Paul Krugman: Why We'd Be Lucky To Have Japan's Economic Woes

nytimes.com:

A decade ago, Japan was a byword for failed economic policies: years after its real estate bubble burst, it was still suffering from chronic deflation and slow growth. Then America had its own bubble, bust and crisis. And these days, Japan's record doesn't look that bad to an American eye.

Read the whole story: nytimes.com

Comments

[OrionStar]

10:17 PM on 11/09/2010

Good.

[SCG]

12:55 PM on 09/12/2010

The average Japanese citizen has a healthy cushion of a savings rate to fall back on, and still net wealth input coming from a trade surplus with the world, unlike the U.S. No, we are not in the same boat, but give that meme a few years to play out before the Wall St. cabal have a new fig leaf to couch reality on.

[Yasmine]

12:46 AM on 09/12/2010

Mr Krugmman...................you are correct as usual because you care.
But I am afraid that with the present MOODand HATRED of Gov that the TEAbaggers have created in this country.....................we will become worse than Japan.
and you are so correct to WARN us about the Election if the TEAbagger/GOP wins.
SO it is up to the PEOPLE to UNDERSTAND the situation and set aside their complaints and Vote for the DEMS to KEEP their Majority which is very possible...............IT IS UP to US to SHOW up and VOTE............and we will prove all POLLOCRATS wrong.

[ricitizen]

10:30 AM on 09/12/2010

Yasmine, I've read many of your comments.

I am now a Fan.

Thank you.

ricitizen.

[Yasmine]

09:28 PM on 09/12/2010

ricitizen

Wonderful .................thank you
I will look for your comments ..................
I heard VP BIDEN say that WE WOULD WIN.................so let us not disappoint Uncle JOE.
He is such a good democrat.
20 Years ago a columnist by the name of A M Rosenthal wrote that the MEDIA should exercise ETHICAL JUDGEMENT by reporting the Poll numbers before elections.
Well, as you can see ALL PUNDIT DEBATES are BASED on POLL numbers, phoney and Unscientific as they are .
PUNDITS believe them so they can prove their point............and Stupid people also believe them..................thus creating SELF-fulfilling PROPHECY.

It is our belief that makes them come true.............because if the POLL numbers DEMORALIZE the DEMS ...........they will not be energized to go to vote.
I am forced to be repetitious these days.............because of the Elections.

OCT 2 MARCH on DC with ED Schultz. FIRED up and ready to go

YES WE CAN win again VP Biden.
WE just need to show up.

www.pollocracy.blogspot.com also GOOGLE Pollocracy

[Yasmine]

12:28 AM on 09/12/2010

you know people what amazes me ? IT was OK when the American PEOPLE BORROWED Money on their credit cards to tune of TRILLIONS .............so that and because ..........the BANKS got rich on credit card rates and fees. !!

BUT now that that bubble has burst and people are BROKE............the GOV is not allowed to borrow.............you know WHY??? because the rich taxpayers are afraid for their grandkids will have to pay higher taxes.???
all this when since 1951 the tax rate has come down for 91 % to 33 -35 % ?

SO it is OK for the PEOPLE to borrow and get broke................
but the GOV cannot do that because the rich do not want to pay higher taxes.
so this policy is only for the BANKs and the RICH...............OH
who has the GOLD RULES.................

[banker67]

06:39 PM on 09/11/2010

There are roughly 235,621 economic factors I do not understand at all. For example, if our endless wars wind down and Halliburton and the Carlisle Group start to lose money, will employment in Keokuk, Iowa, rise? No clue.
If Goldman Sachs stops handing six-, seven- and eight-figure bonuses to every executive they've ever met, would that reduce demand for $2-per-hour nannies from Hondouras? Again, not an inkling of how that might, could, would or won't work here in Transylvania or Antarctica.
But one item seems blindingly obvious even to me: Cutting taxes on the super rich will not help anyone except the super rich, who need financial help like an ocean needs rain.

[Yasmine]

11:57 PM on 09/11/2010

That approach of yours is very persuasive.
NO tax cuts (expire Bush tax cuts for MILLIONAIRES)

but we can be creative and flexible for small business

Apparently there are over 800,000 people in that range and so
If some Small business really do hire employees and fall into that 250,000 bracket...............I think we should ask the IRS to AFTER tax filing and proof of employing people..............IRS .could give them a REBATE...........so they feel happy.

[rtx47]

10:16 AM on 09/11/2010

A slow economy and high unemployment calls for bold new approaches. Some recommend a second massive stimulus package - spending money we do not have on some laudable goals. Clearly the detractors are concerned about the mounting federal debt.

