It's not because workers are lazy, or because their skills don't fit the new economy, or because regulations are too tight, or because of some quirk of "Capitol Hill culture," or whatever the excuse is. Women are left caring for both small children and the elderly as their childcare services are cut.
International Trade Institutions and Policy. Olivier Jeanne, Johns Hopkins University. Ed Dolan's econ blog. Ed Dolan, Stockholm School of Economics. More resources in International Economics. Study skills for Economics students Our site Studying Economics has tips including writing and referencing , revision , and help with maths.
Know your rights; respect others'. Resource types Sub-disciplines Pedagogical topics Data Online sources. Since fewer people want to go out in the winter, the logical choice for any single couple is to baby-sit in the winter and go out in the summer, but that leads to supply issues in both seasons.
But if each coupon buys one hour of babysitting in winter, but only 45 minutes of babysitting in the summer, couples have an incentive to spend them instead of hoarding them, thus keeping them circulating, and so the co-op economy survives. And that's why persistant inflation can be a good thing. Obviously, this is incredibly simplified, and in a real economy there are dozens or hundreds of other things to consider, but it's a surprisingly good example for how concise it is and how silly it seems.
I don't want to go into too much detail about the various crises covered in the book, because Krugman does an excellent job, but a lot of them come down to three things: A speculators gonna speculate or B failure by the government to properly regulate or C moral hazard.
Moral hazard is probably the most immediately relevant to Americans like myself, since it's a huge reason for the banking crisis that's currently still going on and was never properly dealt with. The basic principle is that betting with other people's money means you don't really care as much when you lose, and most of modern finance is betting with other people's money without risk--the government will always bail out the banks, then if they win they keep all the money, and if they lose they suck the extra from the government, and thus win either way.
When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You are a den of vipers and thieves. The book says that austerity is precisely the wrong way to deal with the kind of crises depicted within, because seizing up a market further when the flow of money has already been choked will just make things worse. Here is the warning, and it was not listened to.
He suggests that the government temporarily nationalize the banks and directly lend to the consumer while the financial system was sorted out. Unfortunately, due to supply-side idiocy and Protestant work ethic moralizing that economy needed to "suffer" to purge out the "rot," none of that happened. Unfortunately, the book loses a star from me because I don't think that the solutions proposed really work. Krugman says that governments need to be sure to regulate the "shadow banking system" that provides a lot of the benefits of the actual banking system without the same restrictions.
Most of the solutions are on the national level, but as Krugman admits, a lot of the problems were caused by global finance, and without any sort of international organization to regulate that, the end result of regulations in any individual country are the creations of more Monacos and Cypruses and Canary Islands. Exactly what form the next response should take isn't clear, but financial globalization has definitely turned out to be even more dangerous than we realized.
But if we, and Europe, can't even handle our own national financial systems, how can we regulate the international system? If only we had an answer. Krugman's claim at the front of the book that he intends to make it more readable to the wider non-economic savvy public doesn't really hold up by the end sadly.
There are many head-scratching paragraphs that I had to read multiple times to properly understand. Economics to me is like most sciences, I'm sorry, but no matter what people say, they are the sort of subjects that can never be fully accessible to the average Joe.
The very nature of their subject requires jargon, near Mostly very good. The very nature of their subject requires jargon, near impenetrable concepts and a hefty dose of a good Maths background to properly appreciate. Still, Krugman is better than most, and has some very funny turns of phrases here and there. His baby co-op metaphor at the beginning of the book for the way the housing market was treated by banks was particular inspired, and an excellent way to clarify the complex clusteruck of CDOs, sub-prime mortgages, derivatives and others that lead to the crash.
Overall, his analysis is one I agree with. Unregulated banking, along with their wanton stupidity and their ever increasing, never ending demand for more money that all capitalists share alike led to the collapse. Not, as the pernicious, worthless, dishonest little scum in the UK Conservative Party have managed to suggest, because of Labour's spending A ludicrous claim.
How does a spending deficit cause a banking collapse? Krugman provides a clear, insightful, hugely detailed outline of how things went wrong, and subsequently gives an informative plan for a global recovery.
