The invisible link: For a real stimulus, let’s invade Europe
Over at the ASI Tom Papworth has been taking on economist Paul Krugman.
Below is the opening para, to whet your appetites and lure you in. Click here or at the bottom for the whole article. Take it away, Tom…
Here is Nobel Laureate Paul Krugman on how to bring a major recession to an end:
It took the giant public works project known as World War II — a project that finally silenced the penny pinchers — to bring the Depression to an end.
The lesson from FDR’s limited success on the employment front, then, is that you have to be really bold in your job-creation plans. Basically, businesses and consumers are cutting way back on spending, leaving the economy with a huge shortfall in demand, which will lead to a huge fall in employment — unless you stop it. To stop it, however, you have to spend enough to fill the hole left by the private sector’s retrenchment.
I’ve read a lot about World War II, but I don’t think I’ve ever heard it described as a “giant public works project” before.
To understand why any “giant public works project” will fail to stimulate the economy, continue reading.
Tags: Paul Krugman, stimulus
