Paul Krugman is a columnist for The New York Times and Distinguished Professor of Economics at the Graduate Center of the City University of New York. He was awarded the Nobel Prize in Economics in 2008. (December 2015)
Economists struggling to make sense of economic polarization are, increasingly, talking not about technology but about power. This may sound like straying off the reservation—aren’t economists supposed to focus only on the invisible hand of the market?—but there is actually a long tradition of economic concern about “market power,” aka the effect of monopoly.
Martin Wolf’s The Shifts and the Shocks is an extended, learned, and well-informed exposition of the consensus view about what went wrong with the economy. But is it the whole story? And are policy recommendations based on this consensus likely to solve our problems?
Thomas Piketty isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. This is a book that will change both the way we think about society and the way we do economics.
The future is uncertain, a reality acknowledged in the title of William Nordhaus’s new book, The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. Yet decisions must be made taking the future—and sometimes the very long-term future—into account. This is true when it comes to exhaustible resources, where every barrel of oil we burn today is a barrel that won’t be available for future generations. It is all the more true for global warming, where every ton of carbon dioxide we emit today will remain in the atmosphere, changing the world’s climate, for generations to come.
Austerity economics is in a very bad way. Its predictions have proved utterly wrong; its founding academic documents haven’t just lost their canonized status, they’ve become the objects of much ridicule. None of this should have come as a surprise: basic macroeconomics should have told everyone to expect what did, in fact, happen, and the papers that have now fallen into disrepute were obviously flawed from the start. This raises the obvious question: Why did austerity economics get such a powerful grip on elite opinion in the first place?
When Obama was elected in 2008, many progressives looked forward to a replay of the New Deal. The economic situation was, after all, strikingly similar. As in the 1930s, a runaway financial system had led first to excessive private debt, then financial crisis; the slump that followed (and that persists to this day), while not as severe as the Great Depression, bears an obvious family resemblance. So why shouldn’t policy and politics follow a similar script? But while the economy now may bear a strong resemblance to that of the 1930s, the political scene does not.
Following the election of a pro-bailout party in Greece on June 17, the new Greek government being formed this week will try once more to negotiate a solution to its intractable debt crisis that will keep it in the eurozone. But how did Greece get into this situation in the first place? Are other countries at risk of falling into the same predicament? In a panel discussion at the Metropolitan Museum of Art earlier this year sponsored by the Review and Fritt Ord, these and other questions were explored by Paul Krugman, Edmund Phelps, Jeffrey Sachs, and George Soros. —The Editors
The depression we’re in is essentially gratuitous: we don’t need to be suffering so much pain and destroying so many lives. We could end it both more easily and more quickly than anyone imagines—anyone, that is, except those who have actually studied the economics of depressed economies and the historical evidence on how policies work in such economies. The truth is that recovery would be almost ridiculously easy to achieve: all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending.
The great financial crisis of 2008–2009, whose consequences still blight our economy, is sometimes portrayed as a “black swan” or a “100-year flood”—that is, as an extraordinary event that nobody could have predicted. But it was, in fact, just the most recent installment in a recurrent pattern of financial overreach, taxpayer bailout, and subsequent Wall Street ingratitude. And all indications are that the pattern is set to continue.
So, should progressives just give up? History says no—over the past decade American politics have proved astonishingly mutable, with not one but two supposedly permanent majorities quickly collapsing in 2006 and 2010. Things may turn again, as long as progressives fight on. But what would fighting on look like?
We’ve already argued—in the first part of this review—that a rise in government deficits played a key role in preventing the crisis of 2008 from turning into a full replay of the Great Depression. Why not use more deficit spending to push for a full recovery? That’s a question that deserves more serious consideration than it has received so far.
It hasn’t been much of a recovery. Unemployment has hardly fallen in either the United States or Europe and US economic growth is slowing. Given this bleak prospect, shouldn’t we expect a scramble to put forward plans for promoting growth and jobs? Apparently not. There is room for action, both monetary and fiscal. But politicians, government officials, and economists alike have suffered a failure of nerve—a failure for which millions of workers will pay a heavy price.
Following are excerpts from a symposium on the economic crisis presented by The New York Review of Books and PEN World Voices at the Metropolitan Museum of Art on April 30. The participants were former senator Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells, with Jeff Madrick as moderator.
What the world needs right now is a rescue operation. The global credit system is in a state of paralysis, and a global slump is building momentum as I write this. Reform of the weaknesses that made this crisis possible is essential, but it can wait a little while. First, …
The history of economic thought in the twentieth century is a bit like the history of Christianity in the sixteenth century. Until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936, economics—at least in the English-speaking world—was completely dominated by free-market orthodoxy. Heresies would occasionally …
The good news is that we know more about the economics of health care than we did when Clinton tried and failed to remake the system. There’s now a large body of evidence on what works and what doesn’t work in health care, and it’s not hard to see how …
Two Problems, Not One America in 2030 will be “a country whose collective population is older than that in Florida today.” It will be in “desperate trouble” because the expense of caring for all those old people will cause a fiscal crisis. The nation will be plagued by “political …
Here’s a true story that came too late to make it into Kevin Phillips’s American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush, but it fits perfectly with its thesis. As all the world knows, Halliburton, the company that made Dick Cheney rich, has been …
On a recent Friday afternoon, the Interior Department announced a change in rules for US mining companies. (They always announce the outrages on Friday afternoon, because few people read the Saturday papers or watch the Saturday TV news.) Reversing a Clinton-era decision, Interior now says that companies mining precious metals …