Friday, September 30, 2011

Fences: how many and where?

In the op-ed column, Phony Fear Factor, Paul Krugman expresses his views on the conservative party's opinions regarding the cause of our national economic dilemma. Conservative politicians and economists widely believe the Obama Administration is culpable for the torpid economic recovery, mainly job growth, we've experienced since The Great Recession occurred in 2007. He further explains the conservatives' main claim for this drag as "costly regulations and higher taxes." Krugman states in his editorial that this is not the case. Evidence from prior recessions shows that economic recovery is a slow process, and that, compared to the 2001 economic recovery, we are mending much faster. Also, large businesses are making good profits, but not investing in growth. The reason is poor sales. There is no need to expand the work force if there is little product demand. That would be bad business. The perpetuance of these pugnacious "delusions" conservatives hold on to, Krugman theorizes, is firstly their proclivity to believe what they will despite empirical evidence (their rejection of "climate science and even the theory of evolution") and secondly their need to incriminate the Obama Administration for "everything bad in America." His final claim is that our economic troubles grew from little regulation, and that the conservatives' goal is to deregulate even further.

There are points I agree with Krugman on,  and points I have too little economic knowledge on to make an informed opinion. I agree with his claim about conservatives strongly holding on to their opinions despite scientific evidence. Despite a study showing evidence against gay service members causing any disruption in the armed forces, some conservatives still fought to keep Don't Ask Don't Tell alive. It is hard for a government to improve if representatives continue to cast their votes based on opinionated grounds. I also agree with his statements regarding the slow job growth America has seen. If there are no increased demands for a product, it would be illogical and disadvantageous for a company to expand the production of such a product via a larger work force. They would invest in a market that doesn't exist and lose money, probably causing large layoffs in an attempt to balance their check books. The catch is, with a weak work force and little civilian monetary funds, how are consumers supposed to demand more and stimulate the need for a larger work force? Regarding Krugman's last claim about the need for more government regulation in the business world as a means of fortifying the economy, I'm not sure what kind is needed to stimulate growth. Most government regulations I've studied in macroeconomics, such as subsidies, price ceilings and floors, and heavy taxations, have all been explained to have negative economic repercussions and usually favor big business and wealthy civilians, creating a larger gap between the rich and the poor. On the other hand, further deregulation would allow for greed to run rampant. Despite all this, one thing I do believe is politicians need to stop searching for a place to put blame and look to the future, using scientific evidence to guide them towards a solution. However, as Krugman said, this is difficult since even conservative economists have the tendency to support conservative "delusions," making the discrimination between fact and fiction difficult, especially to the untrained eye.

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