Washington, May 3 (IANS) Nobel Prize-winning economist Paul Krugman has called for more government spending and an end to US austerity measures in a bid to jolt the sluggish economy back to life.
In a new book released this week, Krugman, a columnist at The New York Times, contended the US was in a state of “depression” — though one less dire than the Great Depression of the 1930s — an assertion that runs counter to most economists’ view that the economy is merely in a sluggish recovery from a major recession.
Krugman said Wednesday that the nearly 4 million long-term unemployed – those out of work more than a year – will have a “corrosive” impact on the economy and “do enormous damage” to the country in the long run, Xinhua reported.
“The magnitude of this disaster tends to get forgotten,” he said during a talk at the Economic Policy Institute, adding that long-term unemployment will set back the careers of many young people for years to come, impacting not only incomes but also tomorrow’s US tax receipts.
The book, “End This Depression Now”, calls for a reversal of austerity measures on state and local governments, a boost in infrastructure spending and a short-term increase in unemployment insurance.
A large cash injection would get the economy back to full employment within two years and would be relatively easy to pull off, he wrote.
“People like me are not preaching some outlandish, radical economic theory,” he said.
“We’re actually saying take your textbooks seriously. And take what we know, take what we’ve learned from economics from 80 years of experience and apply it to the situation.”
He added that US austerity measures have actually shrunk the economy, precisely the opposite of what they were intended to do.
