SKETCH: Professor Krugman, Where’s the Shark?

Paul Krugman, the Nobel-prize-winning economist is in Oxford until mid-June as the Sanjaya Lall Visiting Professor in Development and Business.

The liberal Princeton/NY Times professor just delivered his inaugural lecture asking the question (the almost-rhetorical question) Do We Face Secular Stagnation?

It follows on from his books The Age of Diminished Expectation, the Return of Depression Economics and articles like Is Capitalism Too Productive? The Myth of Asia’s Miracle and – suggested title – What Are You Laughing At, Can’t You See the State We’re In?

His proposition is that the glory days are behind us, that each recession has been harder to get out of than the last, that we will have extended periods of low-to-no growth, and that under-employment will create “dreary lives” for large numbers of people – because politicians will not listen to him and his $300bn job-creation schemes.

If Labour can get him onto a stage with Ed Miliband, the election will be in the bag. For the Tories.

He talked about the impulses to “austerity” saying that it’s as though governments want to engineer a gratuitous recession in order to have a pre-election year boom, “like the Government has done here” (cosy laughter from the full-to-overflow hall).

Small, bearded, charming, Prof Krugman looks like the oceanographer in Jaws. Remember, that clever fellow, expert in his field, ran up and down the beach warning the pleasure-seekers there was a giant shark out there waiting to devour them.

But the question for Krugman is: Where’s the shark?

Billions of jobs have been created since Krugman started writing, poor people in the Rhondda Valley have luxury goods, Third World life-expectancy is climbing. And even this last recession shows signs of ending, as recessions do.

We bucket along, whatever governments do to us, left or right. We boom, we bust. We live too well, we pay the price, but we still get to keep the flat screen TV.

Now, post-2007, inflation is at last down (Krugman said, just when we need 4 or 5 per cent inflation for full employment).

Savings are improving (but on Krugman’s account, that’s making everything worse on account of the “paradoxes of thrift, toil and flexibility” leading to the “liquidity trap”).

Growth is back (but built on unsustainable private debt).

Politicians won’t create demand (even though printing money is cost-free).

He describes recessions as technical monetary failures – “a magneto problem” that can be solved by politicians throwing the right switch. The resources are there, the models are there, leaders can create demand – it was a mystery why Treasury officials didn’t listen to him.

In this “bizarre world” he said, “virtue is vice and prudence is folly.”

He has also talked about the desire of people to see economics as “a morality play”.

That’s not only true but useful.

You are advising on development economics. You have two moral models to choose between.

Toil, thrift and low taxes on one side – state-created jobs and printing-press money on the other.

You don’t need black and white hats – or even a professor of economics – to know which is better than the other.



Tip offs: 0709 284 0531
team@Order-order.com

GuidoFawkes Quote of the Day

Chuka has been trying to spin the Siemens row:

Chuka Umunna: It’s no different from Sky News quoting a business leader.

Adam Boulton: Except yours says ‘VOTE LABOUR’ at the bottom.

Top Posts This Week

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.

Facebook

SMART METER PROGRAMME’S DIGITAL ACTIVITY WASTE SMART METER PROGRAMME’S DIGITAL ACTIVITY WASTE
MASK SLIPS FROM GREENPEACE ‘HEALTH CHARITY’ FRONT MASK SLIPS FROM GREENPEACE ‘HEALTH CHARITY’ FRONT
PM Gets Last Word On Thursday PM Gets Last Word On Thursday
FOXY BARONESS’ WEBSITE BORKED FOXY BARONESS’ WEBSITE BORKED
Labour: The Party of Benefits Labour: The Party of Benefits
GOVERNMENT DIGITAL SERVICE BEATS MICROSOFT INTO SUBMISSION GOVERNMENT DIGITAL SERVICE BEATS MICROSOFT INTO SUBMISSION

EUROPOL CHIEF: SNAPCHAT GREATEST TERRORIST THREAT EUROPOL CHIEF: SNAPCHAT GREATEST TERRORIST THREAT
Sky News Ballot Ballad Sky News Ballot Ballad
WATCH: UKIP Pledge Card Revealed WATCH: UKIP Pledge Card Revealed
Mini Wars Mini Wars
OZZIE NUMPTY EMAILS DAVID CAMERON’S PASSPORT NUMBER TO ASIAN FOOTBALLERS OZZIE NUMPTY EMAILS DAVID CAMERON’S PASSPORT NUMBER TO ASIAN FOOTBALLERS
Hell? Yes Hell? Yes
Cameron’s Last Speech in Downing Street (Before the Election) Cameron’s Last Speech in Downing Street (Before the Election)
Free Sun Advertising On the BBC Free Sun Advertising On the BBC
Downing Street Fighting Like Cats and Dogs Downing Street Fighting Like Cats and Dogs
Lucy Powell Falls Apart Under Questioning Lucy Powell Falls Apart Under Questioning
Feminist Jazz Hands Explained Feminist Jazz Hands Explained
WALTER MITTY CV OF ANTI-FRACKING CANDIDATE WALTER MITTY CV OF ANTI-FRACKING CANDIDATE
Cassetteboy v Cameron and Farage Cassetteboy v Cameron and Farage
MICROSOFT SHAKES DOWN PUBLIC SECTOR FOR DOSH MICROSOFT SHAKES DOWN PUBLIC SECTOR FOR DOSH
WATCH: Toby Young Skewers Labour Zero Hours Contract Attack Line WATCH: Toby Young Skewers Labour Zero Hours Contract Attack Line
MAIL TRICKED INTO QUOTING BATMAN FILM IN PLANE CRASH COVERAGE MAIL TRICKED INTO QUOTING BATMAN FILM IN PLANE CRASH COVERAGE
ANTI-FRACKING PARLIAMENTARY CANDIDATE WANTED TO WORK FOR FRACKERS ANTI-FRACKING PARLIAMENTARY CANDIDATE WANTED TO WORK FOR FRACKERS
Crick Gets Paxo’d Crick Gets Paxo’d
Cameron’s Secret A-List Cameron’s Secret A-List
Corrections and Clarifications: Brooks Newmark Corrections and Clarifications: Brooks Newmark
What is Wrong With the Lobby? What is Wrong With the Lobby?
Arrogant Bercow: “I’m Not Going Anywhere” Arrogant Bercow: “I’m Not Going Anywhere”
GOVERNMENT SHELLS OUT FOR PHOTO OF DEAD ZEBRA GOVERNMENT SHELLS OUT FOR PHOTO OF DEAD ZEBRA
DWP Press Office Wins the Internet DWP Press Office Wins the Internet