Paul Robin Krugman is an American economist, distinguished professor of Economics at the graduate center of the city University of New York, and an op-ed columnist for The New York Times. In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to new trade theory and new economic geography. In the fifth year of the global economic crisis, Paul Krugman gives a prescription for a full recovery in his book End This Depression Now! His preferred remedy is increasing government spending to cure the United States’ unemployment problem. Here, he focuses on things and what we should do further rather than how it did occur in the book “END THIS DEPRESSION NOW!” Avoiding marginal tax rates or incentives to work. It also highlights about the unemployment; he supports Keynes in this book. He also explains that if the politicians are able to figure out the clarities and will to end this depression now. In his book, he explains that People who have, for whatever reason, taken all of us down the wrong path, at Immense cost to our economies and our societies, and to appeal to informed public. He is not confirmed and points out that maybe the economies will be on a rapid path to true recovery by the Time this book reaches the shelves, and this appeal won’t be necessary.
Krugman starts with an analysis of the damaging effects of long-term unemployment on people's
lives and the economy. After this analysis, he makes clear that urgent actions need to be taken to solve this serious problem. His central argument is "unemployment is all about insufficient
demand". Since heavily indebted people and businesses are not eager to make investments, the
government is the only actor who can spend to create demand. Contrary
to those pushing for
immediate fiscal consolidation, he repeats Keynes central dictum: "The boom, not the slump, is the time for austerity". Krugman argues we are still under the influence of the crisis, but we are not using all the tools and knowledge which we have to solve this depression. What is required is political will to take the measures needed for a quick and complete recovery. This raises an intriguing question: if the problem and solution are not too complex, why do politicians not fix it? His answer is that bad policies which give unfair advantages to wealthy and influential people have a powerful hold over our political culture. This book is an attempt to make the lessons of macroeconomics textbook and make them relevant to the current reality. And it is going to be tough reading, especially for conservatives. Krugman explicitly presents his analysis in direct rebuttal to ideas advocated by well-known economic conservatives. His style is engaging and, as ever, he makes an effort to describe, sophisticated economic concepts in a comprehensible and fun way, utilizing stories and parables. There are several lessons from the book which the author insists must be learned. Firstly: "it is the fact that your spending is my income, and my spending is your income". Secondly, an economy can be depressed due to failures of coordination rather than lack of productive capacity. Thirdly, the solution of significant economic problems may not be as hard as it seems. The first chapter of the Krugman’s book explains that nothing is good in the state of economy and the things are really bad. He tries to question “How Bad are the Things” in his first chapter. The rate of unemployment is increasing in a great way and due to the present economic situation, they are the one who suffers the most. Among all the types of unemployment, involuntary unemployment is what economists are interested as it means that there are unemployed people who have selected to survive without doing any work, but not due to any economic issues.
The author points out that, people who want to work but cannot find work suffer greatly, because they have chosen not to work, or at least not to work in the market involuntary unemployment, that anyone can find a job if he or she is really willing to work and is not too finicky about wages or working conditions. Those who are seeking work but do not have jobs are not considered. The U.S. unemployment measure the news based on a survey in which adults are asked whether they are either working or actively seeking work. He explains another ruling problem which is ruined lives of several people. All this churning means that some unemployment remains even when times are good, because it often takes time before would-be workers find or accept new jobs. As we saw, there were almost seven million unemployed workers in the fall of 2007. In times of prosperity, however, unemployment is mostly a brief experience. Good times there is a rough match between the number of people seeking work and the number of job openings, and as a result most of the unemployed find work fairly. Of those seven million unemployed Americans before the crisis, fewer than seekers for every job opening, which means that workers who lose one job find it Six million Americans, almost five times as many as in 2007, have been out of work for six months or more; four million have been out of completely, because long-term unemployment was obviously rife during the great long-term unemployment is deeply demoralizing for workers anywhere. Official unemployment rate, but the number of Americans who were unemployed yet a longtime really erode work skills, and make you a poor hire? Lose a job in this economy, and it is very hard to find another; stay unemployed long enough, and you will be considered unemployable. Anyone trapped in long-term unemployment; even if he or she isn't in financial you cannot find a job, when the life you built is falling apart because funds are running unemployment among young workers, like unemployment for just about every situation, but because young workers have a much higher unemployment Roughly one in four recent graduates is either unemployed or working full-time jobs, probably because many of them have had to take low-paying jobs that high unemployment with those who graduated in boom times; the graduates with damage to the lives of young Americans will be much greater this time around. In today’s economic condition which is the great depression, at most politicians are both able to fix the problem with their knowledge, skills and tools. However, due to self-interest and confusing thought within the leader had stopped them to fix and end the problem which results bad impact in the economy. Krugman points that the basic reason for the depression is negligence of housing field as there were and more construction of houses. Less spending industries soon followed shrink of the sales and thus, the national government also tends to receive less income. Therefore, the output from the nation’s economy is quiet low and the rate of unemployment is often high. People spend less and decrease demand that is less transfer of demand as Paul said that demand is not created new but is transferred from one to another.
The services produced in an economy, adjusted for inflation; roughly speaking, it's the amount of stuff that the economy makes in a given. In an average year before the crisis, America's real GDP grew between 2 and 2.5 which is because the economy's productive capacity was growing were occasional setbacks recessions in which the economy briefly shrank instead as the economy made up the lost ground. At the bottom of that slump, in late 1982, real GDP was 2 percent below its level, but the economy proceeded to bounce back strongly, growing at a 7 when the economy stabilized was steeper and sharper, with real GDP falling. The result is an economy producing far less than it "potential" real GDP, defined as a measure of "sustainable output, in which the economy is operating about 7 percent below its potential to put it a bit differently, we're currently producing around a trillion dollars less of value that's $5 trillion, or $7 trillion, or maybe even more that we'll never get back. Economy will eventually recover, one hopes but that will, at best, mean getting back to its old trend line, not making up for all the years it spent below that trend line prolonged weakness of the economy will take a toll on its long-run potential.
In order to achieve full recovery, Krugman proposes policy changes in three areas. Firstly, the government should spend where the private sector is not willing to make use of its full productive capacity. Additionally, he emphasizes that consumer and business confidence will rise with the economic recovery, and, therefore, there is no need to be afraid of deficits. One spending method the government can use is providing aid to states to compensate for their budget cuts. This approach will serve to decrease unemployment and restart projects which could not be realized earlier. Another method is more aid to distressed individuals in various forms, such as a temporary increase in unemployment insurance and other safety net programs.
Conclusion:
While Krugman makes important points about the need for stimulus packages to reduce unemployment, a crucial consideration is how this money is spent. Expenditures which do not have high multiplier effects in the economy may result in only weak or temporary demand increases and, therefore, waste money. Similarly, while Krugman recommends moderately higher inflation, he does not mention the effects of higher inflation on reducing real purchasing power and total demand, which are the flip side of these policies. Despite these oversights, this book is an important contribution. In an environment where calls to “austerity” are being regularly made, Krugman offers an alternative set of ideas for solving the United States’ unemployment problem. Along the way, this book provides readers without an economics background a “complimentary” introduction to macroeconomic theory that is clear and comprehensible.