Paul Robin Krugman is an American economist who is well known in the field of international finance and economics studies. He is the professor of Economics at the graduate center and an op-ed columnist for the New York Times. The author has been awarded with several prizes and among them is the Nobel Memorial Prize in economic sciences. In the book “end this depression now!”, In the book, he has focused on things about depression and gives many argument and analysis on unemployment problems as well.
His book highlights on unemployment and supports the economists John Maynard Keynes analysis. The Keynesian economics deals with the short run that also mostly with the recessions and economic output with the help of aggregate demands. Paul explains that the rate of unemployment is increasing in a daily basis, today. Due to the present economic condition, mostly people with low income suffer a lot. Among the unemployment only, there is another unemployment rate that most economists today are interested in, i.e. involuntary unemployment. The involuntary unemployment was also stated by Keynes where he explains that it is that kind of unemployment where people are willing to work at certain wage but are still considered to be unemployed. There are unemployed people, but they select to survive with prevailing wages, due to the never ending economic issues. In other words, people are avoiding marginal tax rates or other bonus incentives to work. He wants to point out what people can do, until the last, but thinks that no one is going to take it seriously. instead of that, he expects by the time the book reaches to the shelves of people, maybe there will be rapid path to recovery. Paul Krugman starts his book with the analysis of the damaging effect that unemployment could cause in the long run. The damage would be done in the ordinary people’s life and the nation’s economy as a whole. As everyone knows that unemployment is the serious cause and that the author wants to make it clear with his analysis that the unemployment should be stopped or some actions should be taken immediately, as soon as possible. The central argument he makes it is that unemployment is about insufficient demand because, people are mostly in the debt, and they are not motivated to have heavy investment. The only left to do investments is the government. This results in only one actor to pay the demand, i.e. the government. The author explains that people are still under the influence of crisis and no one in interested in using tools to solve it, as people have become much lazier and only want easy tasks which has resulted in more problems. Paul Krugman, further gives detail about the common economic condition, The Great Depression, he explains that the problem can be fixed with the knowledge, skills and tools of the economic actors. However, due to self-interested thought of many actors and mostly politicians it has stopped them to fix the problem or bring depression to an end. The problem has left the economy with very bad and huge impact. He has given idea about the causes of problem which is mostly the negligence of housing field because of less industries and more numbers of construction houses. As the spending were less on investment, the economy started to shrink the sales. Thus, this resulted in low rate of employment due to less demand and the national government also tends to receive less income. Due to the unemployment rate taking heights, people started to spend less and decrease the demand which can be mentioned as the less transfer of demand according to Paul. He argues that the demand is not created new, but is transferred from one to the other. This resulted in having less output from the nation’s economy. The politicians are not fixing anything and the author wants to question them, “why not?” He then gives his own answers to to his own question stating that the politics has given unfair advantages and people only think of self satisfying needs in power rather than working for all. He makes an attempt for people to know the reality which is going on with the government. The book has many chapters which discuss on the topics of self realization about how an individual is spending the income and where does it go. The author gives recommendation for the reader to read specific chapters that also explains about the issues by which one can know how much the economy can be depressed by the failure of coordination. The economy can be hurt by the lack of productive capacity as well. He begins the first chapter of his book explaining that nothing is good in the state of economy and many things are really bad. He tries to question about the bad things that is taking place in US economy, and himself answers the bad aspects. The rate of unemployment is increasing excessively, due to which the present economic system cannot be arranged effectively. Paul Krugman further analyzes the problems and explains that the monetary policy alone cannot fix the nation’s economic problem as there are many workers who have high skills, but work in the wrong place. He gives the solution of the problem by stating, people possessing high skills should work in the area or the right place. This can also increase the economy of the country as the result will be effective and efficient giving more output. To raise more output and bring the country’s economy out of the depression, people should have increasing government spending. The major way to end the depression can be increased government saving.
In the author’s view, the mortgage was a mess and only included people sunk in large debts. The government should not have lent much more than what they earned, which should be stopped as well. Paul also gives the idea of different economists in his view and not economy alone. He gives the idea about the inflation and wants the economy to recover soon. He emphasizes on the fact that the consumer and business confidence should go above with the economic recovery.
He argues that the role of money should be focused for doing good in the politics. He finds it hard to find out what the economic actors or the politicians really believe. He wants them to know that bringing inequality into the economics is a political environment is being noticed by many. In the economy, the rise of inequality has many driving forces for the nation’s economic condition as a whole. In my view, the growth of inequality is also good for some individual. The budget of the government deficits is the most flustering aspect. Paul Krugman points out the citizens of the country can be trapped in long term unemployment and can never recover out of it. He explains the causes of high inflation can be the minority of costs. He explains it is because that the minority costs can hinder individuals to spend money. He makes the readers believe that the inflation when increased can make the interest rates to decline and even reach zero which results in the borrowers to pay back the loans at the given interest rates and not any percent more than that.
He has given facts about the real GDP of America that grew in the early 1980s, but later it stayed to 2 or below 2. It then bounced back later with sharp acknowledgement. He wants the politicians of the country to focus on certain areas which can be helpful. The first area he has focused on his book is the government spending. Government spending should be increased in the private sectors. The private sectors should utilize it in the full productive capacity which will surely increase the output and increase in economy. Another point he emphasizes on the book is that the seller and the buyer in the economics should have a confidence to rise from the recovery and that budget cuts can be compensated. He highlights on the U.S. governments policy that how it provides lots of debts to the poor people. The interest rate is then increased. For the poor people, it becomes really hard to pay off which gives rise to many economic disputes in the country. He has examined various services that the economy produces after the inflation rate. The other area he has emphasized on is that if the government can service the people, unemployment rate can decrease very fast. Krugman has also focused on the differences between the economic aspects of Europe and USA. As everyone knows the political status of Europe is in the path of success due to peace and integrity. To promote full employment, the government of the country should start working on areas to reduce the interest rates. The interest rates should be low and should not be apprehensive. Household has its own assumptions according to the author. According to the household, during the time of currency devaluation, the unemployment rate can decrease and bring benefits. He has recommended that high inflation is good to a certain level and states that the higher inflation can affect in reducing the purchasing power and can also affect the demand.
The economic product’s prices can increase or decrease due to the demand and supply of goods and services. Almost many product’s prices fluctuate, but according to Krugman, there are certain products whose price remains the same during the supply and demand. The products whose price does not change are usually revised and produced according to the pre planned assumptions in inflation. In his book, he has highlighted the services of federal government and wants the readers to know that the federal government is not responsible for managing and printing of the money. The money printing results in inflation as the prices of the product in the market forces to function the demand and supply notion. Paul Krugman also emphasizes on the US government’s promises and mentions that The President, Barack Obama’s promise to bring economic crisis to end and Krugman points out that the crisis came to some extent, but did not eradicate it. He complains that the actions were not gallant. He has supported the strategies, but feels that the implementations were not strict and were based short term advancement rather than looking at the long term issues. He criticizes the government by telling that the economists and government who were making the strategies did not have enough knowledge about the economic conditions and were not able to know the required functions.
Thus, on his book, he tries to explain that the problem still exists in the economy. The government has done changes, but not the the expectation of the people. The author has also suggested various examples and strategies by which the depression can be completely ignored or taken out from the United State’s economy.