Here is some out-of-the-box thinking, which at first glance may seem counter-productive. It does not involve federal spending and may even add to federal revenues. With courage to implement it, this proposal may solve many problems.

Legalizing the undocumented immigrants (who are already IN the American system), would permit these individuals to come out of the shadows. This will allow them, about twelve million, to BUY homes, cars, furniture, washing machines and dryers, refrigerators, seek healthcare and education, etc etc. and thus help and stimulate the over-all economy. The expanding economy will HELP ALL Americans.

Not to mention, the undocumented can start utilizing their full capacity and even start small businesses. And just like past and present legal immigrants, maximize their contribution to America.

We complain that there is no consumer demand. Then on the other hand, we do not want to bring the 12 million CONSUMERS / undocumented workers out of the shadow. Another example of wanting to "have our cake and eat it too." See the link below about immigrants and wealth.

http://www.huffingtonpost.com/rabah-ghezali/there-is-no-wealth-but-fr_b_703085.html#comments

[WASanford]

12:33 PM on 09/11/2010

If, as reported, the jobs we've lost are not coming back, then we have to reduce the workforce. That could be done easily by mandating a reduction of the work week to 32 hours; a 20% hole to be filled by adding new workers; more than enough to hire virtually every laid off worker in this country.

We'd have to raise the minimum wage to a living wage which could be subsidized by the government until the economy became adjusted to the new standard.

A little tinkering around the edges isn't going to solve our problems. We'll have to make real changes, some of them will seem drastic but we must make them all the same.

[rtx47]

03:20 PM on 09/11/2010

Job loss is due to Industrial, Information, and now Robotic Revolution. Globalization accelerated the impact of these transformations.

Two issues follow:
1. Skilled labor will be expensive, being too skilled for automation and robots.
2. What to do with unskilled labor?

Yet, major social issues stem from lack of 'unskilled labor'. Example: Teachers in unison complain, "Parents don't care for and participate in educating their children". This leads to 50% school drop-out (70% in major cities), and 50% drop-out of colleges in a technological world.

Lot of healthcare issues and costs are due to lack of preventive care and social support for indigent at home. End-of-life care (last few months) consumes third of all health-care costs. Only 20% of seniors die at home; rest spend their end-time in hospital or nursing home; paid by taxes.

Paradigm shifted after WWII as joint-family moved to single. It accelerated in 70's, to 90's and is passed equilibrium. Current social practices exacerbate drawbacks of progress. Widespread job automation continues to have repercussions; which we have to live-with.

It may not hurt to return to Good Old Days; living within limits of single-income and saving. It may be a little inconvenient; but it will be a lot gratifying.

Many are doing it. Like moving-in with AND / OR caring for siblings, aging parents, or vice-verse. The earlier and more of us do it, the less time we will spend on the Internet, garnishing our teeth.

[Yasmine]

12:03 AM on 09/12/2010

Euthenasia might be a solution too.

[CJCalgirl]

07:10 PM on 09/11/2010

rtx, GOOD IDEA!  FANNED!!

[frank day]

11:50 PM on 09/10/2010

Dump Timmy and Larry, then hire Krugman.

That would be change I can believe in.

[jmpurser]

10:11 AM on 09/11/2010

Two problems with your plan: 1) If you dump them then you're STILL stuck with the guy who picked them in the first place. Their records were known, the results were easily predicted, and Obama thought that was a great idea. All evidence indicates he STILL thinks it's a good idea. This fish stinks from the head down. 2) Krugman doesn't want the job. He has said, and I agree, that he performs a MUCH more valuable service by being free to call for policies, criticize agendas, and being an unfettered voice for clear economic analysis. He simply could not serve in such a role from inside anyone's administration. And what would he do as part of an administration? It's not like we don't KNOW what should be done or what the result will be of our actions. The only questions are: A. Do those in charge WANT to fix anything? B. Is a fix politically possible? C. Assuming the answers to A and B are yes, will those in charge pay the price for doing the right thing? Carter was the last one to answer that question with a "Yes" and we've NEVER forgiven him for it.

[power1]

09:23 PM on 09/10/2010

Road construction projects are not going to lead our nation to prosperity. We need private sector jobs but unfortunately Obama and the Democrats hate the private sector.

[oldngrumpy]

09:49 PM on 09/10/2010

Private sector jobs would be great, but that would require private sector money, of which there is none. I don't know of any government road pavers working within the US. What constitutes "private sector" in your mind?

