Paul Krugman, Nobel Economic Laureate (stop laughing — if Barack Obama can get a Peace Prize then Krugman can get a Nobel for economics), has reviewed what he called a “seriously ugly jobs report” and concluded that more government spending is needed quickly:
The situation cries out for aggressively expansionary monetary and fiscal policy. Instead, however, all the political push is in the opposite direction.
Earlier a person on Twitter (if I remember who I’ll link it) wrote something along the lines of “this is like trying to cure someone’s meth-mouth by administering more meth.”
And for those conservatives who say that we need to “cut spending,” Krugman actually argues that we have been cutting spending and this latest lousy jobs report is the result of those cuts.
What does Krugman consider to be a “slash in government spending” in the past year? I hope you’re sitting down — Krugman’s “slash in spending” is the stimulus money that is fading away. So the solution to a tanking economy — an economy that got even tankier thanks to the stimulus — is to double-down on the original stimulus that even Reuters reporters are saying might have only made things worse?
Here’s a chart of all post WWII recessions listing at the bottom the number of months from peak employment at the start of each recession and at the left the percentage of jobs lost. Guess which line is the recession we’re in right now:
Anybody who can look at that and say that the only way to recover is for the government to crank up spending and take more money from the private sector via tax and fee increases is a… well, a progressive economist or DC liberal.
The ultimate problem with the “big government” thinking is that after a while — and we’re seeing it with thousands of public sector layoffs around the country — the system can’t sustain itself. It’s best to have those jobs in the private sector where they can be sustained through the natural order of the free market economy. In other words, big government liberals make high unemployment inevitable by creating a public sector economy that isn’t sustainable, and everybody else gets stuck with a bill that must be paid at a later date, crippling the private sector, and nobody wins.
Margaret Thatcher put it more simply: The problem with socialism is that eventually you run out of other people’s money.
(h/t Don Surber)