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A review by notwellread
End This Depression Now! by Paul Krugman
4.0
4.5 stars.
Published four years after the 2008 recession to comment on various governments’ responses and attempts at recovery, in End This Depression Now! the Nobel Prize-winning economist Paul Krugman gives the New Keynesian case for stimulus and government spending as an antidote to periods of economic depression. Although almost a decade old, for obvious reasons it seems pertinent now in these COVID-ridden times.
I enjoyed this much more than Thomas Sowell’s Basic Economics, particularly in terms of writing style, structured argumentation, and persuasiveness. Krugman demonstrates the truth of what he says primarily through case studies and historical precedents without coming across as overly partisan (though, to his credit, he also states his biases and demonstrates self-awareness). Although economists have a particular penchant for graphs, Krugman has managed to restrain himself in this respect to illustrative examples of key trends (in GDP, employment, surplus/deficits etc.) that can be easily understood by the layperson while still accommodating space for educating the reader in the necessary entry-level economic principles. Krugman stresses at the end that, even if only a few are (at least somewhat) persuaded by the book, it will have been worth it: I can honestly say that I went in with an open mind, and came out pretty much convinced.
Crucially, Krugman does not keep the discussion purely theoretical or ‘armchair’, and is keen to show the tangible impact of the wrong policies beyond hard figures like employment and GDP, showing the human cost in ways that are not immediately apparent, and that threaten long-term repercussions. He explains eloquently how unemployment grinds down feelings of self-worth and dignity, and he shines a spotlight on the egregious and unnecessary laying-off of schoolteachers and other public sector workers. While not strictly scientific, Krugman understands the importance of this aspect of the economic story: he knows how to communicate economic consequences in a way that will resonate with the average reader — and how to express the difference between cost and value.
He is also, despite his own political leanings, critical of the failures of government on both sides: on the left, the problem seems to be a bit of lily-livered-ness: in short, Krugman explains that Obama (a politician whom Krugman has both highly praised and fiercely criticised) had the right idea but simply did not go far enough, resulting in an unfortunate initial drop in GDP and investment through a lack of confidence rather than the much much-hoped-for rise. Ben Bernanke is accused of losing a similar game of chicken, showing clear-mindedness of the policy evidence for economic recovery, and then failing to implement it once he took charge of the Fed. The most obvious way to stimulate spending is by giving money to those in dire need, who will inevitably spend it with haste: clearly this is a point we could learn from in the current pandemic.
Obviously the right do not go unscathed, being the main culprits of the disaster we then found ourselves in: as a Brit, I certainly felt his criticisms of the UK government of the time were on point: we experienced a slow recovery from the recession under the Conservative Party’s austerity cuts, which were reflective more of an ideological aversion to ‘handouts’ than an honest attempt at finding the best programme for recovery. You cannot, as then-Chancellor George Osborne once reasoned, manage a nation’s economy as you would that of a household (obviously this is the key difference between micro- and macroeconomics) — sadly, I think they relied on the naivety of the average economically illiterate citizen to sell this narrative, with disastrous results. It was this same kind of attitude to the market that caused the global recession in the first place, after all, and one that is not even based on an alternative academic view — even Milton Friedman, who died in 2006, had begged conservatives to reconsider their approach.
However bad the state of the economy, Krugman provides a glimmer of hope: no depression is so bad that the right plan can’t pull us out of it. Krugman’s words here are so prescient of the current crisis, which is already starting to resemble a Groundhog Day-esque repeat of the last, that he could probably just publish a new edition with a 2020/1-themed chapter tacked on.
Published four years after the 2008 recession to comment on various governments’ responses and attempts at recovery, in End This Depression Now! the Nobel Prize-winning economist Paul Krugman gives the New Keynesian case for stimulus and government spending as an antidote to periods of economic depression. Although almost a decade old, for obvious reasons it seems pertinent now in these COVID-ridden times.
I enjoyed this much more than Thomas Sowell’s Basic Economics, particularly in terms of writing style, structured argumentation, and persuasiveness. Krugman demonstrates the truth of what he says primarily through case studies and historical precedents without coming across as overly partisan (though, to his credit, he also states his biases and demonstrates self-awareness). Although economists have a particular penchant for graphs, Krugman has managed to restrain himself in this respect to illustrative examples of key trends (in GDP, employment, surplus/deficits etc.) that can be easily understood by the layperson while still accommodating space for educating the reader in the necessary entry-level economic principles. Krugman stresses at the end that, even if only a few are (at least somewhat) persuaded by the book, it will have been worth it: I can honestly say that I went in with an open mind, and came out pretty much convinced.
Crucially, Krugman does not keep the discussion purely theoretical or ‘armchair’, and is keen to show the tangible impact of the wrong policies beyond hard figures like employment and GDP, showing the human cost in ways that are not immediately apparent, and that threaten long-term repercussions. He explains eloquently how unemployment grinds down feelings of self-worth and dignity, and he shines a spotlight on the egregious and unnecessary laying-off of schoolteachers and other public sector workers. While not strictly scientific, Krugman understands the importance of this aspect of the economic story: he knows how to communicate economic consequences in a way that will resonate with the average reader — and how to express the difference between cost and value.
He is also, despite his own political leanings, critical of the failures of government on both sides: on the left, the problem seems to be a bit of lily-livered-ness: in short, Krugman explains that Obama (a politician whom Krugman has both highly praised and fiercely criticised) had the right idea but simply did not go far enough, resulting in an unfortunate initial drop in GDP and investment through a lack of confidence rather than the much much-hoped-for rise. Ben Bernanke is accused of losing a similar game of chicken, showing clear-mindedness of the policy evidence for economic recovery, and then failing to implement it once he took charge of the Fed. The most obvious way to stimulate spending is by giving money to those in dire need, who will inevitably spend it with haste: clearly this is a point we could learn from in the current pandemic.
Obviously the right do not go unscathed, being the main culprits of the disaster we then found ourselves in: as a Brit, I certainly felt his criticisms of the UK government of the time were on point: we experienced a slow recovery from the recession under the Conservative Party’s austerity cuts, which were reflective more of an ideological aversion to ‘handouts’ than an honest attempt at finding the best programme for recovery. You cannot, as then-Chancellor George Osborne once reasoned, manage a nation’s economy as you would that of a household (obviously this is the key difference between micro- and macroeconomics) — sadly, I think they relied on the naivety of the average economically illiterate citizen to sell this narrative, with disastrous results. It was this same kind of attitude to the market that caused the global recession in the first place, after all, and one that is not even based on an alternative academic view — even Milton Friedman, who died in 2006, had begged conservatives to reconsider their approach.
However bad the state of the economy, Krugman provides a glimmer of hope: no depression is so bad that the right plan can’t pull us out of it. Krugman’s words here are so prescient of the current crisis, which is already starting to resemble a Groundhog Day-esque repeat of the last, that he could probably just publish a new edition with a 2020/1-themed chapter tacked on.