If you are referring to jobs that are not financed or subsidized by government money then you are likely not going to like this news. NO road projects are private sector. They are all tainted by that evil "gubmint". Obama would actually be quite relieved to know that you expect the private sector to get us out of this recession. That would take a big load off his shoulders. When does this start? If the private sector can get us out of this mess then why did we get into it in the first place?

[jmpurser]

09:15 AM on 09/11/2010

You are clueless on both economic terms and political ones. No one is trying to make us prosperous by building roads. We're trying to keep the economy moving, mortgages paid, payrolls rolling, and the nation limping along by building roads. Without building the roads all that stuff STOPS. Get it? And Obama and the Democrats have written one corporate welfare bill after another. If they got any more "business friendly" they'd cancel elections and just give the nation to the National Chamber of Commerce.

[Yasmine]

12:04 AM on 09/12/2010

So what is YOUR solution....................??

[realpolitic]

08:16 PM on 09/10/2010

Krugman is a truth teller.  The response to the recession was half-measures and we need further stimulus.  We need infrastructure investment.  What corporation does not invest in itself?  It would soon be non-competitive.

[Easy Goer]

10:28 PM on 09/10/2010

exactly, borrowing our way to prosperity. It has never worked before, but we should keep trying

[realpolitic]

10:30 PM on 09/10/2010

Don't you borrow on your way to prosperity? You borrow to buy a house. For nations, during recessions borrowing is a good idea. 

[frank day]

11:49 PM on 09/10/2010

Not all borrowing is bad.

Its called investing. Now is the time to invest in our biggest resource. Its workers.

[Yasmine]

12:09 AM on 09/12/2010

EXACTLY ...............RE-.BUILD AMERICA.............that is INVESTMENT

[realpolitic]

12:14 AM on 09/12/2010

You are right again, Yasmine.

[samtee]

08:07 PM on 09/10/2010

People still listen to this idiot OMG

[asteven]

08:31 PM on 09/10/2010

strong words to criticize a Nobel's prize winner. and your credentials are?? tea party membership, an F250 truck and a Mossberg 935 shotgun?? oh, I forgot the bible...

[Easy Goer]

10:29 PM on 09/10/2010

obama won the nobel prize. For what-record amount of people on food stamps?

[jmpurser]

09:17 AM on 09/11/2010

He keeps being proven correct.

[mtracy9]

06:55 PM on 09/10/2010

Early in his presidency, Reagan chose as his economic advisers a group that espoused a radical economic theory called "supply-side." The supply-siders told Reagan that if he gave tax cuts to the top brackets (the wealthiest individuals) the positive effects would "trickle down" to everyone else. Tax cuts, they argued, would produce so much growth in the economy that America could simply outgrow its deficits. Reagan bought into supply-side theory, which is why in 1981 he predicted that there would be a "drastic reduction in the deficit."

However, Reagan soon discovered that his supply-side advisers were wrong. Tax cuts, instead of reducing the deficit, caused the deficit to balloon.

At this point, Reagan would change strategy. He would blame the U.S. Congress for the record deficits that accrued during his years in office. Reagan would say that Congress was responsible, because Congress did not slash spending enough--meaning domestic spending, since Reagan always championed increased military spending.

Reagan chose to ignore the fact that his own Republican Party was in control of the Senate from January 1981 to January 1987, and that Congress actually spent less than what he originally had asked for.

Federal deficits would continue unabated until the presidency of Bill Clinton when fiscal responsibility would finally be restored. President Clinton would achieve a balanced budget (and even record surpluses) in large measure by restoring higher taxes on the wealthy.

[an]

07:39 PM on 09/10/2010

true story. reagan's economic advisor was milton friedman, who is a kind of modern god for supply side economists, and is the most influential economic thinker today (though he's dead). problem is that most obama's advisors also worship at the altar of friedman. instead of putting someone like krugman or stiglitz in his cabinet, he put summers and geithner. therefore we still an unregulated financial industry, inadequate stimulus, and a ballooning deficit as well...

[Mentlegen]

09:43 PM on 09/10/2010

You do realize Krugman served on the CEA under Reagan, this is not uncommon knowledge.

[jmpurser]

09:19 AM on 09/11/2010

Thanks. All too often we allow everyone to have their own facts. Good post, fanned and faved.

[econ1]

06:51 PM on 09/10/2010

I agree with Paul Krugman that a shift from military spending to infrastructure investment would be a good thing. The key thing is that it be investment; bridges to nowhere or railroads that can never cover their costs are no better than fighter jets we don't need. Yes, both deliver jobs today, but both either suck money from other more worthwhile uses or require debt repayments for as far as we can see.