Sadly, the book, being published in , now seems a disappointingly lost cry, as his plans for a worldwide economic recovery V. Keynesian spending and growth increases have not been pursued. In actuality, we have the perverse situation in which a neo-liberal free market capitalist failure is trying to be resuscitated with a neo-liberal, free-market capitalist solution. In continental Europe it's been an absolute disaster, with mass unemployment and huge political and economic unrest stemming as a result of it.
In the UK it would seem to be on the surface doing much better high employment, low inflation etc. Also, the wider and more crucial point to make is that austerity, if not an economic red herring based on shaky and ill-founded principles the report George Osbourne used to justify his austerity plans were subsequently proven to be dogshit, which numerous data errors in it , has utterly failed on a moral level. It is an absolute obscenity to humanity.
It has produced a destroyed NHS health care system, which as Noam Chomsky has so astutely identified is a classic case of stealth privatisation, where you defund something to the point of collapse, look at the numerous failings, let the media go "look!
Public services don't work! The benefit social security system has ripped to pieces, with the mass majority of people who need benefits to, you know, live, being cruelly stripped off it, leaving them starving and reduced to poverty because of the fanatical determination of the Conservatives to stamp out the minuscule crime of benefit fraud which counts for something like 3. Disabled people have suffered even worse through the social cleansing programmes, being chucked out of their wheelchairs in order to be shunted back to work, and sometimes actually killing themselves out of despair.
For the youth of today, they have seen public education struggle, their EMA cut, and higher tuition fees. For women, lack of money into the police force they are failing to record , crimes a year, including one in four sex offences in the UK.
Women are left caring for both small children and the elderly as their childcare services are cut. Funding for refuges and rape crisis centres has also been cut.
At local levels, councils have essentially become a pointless club where councillors and local MPs meet to sit around twiddling their funds, as local government money have been so slashed it has left services such as local NHS hospitals in dreadful states, and libraries constantly under threat of closure, and with little to no power left to them.
I could go on. There is a litany of abuses and abominations committed under the guise of a rational "technocrat" way of dealing with the economy. It is of course, not technocratic, but deeply ideological.
The right wing have always hated the concept of the state. They've always hated social democracy. They've always hated the idea of helping the poor and protecting the weak. They've always sneered and spat on the concept of a society worthy of being called one, where the poor, the working, women, ethnic and racial minorities, the disabled and the young are treated equally and with fairness and decency.
They've harboured these hatreds since the end of WW2, but put on a brave face and pretended to go along with the enormous social and economic changes produced after WW2. Thanks economic crash, it has given the Right the chance to utterly and finally destroy the state, and drag us all back to their utopia of the s reborn. I feel glad that people like Paul Krugman are around to constantly poke holes and demonstrate the lies and idiocy surrounding right-wing neo-liberal thinking.
I only wish more people had listened to him. It acts more like a textbook sometimes than a work of political theory which is probably what it was meant to roughly be: But it is still very erudite, and a great educational tool for understanding the mess we're in now.
I read this because I wanted to hold an informed opinion about the recent financial crisis both to help me interpret many of the headlines that have appeared lately and also to help me understand just how bad it is--I mean, really, is this going to be the unraveling that will cause us to implode? Krugman clearly taught me well on both counts. Reading the initial chapters about Japan's economic crisis in the late 80s and 90s, Argentina's in , Thailand in the late 90s I thought less benefici I read this because I wanted to hold an informed opinion about the recent financial crisis both to help me interpret many of the headlines that have appeared lately and also to help me understand just how bad it is--I mean, really, is this going to be the unraveling that will cause us to implode?
Reading the initial chapters about Japan's economic crisis in the late 80s and 90s, Argentina's in , Thailand in the late 90s I thought less beneficial until I saw how he referred to them in the later chapters. By the end of the book, I saw that his initial chapters were clearly needed for a full understanding of the what ails us.
The last three chapters are worth the price of admission alone. Take note of some of these choice sentences: But it might be more accurate to say that it's like everything we've seen before, all at once: Most of the book deals with factual and detailed economical policy and since my background is in Liberal Arts, I was able to follow most of it gingerly even though it may be dispassionate reading.
