QOTD: Krugman
by digby
Chris Mooney interviewed Paul Krugman on his science podcast and asked him some very interesting questions about economics and science and pseudoscience. This is one of them:
So, we asked, if Keynesianism thinking is the key to fixing our present economic woes, then why won’t people listen? Why are we currently so obsessed with deficits?
Krugman’s answer was twofold: People make up their minds about economics based on heuristics and shortcuts—for instance, the misleading metaphor that likens government finances to the budget of an individual family—and Keynesianism can be complex and counterintuitive. It also runs up against the popular notion that the government shouldn’t lean on the scales, because a fair system is one in which people get ahead or fall behind based on their own merits, without external help. As Krugman explained, that’s not actually how it works at all—you can fail in this world for reasons that are totally beyond your control:
“The economy is an interactive system. Money flows in a circle. My spending is your income, your spending is my income. And that means that your destiny has a lot to do with what other people are doing. You can lose your job, you can be in big trouble, not because we’ve done anything wrong, but because there’s not enough spending and the economy is depressed.
You can listen to the whole podcast here.
.