It is also important to continue to keep depression and deflation clear. Depression (dropping GDP and under-employment) is always bad, deflation (a decrease in price levels) is not necessarily bad. One could look at deflation in the prices of computers over the last ten years. Or if your house is deflating in value (and you weren't over leveraged), your insurance costs, taxes, repair costs etc. would be going down. Deflation is bad for debtors but good for savers. As a big debtor, I think the US government will prevent it from happening with all their might.

[Easy Goer]

10:31 PM on 09/10/2010

killing the savers with 0% interest rates

[CJCalgirl]

07:25 PM on 09/11/2010

econ1, Agreed, although I think roads etc. NEED repairing, what we REALLY need is a HUGE infusion of stimulus in Alternatives.  Better roads mean MORE driving, and MORE consumption of fossils.  We need REAL high-speed rail that can accommodate long distance travel, reducing the use of airliners, and trucks for moving goods.  Also conversion capability for solar, wind, wave, and tidal energy production (which we already have the tech knowledge to do).  Then we need to CUT subsidies for agribusiness, allowing foreign countries to compete honestly, and improve THEIR economies as well.  Then the PHARMA, and stop the rampant marketing of GM foods that we are eating BLINDLY, which the FDA has YET to investigate.  Monsanto should have their LIFE patents revoked, and be forbidden to produce 'suicide seeds' which only grow a single crop, while prohibiting farmers from saving their crop seed.  We have a LOT to do!

[TeraWatt60]

05:30 PM on 09/10/2010

Krugman is spot on  and those claiming that Repug policies "work" either have not been paying attention or simply been misled by the Faux Noise crowd ...no one can seriously claim that either the "don't tax the rich, make them richer" and the "best regulation is self regulation" mantras from the GOBP have produced anything like the results they are hyped...in fact they benefit no one but the wealthiest and least ethical members of society...the Repugs simply lack the moral compass and basic math skills to do either.

[Easy Goer]

10:31 PM on 09/10/2010

you think the stimulus worked? Do you want to buy a bridge?

[jmpurser]

09:21 AM on 09/11/2010

It did work. Your ignorance of the facts doesn't actually change them.

[ricitizen]

10:35 AM on 09/12/2010

You didn't read his column did you. And you really aren't offering any facts or ignoring the point.

Your comments are merely pejorative.

[jmpurser]

09:21 AM on 09/11/2010

My only argument with you is the notion that these are "repug" policies only. In the first place name calling is foolish. In the second Obama and the Democrats are pursuing VERY similar polices to Reagan's.

[capitaldysfunction]

05:27 PM on 09/10/2010

The Republicans will "surely try to repeal health reform, which would be another twofer, reducing economic security even as it increases long-term deficits". And Paul Krugman points out the Tangerine Man John Boehner wants to decrease taxes on the wealthy while doing spending cuts: still another two for one-- bigger deficits and fewer jobs.
Americans had better stop and ponder why so many of them vote for a party that so obviously supports the rich and corporations. The plutonomy this has brought about is the worst form of economy because the spending habits of the rich fluctuate wildly. A new yacht is not a necessity every year.
Hell on earth can happen in America. Its coming to a theatre near you. Vote Republican.

[jmpurser]

09:22 AM on 09/11/2010

The problem being we get hell in a hurry under the Republicans and on the installment plan under the Democrats. We REALLY don't have a major party interested in FIXING any of our problems.

[TeraWatt60]

11:50 AM on 09/11/2010

only if Democratic leaders insist on trying to get Republican support ...the Republican philosophy is ,in large part, responsible for our current mess and their attempts to cover up this fact are why we face continuing issues. If they manage to ooze back into Congressional majorities Senate Dems should make the Repugs pay for their sleaze and House Dems should behave similarly. Obama should then veto every single piece of garbage spewed by the Party of NO and make it very clear that these are the same policies that failed the first time under Duhbya

[Robert Cantor]

04:58 PM on 09/10/2010

Democrats dont govern well
Republicans govern badly

there it is

[sonoffestus]

05:13 PM on 09/10/2010

Clear, concise and on point.

[Robert Cantor]

05:29 PM on 09/10/2010

ty

[Easy Goer]

10:33 PM on 09/10/2010

sad but true; smaller the government the better

[Robert Cantor]

11:28 PM on 09/10/2010

how about no government? we can start by abolishing the military;
you agree with that, dont you?