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Like most of Krugman's blogs, he's over-simplifying for a mass audience. Full-employment is very easy to achieve for the government, if that is the government'

Like most of Krugman's blogs, he's over-simplifying for a mass audience. Full-employment is very easy to achieve for the government, if that is the government's only goal. Create artificial demand for ditches to be dug, and then hire people to dig those ditches. The fundamental question is not how to generate artificial demand, but how to generate artificial demand that succeeds at generating useful value. Now, that spectrum has a range of answers. Sometimes you don't really care about value, or you take value on faith, e.g. when constructing public infrastructure works. They put people to work, get people spending, and everyone agrees that the country is in dire need of infrastructure improvements right now. There are, however, two non-infrastructure extremes: a) spending money on strong companies that will become stronger (instead of failing due to temporary unavoidable circumstances), but if anyone knew for sure which companies these were, the government wouldn't need to spend any money at all, investors would step in and pocket the profits. Then there's b) spending money on weak companies that would've failed in a year or two anyway, and emergency bailouts only forestalls the inevitable, wasting money and time and creative potential for nothing. Now most companies are on a spectrum, which means that the strategy of such wide-spectrum spending is to offset the losses of boosting weak companies with the gains made by strong companies, overall. Will it work at generating (net) useful value? Maybe. If so, then the currency is tied up in the extra value generated, and we'll avoid inflation. If not, then we have far more currency in circulation for the same amount of value, and prices will go up in tandem. Jury's still out.

throw0101a 6y ago
> Full-employment is very easy to achieve for the government, if that is the government's only goal. This is a bit black-and-white: full employment may not be the end-goal of stimulus spending and the government generally, but rather simply just getting the ball rolling. Pre-pandemic there wasn't much need of stimulus, and certainly no need of the December 2017 tax cut (TCJA) that was supposed to "pay for itself" per its proponents, given the state of the economy and unemployment rate: * https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE Now that isn't the only measure of 'success', but if the unemployment rate is (say) >8%, then spending money on 'non-useful value' work, so that people can pay rent and buy food, isn't such a bad thing in the short-term (IMHO). Some certainly argue for full-employment all the time, but that's a separate discussion than the general idea of raising aggregate demand to 'induce' economic activity. > Now, that spectrum has a range of answers. Sometimes you don't really care about value, or you take value on faith, e.g. when constructing public infrastructure works. They put people to work, get people spending, and everyone agrees that the country is in dire need of infrastructure improvements right now. Yeah: * https://www.npr.org/2018/05/15/611389675/why-its-infrastructure-week-again https://www.npr.org/2018/05/15/611389675/why-its-infrastruct... * https://www.theverge.com/2020/3/10/21173209/infrastructure-week-dead-rebranded-trump-tweets-united-policy https://www.theverge.com/2020/3/10/21173209/infrastructure-w... * https://www.infrastructurereportcard.org https://www.infrastructurereportcard.org

throw0101a 6y ago

> Full-employment is very easy to achieve for the government, if that is the government's only goal. This is a bit black-and-white: full employment may not be the end-goal of stimulus spending and the government generally, but rather simply just getting the ball rolling. Pre-pandemic there wasn't much need of stimulus, and certainly no need of the December 2017 tax cut (TCJA) that was supposed to "pay for itself" per its proponents, given the state of the economy and unemployment rate: * https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE Now that isn't the only measure of 'success', but if the unemployment rate is (say) >8%, then spending money on 'non-useful value' work, so that people can pay rent and buy food, isn't such a bad thing in the short-term (IMHO). Some certainly argue for full-employment all the time, but that's a separate discussion than the general idea of raising aggregate demand to 'induce' economic activity. > Now, that spectrum has a range of answers. Sometimes you don't really care about value, or you take value on faith, e.g. when constructing public infrastructure works. They put people to work, get people spending, and everyone agrees that the country is in dire need of infrastructure improvements right now. Yeah: * https://www.npr.org/2018/05/15/611389675/why-its-infrastructure-week-again https://www.npr.org/2018/05/15/611389675/why-its-infrastruct... * https://www.theverge.com/2020/3/10/21173209/infrastructure-week-dead-rebranded-trump-tweets-united-policy https://www.theverge.com/2020/3/10/21173209/infrastructure-w... * https://www.infrastructurereportcard.org https://www.infrastructurereportcard.org