Columnist and academic Paul Krugman is God of All Economic Thought in some Democratic literary and political circles. This midsize volume shows why. Krugman’s facility both with arcane details and with vast unified explanations boils down complexity so much that the reader often wonders: Why didn’t I see it that way myself?
Krugman’s influence as a star New York Times columnist and Princeton professor was well established even before he won the Nobel Prize in economics in October. The award was recognition of his earlier work on imports and exports.
Krugman’s appeal lies in his gift at poking holes in economic cant and ideological explanations that don’t fit real-world developments. Even though Krugman has been among the Bush administration’s toughest critics in his column, little of his latest volume is concerned with how the administration handled the economy during the past decade.
Instead, much of this updated book is a retread of his 1999 work The Return of Depression Economics, a review of the lessons learned from the surprise crises that struck developing economies in the 1990s. Krugman has updated many of these pages and added three new chapters and a conclusion. But all focus on a central theme: that in their policy responses, officials often got through by getting lucky.
Surprisingly it is the redone older chapters that seem freshest — perhaps because the recent rush of events make the new pages seem like today’s conventional wisdom.
The first new chapter is a review of the tenure of Federal Reserve chairman Alan Greenspan from 1987 to 2006. Though he won wide plaudits during his time, Krugman calls Greenspan’s reign overrated and accuses him of coasting on the unpopular but necessary decisions of his predecessor, Paul Volcker, to raise interest rates that finally beat inflation. Greenspan didn’t act quickly enough to stem the asset bubbles that formed first in technology stocks and then in housing prices, Krugman argues.
The bigger cause of the current situation is described in the next new chapter, on the rise of what he describes as a shadow
banking system that grew up outside the institutions regulated by the Federal Reserve and other agencies. Instruments like auction-rate securities grew popular for paying higher interest rates than customers could get at standard banks, only to freeze up when new investors lost confidence in the system. Toward the end he takes a poke at US President George W. Bush’s administration for its pride in attacking banking regulations precisely when they were most needed. Here’s a moment where Krugman may be oversimplifying. Despite holding Congress since 2006, Democrats haven’t pressed as hard as some hoped for stricter oversights.
Last comes an account of the worldwide crash that began in last year, as the global financial interconnections originally seen as promoting stability had the opposite effect of spreading problems around. Whereas in the recessions of 1981, 1990 and 2001, Fed officials seemed to have leverage over the US economy, today’s weaknesses come from the ground up, the lack of demand from consumers and businesses.
What is to be done now? Krugman concludes by proposing heavy spending such as on public works projects to restimulate the economy, ideas already popular in Democratic circles and backed by the incoming Barack Obama administration. Krugman was tough on Obama during the Democratic primaries over his health-care policies. Now his test will be to hold the incoming administration to the same standards of economic clarity that he applied to Team Bush.
In the end, this book’s best contribution may be Krugman’s bottom line that just as smaller economies found their way back, there are specific technical steps — better regulation, more spending — that could still turn the US economy around.
Wooden houses wedged between concrete, crumbling brick facades with roofs gaping to the sky, and tiled art deco buildings down narrow alleyways: Taichung Central District’s (中區) aging architecture reveals both the allure and reality of the old downtown. From Indigenous settlement to capital under Qing Dynasty rule through to Japanese colonization, Taichung’s Central District holds a long and layered history. The bygone beauty of its streets once earned it the nickname “Little Kyoto.” Since the late eighties, however, the shifting of economic and government centers westward signaled a gradual decline in the area’s evolving fortunes. With the regeneration of the once
Even by the standards of Ukraine’s International Legion, which comprises volunteers from over 55 countries, Han has an unusual backstory. Born in Taichung, he grew up in Costa Rica — then one of Taiwan’s diplomatic allies — where a relative worked for the embassy. After attending an American international high school in San Jose, Costa Rica’s capital, Han — who prefers to use only his given name for OPSEC (operations security) reasons — moved to the US in his teens. He attended Penn State University before returning to Taiwan to work in the semiconductor industry in Kaohsiung, where he
In February of this year the Taipei Times reported on the visit of Lienchiang County Commissioner Wang Chung-ming (王忠銘) of the Chinese Nationalist Party (KMT) and a delegation to a lantern festival in Fuzhou’s Mawei District in Fujian Province. “Today, Mawei and Matsu jointly marked the lantern festival,” Wang was quoted as saying, adding that both sides “being of one people,” is a cause for joy. Wang was passing around a common claim of officials of the People’s Republic of China (PRC) and the PRC’s allies and supporters in Taiwan — KMT and the Taiwan People’s Party — and elsewhere: Taiwan and
Perched on Thailand’s border with Myanmar, Arunothai is a dusty crossroads town, a nowheresville that could be the setting of some Southeast Asian spaghetti Western. Its main street is the final, dead-end section of the two-lane highway from Chiang Mai, Thailand’s second largest city 120kms south, and the heart of the kingdom’s mountainous north. At the town boundary, a Chinese-style arch capped with dragons also bears Thai script declaring fealty to Bangkok’s royal family: “Long live the King!” Further on, Chinese lanterns line the main street, and on the hillsides, courtyard homes sit among warrens of narrow, winding alleyways and
RSS