Paul Krugman is professor of economics at Princeton University. Paul Krugman is Centenary Professor at the London School of Economics. Paul Krugman is best-known as an op-ed columnist for The New York Times. Paul Krugman won the Nobel Prize for Economic Sciences for 2008. The Washington Monthly called him "the most important political columnist in America." The Economist said he is "the most celebrated economist of his generation." -------------------- From yesterday's New York Times, August 9, 2009: Averting the Worst So it seems that we arent going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government. Just to be clear: the economic situation remains terrible, indeed worse than almost anyone thought possible not long ago. The nation has lost 6.7 million jobs since the recession began. Once you take into account the need to find employment for a growing working-age population, were probably around nine million jobs short of where we should be. And the job market still hasnt turned around that slight dip in the measured unemployment rate last month was probably a statistical fluke. We havent yet reached the point at which things are actually improving; for now, all we have to celebrate are indications that things are getting worse more slowly. For all that, however, the latest flurry of economic reports suggests that the economy has backed up several paces from the edge of the abyss. A few months ago the possibility of falling into the abyss seemed all too real. The financial panic of late 2008 was as severe, in some ways, as the banking panic of the early 1930s, and for a while key economic indicators world trade, world industrial production, even stock prices were falling as fast as or faster than they did in 1929-30. But in the 1930s the trend lines just kept heading down. This time, the plunge appears to be ending after just one terrible year. So what saved us from a full replay of the Great Depression? The answer, almost surely, lies in the very different role played by government. Probably the most important aspect of the governments role in this crisis isnt what it has done, but what it hasnt done: unlike the private sector, the federal government hasn't slashed spending as its income has fallen. (State and local governments are a different story.) Tax receipts are way down, but Social Security checks are still going out; Medicare is still covering hospital bills; federal employees, from judges to park rangers to soldiers, are still being paid. ..... The point is that this time, unlike in the 1930s, the government didn't take a hands-off attitude while much of the banking system collapsed. And thats another reason were not living through Great Depression II. Last and probably least, but by no means trivial, have been the deliberate efforts of the government to pump up the economy. From the beginning, I argued that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, was too small. Nonetheless, reasonable estimates suggest that around a million more Americans are working now than would have been employed without that plan a number that will grow over time and that the stimulus has played a significant role in pulling the economy out of its free fall. All in all, then, the government has played a crucial stabilizing role in this economic crisis. Ronald Reagan was wrong: sometimes the private sector is the problem, and government is the solution. And arent you glad that right now the government is being run by people who dont hate government? -------------------- Please read the full article here: http://www.nytimes.com/2009/08/10/opinion/10krugman.html?_r=1 Damn. That is such a LIBERATING and Democratic message. One more time: Reagan was wrong: sometimes the private sector is the problem, and government is the solution.