There are only a few times in the short book in which Krugman gives financial and moral advice. Finally, literally, the last sentence of the book how can it be a spoiler if there is no plot? I am glad I read this book. Interesting and very readable, but left some questions unanswered.
This book was very readable. Paul Krugman does a great job providing simple, succinct, easy-to-understand explanations of economic ideas and also to-the-point, in-a-nutshell historical information.
I haven't yet found anything of his a slog to read, which I do appreciate. His main thesis seems to be that economists don't know as much as they thought they did, and the profession needs to ditch the facile advice too many of its practitioners have been giving over the last years and do a lot more thinking and researching.
His biggest specific point seems to be that when nations open up their economies to global capital flows as they have been advised by the IMF etc. He says the Latin American crisis that began in Mexico in , the Japanese struggles that began in , and the Asian crisis that began in foreshadowed the current global crisis and should all have served as warnings for the rest of us. He thinks we need to find a way to protect our economies from sudden massive capital flight, which for no obvious reason afflicted Argentina as well as Mexico in Argentina had been doing well and acting responsibly.
Such capital-flight events are much like bank runs, because they can devastate even a sound bank - or economy. He doesn't do that great a job tying Japan into that story.
Krugman uses the story of a babysitting co-op, which was a kind of mini-economy, as an explanatory tool. But that story wasn't fully fleshed out, and left me with a burning question: WHY did the co-op have a recession? Why was the number of babysitting coupons fine for a while, but then somehow not fine anymore? Were some people accumulating them, causing others to have fewer? Or did everyone start wanting to have more coupons in reserve at the same time?
And if so, then why? It seems to me that simply issuing more coupons may be only a temporary fix that holds the seeds of other problems down the line. View all 7 comments. Though I have a reasonable grasp of the current global financial crisis, I wanted to know a little more about its inner workings. After reading several articles by Paul Krugman, I decided to pick up his book, especially since it now has updates from the financial crisis.
Krugman strikes a fine balance between simplifying global investment banking and unloading the economist jargon. In order to explain the basic characteristics of a recession and several other market fluctuations he uses t Though I have a reasonable grasp of the current global financial crisis, I wanted to know a little more about its inner workings. In order to explain the basic characteristics of a recession and several other market fluctuations he uses the parable of a babysitting co-op, where each family has coupons worth 1 hour of babysitting that they can earn, spend and save.
The simple transactions between couples signify market activity and resources. Eventually, even this parable gets a bit involved, but serves its purpose well.
It is with this understanding that Krugman wrote this book in the first place. He argues that the Great Depression gave the world a taste of financial catastrophe but also provided the history and macroeconomic theory to prevent future collapses. Despite that, there have been many brutal recessions that could have been avoided had policy-makers taken the proper steps.
For good measure, he throws in a de-glorification of Alan Greenspan. Finally, he ties it all together with the Hydra that is our current financial crisis, one that combines calamity in housing, credit and currency.
For anyone looking for a succinct breakdown of the current financial crisis, this book does the job. This book is brilliantly accessible. He first chastises economists for not expaining things clearly. Then, he uses the simple example of a babysitting coop to explain the business cycle. Without using the term Demurage, he cites the Keynesian and Gesellian idea of forced spending into the economy which increases circulation and ends the deflation cycle.
But he expains it without using any of these terms. Too bad phd students are not allowed to do this in a thesis Yes I saw one such This book is brilliantly accessible.
Too bad phd students are not allowed to do this in a thesis Yes I saw one such thesis, but I think it was sociology, not economics, nor economic social policy, which was my area.
I recall reading this in for my thesis, and wondering how my office-mate, an economics phd student, could know almost nothing about the history of economics.
Now I know, sadly, that most economists seem to ignore history. Or brush it aside. Other authors mention a roughly 19 year boom-bust world economic cycle, but the cycle is there, and is not stable.
Yet the warnings of Keynes and even Greenspan were ignored. The Asian crises had all the hallmarks of the Great Depression, and international reaction follows, it seems, the errors of the Depression. He warns "As in the Victorian era, capitalism is secure not only because of its successes-which, as we will see in a moment, have been very real-but because nobody has a plausible alternative.
