and why those policies would have the exact opposite of the intended consequences. Said plainly, Krugman states that such policies will only serve to dig us into a deeper hole. (But that doesn't mean our country won't try it anyway, does it?).
That's not to say that Krugman doesn't think that our huge debt problem needs to be addressed. He does. He just doesn't think it's anywhere near being our most pressing problem, and he offers economic numbers to support his case. And like I said earlier, he says that attacking the debt problem at the wrong time (now) will only make our worst problem (the anemic recovery) worse still.
Krugman also tackles a number of economic myths, both American and European, which he says are getting in the way of solving the economic problems simply because the decision makers don't have an accurate understanding of what the problem is. And as everyone knows, if you don't identify the core problem and how and why it developed in the first place, you're probably not going to make any progress in solving the problem unless blind luck or providence lend a hand.
One of the European myths Krugman tackles is that all the European countries are in trouble because of profligate spending. Untrue, he says. While some countries like Greece have caused many of their own problems, other countries like Spain had actually been paying down their debt relative to GDP for years when the economic crisis struck. In other words, it was the economic crisis which led to the debt crisis, not the other way around.
The one part of the book that I found particular surprising (don't ask me why) was Krugman's chapter on Austerians (Ch 11) where he gives a number of reasons why people embrace austerity. Of course ignorance of economics and history both play a role. Krugman also makes a good case that there's an emotional desire to 'punish bad nations' by making them suffer for their perceived economic sins despite the fact that they're often not at fault for the problem and that it's a counterproductive approach. But more disturbing still is Krugman's belief that powerful people have an economic interest in preventing a recovery even though a recovery would also help them as well as everyone else. If true, I guess we should never underestimate the possibility that powerful people may have suspect motives when their self-interest conflicts with the common good.
Krugman also discusses why the European Union's adoption of the Euro as a common currency is causing so many problems for Europe. For example, he points out that if all the countries still had their own currencies, countries like Greece could devalue their currency relative to the rest of Europe, and that's now that's not an option for any country that uses the Euro.
Despite all the other reasons to read this book, it's worth reading if for no other reason than to better understand the nature of the liquidity trap in which we currently find ourselves, and that's tackled very early in the book.
It's only 238 pp, and it's a great primer in understanding our current economic doldrums.
I suppose that anyone who knows of Paul Krugman knows he's a columnist for economic and political matters (they're often interrelated) at the NYT, an unabashed Keynesian economist, an author of several books, and a recent recipient of a Nobel Prize in economics in 2008, as well as an occasional TV pundit. He's also routinely denounced by conservatives for many, if not most, of his positions, which is a shame considering that, regarding economic policy, he's routinely taken on Democrats as well as Republicans for years simply because he dislikes bad economic policy, regardless of which political party is pushing it. I get the impression that's because he believes that, too often, public policy is championed for reasons other than its merits. For example, sometimes people push certain policies because they benefit one group or segment of society. Sometimes it's because it's an ideological belief. Sometimes it's simply a lack of a working knowledge of both economics and the historical record of what has worked and what didn't work in previous recessions.
While I've read the occasional column by Krugman, I had never read any of his books. This particular book was just published (April 30, 2012) and it seemed timely considering the current ongoing debate on how to revive the economy. I was also struck by the title (which I don't particular like) because I perceived it as essentially a plea for attention, or at least for serious consideration. But Krugman's title is meant more to describe the human toll that the economic downturn is having on families as opposed to a textbook definition of the state of the economy.
In the book Krugman offers an explanation of our current economic crisis, how we got here, and how best to get out of it. In fact, he states several times that we really don't have to be going through this extended economic downturn at all. He offers historical perspective going back to before the great depression, and an analysis of differing approaches and offers his ideas for how best to solve our current economic problems.
The book is intentionally written for the layperson. While there are a few graphs and charts (I would have preferred more, frankly), there's no math or complicated economic theorems to make the eyes glaze over. It's basically written in a very straightforward style.
Of course Krugman discusses the concept of austerity and the notion of cutting back on national debt immediately as a way of addressing our current problems. And needless to say, Krugman is highly critical of that approach. He offers several example of how and why those policies would have the exact opposite of the intended consequences. Said plainly, Krugman states that such policies will only serve to dig us into a deeper hole. (But that doesn't mean our country won't try it anyway, does it?).
That's not to say that Krugman doesn't think that our huge debt problem needs to be addressed. He does. He just doesn't think it's anywhere near being our most pressing problem, and he offers economic numbers to support his case. And like I said earlier, he says that attacking the debt problem at the wrong time (now) will only make our worst problem (the anemic recovery) worse still.
Krugman also tackles a number of economic myths, both American and European, which he says are getting in the way of solving the economic problems simply because the decision makers don't have an accurate understanding of what the problem is. And as everyone knows, if you don't identify the core problem and how and why it developed in the first place, you're probably not going to make any progress in solving the problem unless blind luck or providence lend a hand.
One of the European myths Krugman tackles is that all the European countries are in trouble because of profligate spending. Untrue, he says. While some countries like Greece have caused many of their own problems, other countries like Spain had actually been paying down their debt relative to GDP for years when the economic crisis struck. In other words, it was the economic crisis which led to the debt crisis, not the other way around.
The one part of the book that I found particular surprising (don't ask me why) was Krugman's chapter on Austerians (Ch 11) where he gives a number of reasons why people embrace austerity. Of course ignorance of economics and history both play a role. Krugman also makes a good case that there's an emotional desire to 'punish bad nations' by making them suffer for their perceived economic sins despite the fact that they're often not at fault for the problem and that it's a counterproductive approach. But more disturbing still is Krugman's belief that powerful people have an economic interest in preventing a recovery even though a recovery would also help them as well as everyone else. If true, I guess we should never underestimate the possibility that powerful people may have suspect motives when their self-interest conflicts with the common good.
Krugman also discusses why the European Union's adoption of the Euro as a common currency is causing so many problems for Europe. For example, he points out that if all the countries still had their own currencies, countries like Greece could devalue their currency relative to the rest of Europe, and that's now that's not an option for any country that uses the Euro.
Despite all the other reasons to read this book, it's worth reading if for no other reason than to better understand the nature of the liquidity trap in which we currently find ourselves, and that's tackled very early in the book.
It's only 238 pp, and it's a great primer in understanding our current economic doldrums.
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