In the last few years, no one person has embodied the cause to end austerity as much as Paul Krugman. The Nobel Prize-winning economist is a professor at Princeton University, a columnist for the New York Times, and author of the new book "End This Depression Now!"
In the above clip from "Fareed Zakaria GPS," Krugman weighs in on the economic plans of President Obama and Mitt Romney. One, he says, is talking economic sense while the other one is talking "utter nonsense."
Below, in Web-exclusive clips, Krugman explains his argument against austerity.
"Trying to be austere right now is self-destructive, even in purely fiscal terms, because it shrinks the economy now, it shrinks the economy in the future," he tells Zakaria.
Krugman also described how he would handle the long-term deficit in the United States.
"What we actually need is a smaller trade deficit ... which would mean that we have to export more and import less," he said.
To see the full interview from Sunday's show, buy past episodes on iTunes or download the audio podcast.
Krugman's advice made sense. Austerity measure don't help the economy back on its feet. In short term we face zero growth and high unemployment. In order to stimulate growth one has to borrow. The pile of debts rise at the same time. So one needs to raise tax and focus on cost saving instead of cost cutting measures.
Austerity only works if there is private spending to replace public spending. Also, during times of economic duress, more government services are requested, e.g., unemployment offices need more staff during a downturn than during normal or good times.
How come he never talks about production & savings?
Because he's a leftest.
I fail to understand how the people have forgotten the basics of economics – supply and demand. Demand creates supply. Supply does not necessarily creates demand. The supplier overcomes all obstacles to satisfy that demand – a good example is the trade in illegal drugs. The supplier creates jobs and workers become tax payers. As the number of taxpayers increase it contibutes to the reduction of national deficit.
The plan offered by Paul Ryan and endorsed by Romney demands spending cuts to reduce the deficit. They believe that if the taxes are cut for the already rich people they will create jobs. My question is what will these new hires do if there is no one to buy what they make? No businessman will invest unless there is market for his products. With all the people losing their employment through the spending cuts, there will not be buyers for those products. Investment decisions are not made based upon taxes, but profit that depends upon people buying things. If people do not have money to buy, the businessman will not have profit. It was proven during the Raegan tax cuts. Eventually he was forced to spend in order to expand empoyment and added mountain of debt in the process. This is being proven again in the policies that are being pursued in Europe.
Deficit will not go by taxing the super rich alone. We will have to expand the tax payer base and intelligently cutting the waste. The taxpayer base can only be expanded by high employment. GOP's plan will shrink demand and the tax cuts will be invested where the demand is – China and India. Mr. Krugman is correct. President Obama's plan makes sense and the GOP plan is nothing but nonsense.
Mac Qurashi is talking sense. What we should do (and should have done from the beginning of Obama's term) is invest in infrastructure and green power production... keeping jobs HERE in the USA. By encouraging green power (solar, wind, and non-food crop ethanols) we would create jobs in manufacturing, construction, and service – all the while weaning our selves from the fossil fuel addiction our current economy fosters. It's even good for national security. We also employ Americans in building trades as well as operation when it goes online.
Taxing those in that top 1% makes sense, too, because despite the ridiculous whining we hear on Fox News, the very rich are paying half what they paid under their hero, Ronald Reagan, whose "trickle-down" economics have finally been proven a complete and utter failure for Americans not in that tax bracket... the rest of us all know what trickles down and it sure isn't money.... or jobs.
Jennifer Liberto article on CNN Money
How much did Gary Gensler say ? 700 Trillion ?? $700,000,000,000,000.00 ??? What's that ?!? About $100K for everyone on the planet ?
These numbers are so big they are no longer humanly fathomable. Why not make it, let's say, ONE QUADRILLION DOLLARS ?!?
Krugman is a "Nobel Prize" winner like our half wit president (Obama) that endorsed and implemented Keynesian economics and spent us out of existence! These liberal Yahoo's sound like a broken record that is making america a 3rd world country with an astronomical national debt that obama has added more to than the last 3 presidents combined! ...the gov't created the housing bubble at Fanni & Freddi that gave us the bad economy, but they just keep making excuses not to cut the budget! ....enough is enough, Obama is the most expensive leader in the history of humanity and must go in 2012!!!
I don't think Krugman know what he's talking about.
The conservative view would be to lower marginal tax rates about 5 percent maximum; strip out the candy ( about 70,000 pages) in the form of breaks, exemptions, deductions; reduce substantially the estate tax; make modest downward adjustments to capital gains and dividend taxes.
That's for starters–if not for a moral boost/economic jump start.
If we ever get around to discussing budget cuts, then that's fine.
Financial stimulus by Fed money printing is that last and only gasp for a failing economy and country.
Let's rewrite the tax code–preferably NOW.
How come no one has ever thought of this before. Watermelon juice is a great idea!!
The Global Public Square is where you can make sense of the world every day with insights and explanations from CNN's Fareed Zakaria, leading journalists at CNN, and other international thinkers. Join GPS editor Jason Miks and get informed about global issues, exposed to unique stories, and engaged with diverse and original perspectives.
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Obama as a foreign policy president?
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Hillary Clinton's truly hard choice
China's trapped transition
Obama should rethink Syria strategy
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