Pulitzer Prize-winning New York Times columnist Paul Krugman has a simple answer for what’s wrong with the economy. Never mind the arguments about structural economic problems that have disadvantaged the middle class and have put America at a global competitive disadvantage. “There is not enough demand in this economy,” Krugman said at a talk at the Economic Policy Institute Wednesday.
“This is a problem that is not in fact hard to fix, if it were not for the politics and the intellectual confusion,” he said.
Krugman was invited to EPI to discuss his latest book, “End This Depression Now.” He will also be featured next month at the Take Back the American Dream conference, where he will be able to answer more pointed questions about how to change a flawed narrative about the economy that he said appeals to the interests of the 1 percent but is harming America as a whole.
Depression, Krugman said, “is the right word to use” for the economic conditions facing America, rather than recession. The conditions that led up to the financial crisis and which have followed are more akin to the bursting of the 1929 financial bubble and the retrenchment that followed for much of the next decade.
What’s worse, Krugman said, is that conservative policymakers are specifying the wrong remedy: austerity budget-cutting policies.
“We’ve conducted what is pretty damn close to a controlled experiment” in what happens to an economy when conservative austerity policies are imposed during a recession, Krugman pointed out. That experiment is in the euro zone, “and the results are in … Austerity has been contractionary with a vengeance.”
In fact, hours before Krugman spoke, news outlets were reporting unemployment rates at a 15-year high in the euro zone countries and a ninth straight month of contraction in the manufacturing sector on those countries.
But conservative leaders here in America are refusing to heed the lessons, instead hewing to “crank and charlatan doctrines that have become the official line” of the conservative political establishment, according to Krugman, given currency largely because the wealthy people to whom these doctrines appeal “have bought a lot of the political process.” The counter-arguments, Krugman told EPI, are by contrast not radical theories. “What we’re saying is take your textbook seriously,” he said.
Paul Krugman will be a keynote speaker at the Take Back the American Dream conference. Click here to register.