Day: June 28, 2010
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
I’d agree with all that Krugman says above (and in the editorial), but take small issue with this part:
In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery.
I think the GOP leadership realizes all too well that not enough has been done. They have chosen to use the crisis for short-term political gain. There is no other explanation for the withdrawal of unemployment benefits. None. They just want to maximize pain to the citizens out there that may be inclined to vote come 2010 and, more urgently from the GOP perspective, in the 2012 follow-on when they could well be poised to take power in both branches.
Then, of course, they’ll fix it all with a rigorous program of tax cuts for the wealthy. Which is touched on in the closer:
And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
Yep.
Lemkin 