This situation will not last forever. Surely there will be other ideologies, other dreams; and they will emerge sooner rather than later if the current economic crisis persists and deepens. Let's not "learn all the wrong lessons" again. My hope is that a this book is on the nightstand, desk, bathroom book caddy, and coffee table of every economic policy wonk this side of the Potomac and the other side, too!
Krugman, who wrote this book in and updated it during the 4th quarter of , clearly and succinctly presents the multiple case studies, warning signs and missteps that led to our current economic crisis. From Mexico and Argentina fiscal failures in the s and early 90s to the J My hope is that a this book is on the nightstand, desk, bathroom book caddy, and coffee table of every economic policy wonk this side of the Potomac and the other side, too!
From Mexico and Argentina fiscal failures in the s and early 90s to the Japanese recession and the Asian Tiger meltdown of the 90s to the tech stock and housing bubbles bursting in our own country, Krugman offers concrete insights as to the why and well-reasoned solutions that we could have and still can use to pull ourselves out of the quagmire. Any fan of Krugman's and anyone new to his philosophies will appreciate his lucid, layman, refreshing writing style.
He does not present his facts and opinions with the doom and gloom of a partisan propagandist. He speads the blame and the praise equally and there is always a gentle sense of humor and a respect for the intelligence of his readers. Big hand clap for this Nobel-winning economist. I feel better knowing such calm and wise minds continue to speak loudly in defense of common sense and compassionate economics.
Two generations ago we solved the economics of the great depression of the 19s and many economist thought it wouldn 19t happen again. Unfortunately we still don 19t learn from our mistakes.
Paul Krugman uses a baby-sitting co-op as his economic model to explain how an economy can become imbalanced as to supply and demand. The US has been ignoring the demand side of this equation. He next explains recent economic crisis in Latin America and Asia, before addressing the panic of and the gr Two generations ago we solved the economics of the great depression of the 19s and many economist thought it wouldn 19t happen again.
He next explains recent economic crisis in Latin America and Asia, before addressing the panic of and the great depression of the 30 19s. His explanation of what has happened recently to cause our current recession is relative to these previous crises. How we get out of this mess isn 19t rocket science since we 19ve been here before, but unfortunately our economic ignorance isn 19t allowing our political will to go back to what we already know.
Most fascinating to me was the strange resemblance the panic is to today 19s problem and the development of the shadow banking system. Anyone who has taken econ or paid close attention in high school econ class won 19t be surprised by the solutions offered.
First, I'm not a huge Krugman fan to begin with, so keep that in mind. I tried to be as objective as possible when reading his book, however. Most of the book is just background of various financial crises of the past years. Of course in hindsight, Krugman in all his wisdom can see how if the different parties in the crises had just done what he thinks they should have, everything would have turned out fine. I'm not an economist, so I can't really argue intelligently about his conclusions.
M First, I'm not a huge Krugman fan to begin with, so keep that in mind. But who cares, that's all in the past. When it comes to the current crisis, he comes out with a whole lot of nothing. Maybe I missed it, but there was no big "here's how we fix this". Maybe that wasn't his intent, but it sure felt like he was leading up to that sort of moment. So overall, I was left with a distinct feeling that there really wasn't a point to his book except for him to make money.
Luckily I didn't help with that, someone else bought the copy I read. Jeder stellt irgendetwas her und verkauft es den anderen, auch wenn die es selbst fertigen könnten. Das war die Wurzel der "Neuen Handelstheorie", die ihm nun den Wirtschaftsnobelpreis einbrachte, ebenso wie die daraus abgeleitete "Neue Ökonomische Geografie". Diese erklärt, warum sich die Menschen mit ihrer wirtschaftlichen Aktivität auf wenige Orte konzentrieren.
Der Nobelpreisträger behauptet indes nicht, allein zu diesen Erkenntnissen gelangt zu sein. Er brachte sie lediglich in die Form einfacher, mathematisch und logisch schlüssiger Modelle, sodass sie in der Sprache der ökonomischen Theorie zu fassen sind. Handelstheorie und Geografie sind bei weitem nicht die einzigen Themen, mit denen Krugman Furore machte.
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