{"id":2621,"date":"2009-12-11T12:53:33","date_gmt":"2009-12-11T17:53:33","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=2621"},"modified":"2009-12-11T12:53:33","modified_gmt":"2009-12-11T17:53:33","slug":"dr-krugman-misdiagnoses-what-ails-the-job-market","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/2621\/dr-krugman-misdiagnoses-what-ails-the-job-market\/","title":{"rendered":"Dr. Krugman Misdiagnoses What Ails the Job Market"},"content":{"rendered":"

In today\u2019s New York Times<\/em>, economist Paul Krugman seems to think that along with propping up failed financial institutions and distorting the nation\u2019s currency, the Federal Reserve should also play a part in creating jobs<\/a>. Predictably, the answer is more government spending.<\/p>\n

Mr. Bernanke has received a great deal of credit, and rightly so, for his use of unorthodox strategies to contain the damage after Lehman Brothers failed. But both the Fed\u2019s actions, as measured by its expansion of credit, and Mr. Bernanke\u2019s words suggest that the urgency of late 2008 and early 2009 has given way to a curious mix of complacency and fatalism \u2014 a sense that the Fed has done enough now that the financial system has stepped back from the brink, even though its own forecasts predict that unemployment will remain punishingly high for at least the next three years.<\/p>\n

The most specific, persuasive case I\u2019ve seen for more Fed action comes from Joseph Gagnon, a former Fed staffer now at the Peterson Institute for International Economics. Basing his analysis on the prior work of none other than Mr. Bernanke himself, in his previous incarnation as an economic researcher, Mr. Gagnon urges the Fed to expand credit by buying a further $2 trillion in assets. Such a program could do a lot to promote faster growth, while having hardly any downside.<\/p><\/blockquote>\n

But there is a downside, and it\u2019s more than immediately exceeding the proposed raise in the national debt by $1.8 trillion<\/a>. As astute observers of California politics say, the government doesn\u2019t have a revenue problem \u2013 it has a spending problem. As I\u2019ve mentioned before<\/a>, the main impediment to private sector job creation is not access to credit: it\u2019s uncertainty about what the government will regulate or tax next. Some form of human activity has to be taxed in order to pay for \u201cstimulus\u201d policies like the one Krugman supports. Business owners know this because they must identify income before they pay out for services, goods, and yes, people. Adding an employee to the payroll is a tremendously expensive decision that isn\u2019t made easier just because the Federal Reserve makes it easier to get a company credit card. If Washington is serious about job creation it needs to stop spending and taxing other people\u2019s money.<\/p>\n","protected":false},"excerpt":{"rendered":"

In today\u2019s New York Times, economist Paul Krugman seems to think that along with propping up failed financial institutions and distorting the nation\u2019s currency, the Federal Reserve should also play a part in creating jobs. Predictably, the answer is more government spending. Mr. Bernanke has received a great deal of credit, and rightly so, for […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[544,454,251,206],"class_list":["post-2621","post","type-post","status-publish","format-standard","hentry","category-posts","tag-federal-reserve","tag-job-creation","tag-new-york-times","tag-paul-krugman"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/2621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=2621"}],"version-history":[{"count":4,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/2621\/revisions"}],"predecessor-version":[{"id":2625,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/2621\/revisions\/2625"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=2621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=2621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=2621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}