From the past. Worth highlighting. Why? Because when the nest recession comes, the usual suspects will once gain start claiming the the should not do anything to shorten or cushion it. And the usual suspects will once again be wrong:
Paul Krugman (2008): Hangover Theorists: "Somehow I missed this: via Steve Levitt, John Cochrane explaining that recessions are good for you.... The basic idea is that a recession, even a depression, is somehow a necessary thing, part of the process of 'adapting the structure of production'. We have to get those people who were pounding nails in Nevada into other places and occupation, which is why unemployment has to be high in the housing bubble states for a while. The trouble... is twofold: 1. It doesn’t explain why there isn’t mass unemployment when bubbles are growing as well as shrinking—why didn’t we need high unemployment elsewhere to get those people into the nail-pounding-in-Nevada business? 2. It doesn’t explain why recessions reduce unemployment across the board, not just in industries that were bloated by a bubble.... The current slump is affecting some non-housing-bubble states as or more severely as the epicenters of the bubble.... Unemployment is up everywhere. And while the centers of the bubble, Florida and California, are high in the rankings, so are Georgia, Alabama, and the Carolinas. So the liquidationists are still with us. According to Brad DeLong, 'Milton Friedman would recall that at the Chicago where he went to graduate school such dangerous nonsense was not taught...' But now, apparently, it is. Update: Not to mention the idea that employment is dropping because workers don’t feel like working...
#noted #2019-09-20
