Paul Krugman despairs at the state of the economics profession

[babylonsister]

http://www.truth-out.org/paul-krugman-the-united-states-is-no-germany62424

The United States Is No Germany

Wednesday 18 August 2010

by: Paul Krugman, Krugman & Co.


Molina/El Nuevo Diario – Managua, Nicaragua/Cartoonarts International/ The New York Times Syndicate

EDITOR'S NOTE: Truthout is proud to begin bringing you a twice-weekly Paul Krugman column, thanks to Paul's service, Krugman & Co. This is new material, not available from The New York Times. Happy reading! ms/TO



The debate regarding fiscal stimulus over the past year and a half has, frankly, made me despair at the state of the economics profession.

If others believe stimulus spending is a bad idea, fine.

But surely we should expect opponents of stimulus to engage in real debate, which means that they'd have to actually listen, just briefly, to what proponents of the argument are saying - in particular, that the case for stimulus has always been highly dependent on conditions on the ground.

Fiscal stimulus only makes sense when the following two conditions prevail: high unemployment, so that the proximate risk is deflation, not inflation; and monetary policy constrained by interest rates that are very near the zero lower bound.

This doesn't sound like a hard point to grasp.

But again and again, critics point to examples of increased government spending in completely different circumstances, and then claim that those examples somehow prove their point.

snip//

And the fact that a prominent commentator on current events apparently doesn't know that, even after a year and a half of debating this issue, leaves me pessimistic about the economic outlook.

[Yavin4]

1. I Love This Line from the Article

"This passage makes me want to stick a pencil in my eye. Why? Let's look at Germany's situation..."

I love Krugman. I just felt that he was a little politically naive, but now, he's learning.

[TheKentuckian]

2. Most economists seem to exist to justify a scam and sell further scams

Priests of a fundamentalist cult of a false secular religion.