To: koan who wrote (202542 ) 5/15/2009 8:31:07 PM From: alanrs Read Replies (1) | Respond to Krugman is not my favorite economist. I think the underlying point, without typing far more than I care to to justify it, is that the last depression had to do with massive imbalances introduced into the economy. A lot of time and effort has gone into trying to explain why, and what worked and what didn't. Not being a student of 1900-1950 history I am reluctant to make any firm statements about any of the theories I have read, except to say that none of them seem convincing. Further, it's easy to look back and point to protectionist policies and trade wars or a slow fiscal response (for instance) and assume that it was a matter of people back then being stupid or ill informed, whereas we are much smarter and would never make those silly mistakes now. After all, hind sight is 20/20. Or maybe it's 10/200. The example of Japan for the last 20 years and counting would lead me to believe that hindsight is indeed something less than 20/20. Or that people are no smarter now than they were back in the mid 1900's. Or that there are political reasons (the art of the possible) to do apparently stupid things in the face of impending disaster. Or that all the screwing around with this, that, and the other program is just that, screwing around (sound and fury, signifying nothing). This screwing around could serve the purpose of giving people something to do until some exogenous event (war, disease, famine, whatever) knocks the last bits of stuffing out of the economy and there is no choice but to rebuild along more sustainable lines (until the next time). Or it could provide cover for rich people to stay rich (not that there's anything wrong with that).
