Obsolete Ideas from Living Economists

In the New York Review of Books, Paul Krugman calls for a “good old Keynesian stimulus.” He says we need to mimic Japan, Sweden, and FDR in terms of our strategy for giving new life to dead banks. Krugman, like Laurence Kotlikoff, is horrified that people are starting to save money. Therefore, he says, the next stimulus plan should “focus on sustaining and expanding government spending–sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure.” He says Keynes is “more relevant than ever.” At the end of his call to Keynesian arms, he states, “I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men.” Apparently, unworkable Keynesian doctrines don’t fall into the “obsolete” or “clutter” category.