Krugman is the ultimate Keynesian, even winning a Noble prize for his work. He seems also to posess a massive ego because he's so certain that he's right! But what if he and the Keynesians are wrong?
I'm no economist, but I think he's wrong about government spending and debt because today's and tomorrow's economy is unlike that of the past where the theory arguably worked fairly well.
I believe accelerating technological change makes for a very different economic reality than in the past. I am persuaded that we are entering a future where jobs will continue to disappear because human work, even complex human work, will increasingly be done by powerful computing networks and robotic systems. As this change accelerates, the need for workers with the "middle skills" (the middle-class) will continue to diminish while the population grows.
Of course, people will continue to be needed in certain service work such as plumbers, technical service, equipment and infrastructure maintenance and health care. Lower paying work like food service, agricultural labor, gardening, etc. that aren't yet adaptable to automation will certainly be required.
Higher skilled jobs designing and servicing these complex digital and robotic systems will be in short supply, because people are changing and re-skilling more slowly than technology is advancing. Our institutions and education have inertia that is unequal to the momentum of society's adoption of advancing technology. The economy seems to be much more capital than labor intensive for the same output.
More than likely, so-called structural unemployment will not disappear quickly, but may become worse. This means fewer taxpayers and increasing burdens on society's productive people to support those who receive ever-increasing benefits provided by government spending which now requires borrowing about 40 cents for every dollar spent.
Krugman's approach may have worked for yesterday's economy, but will likely fail tomorrow's reality. He offers scant evidence that increasing government spending and debt will produce the kind of skills and jobs that will be essential to success in tomorrow's economy. Presumably, he's not advocating 'make-work' jobs with debt spending. Or is he?
If his theory and advocacy is wrong, we face government growth and costs that we cannot afford.
"...So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way."
No comments:
Post a Comment