Krugman Watch: Barking Up The Wrong Tree

Paul Krugman writes, in Permanently High Unemployment

I really don’t think people appreciate the huge dangers posed by a weak response to 9 1/2 percent unemployment, and the highest rate of long-term unemployment ever recorded


You will not get consensus on general liquidity (unbridled credit). You will not get consensus on government spending (expansion of the bureaucracy). You will not get consensus on redistributive infrastructure (city projects).

But you will get consensus on investment in strategic competitive advantages if you can identify them. We are going to have long term structural employment. These people are not going to go back to work in their previous careers. You’re right that government can provide a solution. but that solution is to concentrate capital behind investments in competitive production that the market cannot create largely because of regulatory hinderances, or regulatory uncertainty, or regulatory competition. The greatest benefit to the country will be to invest in a new grid, triple the number of nuclear plants, and to convert as much infrastructure from hydrocarbons as possible. There is no mystery why this is a competitive advantage. It will create millions of jobs, especially in skilled trades.

You’re just recommending the wrong platform for getting money into the economy. And no one is buying it.

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