Paul Krugman: The US economy needs a bigger war
Interview with one of the most famous economists of the world, the Nobel Prize in economics 2008, professor of economics and international relations, Princeton University By Paul Krugman.
Paul Krugman, representing the Keynesian school of economic thought, received wide public acclaim for his harsh criticism of the neoliberal policies pursued by the George W. Bush administration. Krugman became a kind of “icon of the liberal style” in resistance to conservative economic thought. In 2008, the Nobel Committee handed Paul Krugman a prize in economics, noting, therefore, not only his achievements in the field of economic geography, but encouraging the progressive trend that existed at that time. However, Keynes-style politics was not implemented in the United States under the new democratic administration, and Krugman increasingly opposes Barack Obama. What are the reasons for this opposition? Mr Krugman explained his position to the correspondent of the portal Terra America.
- Dear Mr. Krugman, how could you explain the dominance of the right ideology in the States after the 2008 crisis of the year? Why do all emerging alternatives seem even more right? What is the alternative?
One of the key factors in the triumph of the right-wing ideology in the United States is that Barack Obama, from the very beginning of his presidency, pursued too small a policy of reforming the American economy, presenting it as large-scale. Here and there was a failure of perception. Obama has advertised his policy as ambitious. And now the Americans think that this policy has completely failed, that recreating the economy on rational principles is problematic. Although from the very beginning it was possible to predict that everything that Obama did would not be enough. I stated that, but no one wanted to hear anything. Then Obama began to resort to the rhetoric of the right. It turns out that we have a liberal president, who, however, declares the need to cut costs. Someone has a different opinion about how much such a reduction is really necessary, for example, I or Joseph Stiglitz, but we do not participate in the political process. At the moment we, in fact, have a center-right administration in the USA and an extreme right-wing opposition. And for another kind of ideas there is no place.
- Is it possible to say that powerful military industrial complex and militarism are the basis for economic growth? Under Roosevelt, the final overcoming of the Great Depression was due to army orders during the war. Does this mean that in order for the United States to exit the current crisis, America’s participation in a large-scale armed conflict is necessary?
The most important thing is to increase government spending on a large scale. In practice, this usually happens when there is a war. We are really fighting a war, but if we evaluate it in currency notes, then this is a small war. To lift the economy of such a war is not enough. You need something bigger and more impressive. I once joked, and this joke has its own truth: if you convince politicians that we are threatened by aliens from space and force politicians to spend money on creating the infrastructure necessary for defense against outsiders and weaponsthen it will give a huge impetus to the development of the economy. And if then they tell us that there were no newcomers, then everything will be fine - the economy will be restored! But it would be much better, of course, to spend money on repairing roads and building transit systems, but this option is not being considered now. The problem is that for this, the people in charge of America at the present time do not have enough elementary political will.
- How could you describe the policy of the current economic team of Barack Obama? Is this some kind of strategically meaningful policy, or following the circumstances?
At first, they made several strategic decisions, but, unfortunately, these measures were inadequate due in part to political constraints. At this stage, they simply react to what is happening. This is partly due to the fact that within the framework of the existing system in the United States they have no chance of implementing any progressive legislation. Thus, their possibilities are limited by small measures on the edge of the political field. This causes despondency. It is clear that at the moment they do not have a holistic vision of a way out of the crisis. But the worst thing is that it is no longer clear what would have changed if it had appeared in them.
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