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Why Paul Krugman is so Important

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Paul Krugman, Laureate of the Sveriges Riksban...

By Ben Cohen: Nobel prize winning economist Paul Krugman has been getting a huge amount of media attention over the past few weeks, in part due to a book he has written 'End This Depression Now!', but mostly because his message of economic sanity is resonating with the American public.

Krugman is an unassuming figure - he's not exactly telegenic, he's not the best public speaker, and he tends to perform awkwardly when debating. But Krugman's common sense solutions to America's deep economic problems are finding a massive audience of people sick to death of the status quo. More than ever, his voice represents sanity amidst a cacophony of nonsense - a clarion call to restore decency in public policy and prevent the further corruption of the country's monetary system.

For years, the Left in America has been afraid of its own shadow. The Democrats have been systematically emasculated by the Republicans and have given up on virtually all their core beliefs - Bill Clinton passed more Right wing economic legislation than any Republican could have dreamed of, and Barack Obama's boldest redistributive economic proposal was to return the top rate of tax to that just under Ronald Reagan's. This was a direct result of the influence of big money in politics, but also a sad reflection of the intellectual bankruptcy pervading the Left in America. The Democrats stopped believing in their own principles, and gave up on having their own ideas. As Bill Maher said on his show last Friday, the Democrat's pledge to the electorate is this, "Vote for us, we're lame, but the other guys are nuts".

The Republicans are now so far out of the mainstream that it would be criminal not to vote for the Democrats. They are the only entity standing in the way of the complete disintegration of government and the economy. We saw what happened under George Bush, and there's absolutely no need for a repeat.

But for Krugman, this is not good enough, and he is pushing an agenda to reverse 30 years of Republican economics that has created gigantic wealth disparity, huge amounts of poverty, and massive financial instability. In his critically acclaimed book 'The Conscience of a Liberal' Krugman wrote:

I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty. I believe in democracy, civil liberties, and the rule of law. That makes me a liberal, and I’m proud of it.

Krugman sees no need to be ashamed of his liberalness - instead, he flaunts it and goes to great lengths to disprove Republican economics in his daily writing and media appearances. While the media treats both side's policy proposals with equal respect in an attempt to be 'balanced', Krugman looks at actual facts says it how it is. In a recent appearance on ABC news, Krugman stated the following about Republican Paul Ryan's budget plan:

The plan's a fraud. The plan is a big bunch of tax cuts, some specified spending cuts, basically for poor people, and then a huge magic asterisk which is supposed to turn into a deficit reduction plan, but, in fact, if you look what's actually in it, it's a deficit-increasing plan.....There is really no plan there, neither from Ryan, nor from Governor Romney, is just the truth ... if that's being harsh and partisan, gosh, then I guess the truth is anti-bipartisanship.

This type of straight talk is refreshing to hear, particularly to liberals who are not ashamed of being liberal. Krugman is pointing out that the emperor has no clothes, and it seems people are finally waking up to it. Krugman's solutions to the current economic crisis are equally straightforward. He wants to stop self imposed austerity, pump lots of money into infrastructure spending to create jobs, then pay the deficit down once the economy has stabilized. As he told the Guardian:

These are not hard concepts, actually. It's not hard to get it across to an audience. But it doesn't seem to play in the political sphere. What's fascinating is his historical analysis of why policy-makers, who once understood these principles, collectively decided to forget them.
In the years following the Great Depression, governments imposed regulatory rules upon the banking system to ensure that we could never again become indebted enough to make us vulnerable to a crisis. But if it's been a long time since the last major economic crisis, people get careless about debt; they forget the risks. Bankers go to politicians and say: 'We don't need these pesky regulations,' and the politicians say: 'You're right – nothing bad has happened for a while.

While Krugman's concepts have been ignored in the political sphere, there are signs that people high up the food chain are starting to catch on. As President Obama told Rolling Stone:

I read all of the New York Times columnists. Krugman's obviously one of the smartest economic reporters out there.

High praise indeed - and maybe an indication that the Democrats might actually start implementing his ideas. Obama's Presidency is largely staked on the well being of the economy, and given Krugman has been right about virtually everything thus far, it would be smart to listen. And that is why Krugman is so important right now.

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