In the coming election the candidate who first appoints Paul Krugman to his economic policy team gets my vote. As the American economy has cratered, then struggled vainly towards recovery, Professor Krugman has been there first, telling us how it would go, and why. And he’s been right.
He has been doing this since before the housing bubble burst. His was the lone voice in the wilderness telling us there even was a housing bubble, back when all the Wise Old Men of Washington and Wall Street pooh-poohed the idea, certain that unregulated financial speculation could keep expanding forever. Alan Greenspan has since recanted. Washington politicians should follow his example.
The country needs a sound economy before any other political agenda can be pursued successfully. So the President and Congress’ first job is to fix the economy. And to fix the economy they need to stop taking bad economic advice, and listen to someone who actually knows what he’s talking about.
You don’t fix the economy with government belt tightening or grim austerity measures. “Austerity” is just another word for cutting yet more vital jobs. People have to have jobs in order to make money in order to spend it to buy the things private industry wants to sell. You don’t fix the economy by focusing on retiring debt. Debt can only be retired from profits, which means you have to make more money than you spend before you can pay down the debt. Government can only make more money than it spends when the economy is already robust, so that tax income on individual and corporate earnings is also high. In other words, to get the economy going again, the Federal government needs to spend money on targeted job growth, especially in emergency services, infrastructure, and education. Yes, that will increase the national debt in the short term. But any good businessman knows that sometimes you have to take on debt in order to increase your capacity and expand your business. Once you expand, and your income grows, you retire the debt again.
And before any blowhard repeats that lie that "government never created jobs", remember that anyone who believes that does not belong in Congress, or the White House – because anyone who believes that obviously doesn’t take the very real job of running the country seriously.
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