http://krugman.blogs.nytimes.com/2013/02/01/our-incredible-shrinking-government/
Our Incredible Shrinking Government
Most
analysts are, rightly, shrugging off the surprise report of an actual
decline in 4th quarter GDP. It will probably be revised away, and in any
case it’s the result of one-off factors: a drop in inventories and a
quirky sharp decline in defense spending.
Still, the report does highlight the role that shrinking government purchases of goods and services are playing in holding the economy back. And yes, I mean shrinking, not just growing more slowly than I’d like. Transfer payments like Medicare and Social Security are rising (although unemployment benefits are falling), but government purchases of stuff — mostly at the state and local level, where the stuff in question includes hiring schoolteachers — has been in fairly rapid decline.
Here’s a comparison, using the BEA numbers, of the relevant numbers in the current business cycle and during the Bush-era recession and aftermath:
By this measure, the era since the Great Recession began has been marked by unprecedented fiscal austerity.
How big a deal is this? Government consumption and investment is about $3 trillion; if it had grown as fast this time as it did in the Bush years, it would be 12 percent, or $360 billion, higher. Given a multiplier of more than one, which is what the IMF among others now thinks reasonable under current conditions, that ends up meaning GDP something like $450 billion higher, which is 3 percent — and an unemployment rate 1.5 points lower.
So fiscal austerity is the difference between where we are now and an unemployment rate not much above 6 percent. It’s a policy disaster."
Still, the report does highlight the role that shrinking government purchases of goods and services are playing in holding the economy back. And yes, I mean shrinking, not just growing more slowly than I’d like. Transfer payments like Medicare and Social Security are rising (although unemployment benefits are falling), but government purchases of stuff — mostly at the state and local level, where the stuff in question includes hiring schoolteachers — has been in fairly rapid decline.
Here’s a comparison, using the BEA numbers, of the relevant numbers in the current business cycle and during the Bush-era recession and aftermath:
How big a deal is this? Government consumption and investment is about $3 trillion; if it had grown as fast this time as it did in the Bush years, it would be 12 percent, or $360 billion, higher. Given a multiplier of more than one, which is what the IMF among others now thinks reasonable under current conditions, that ends up meaning GDP something like $450 billion higher, which is 3 percent — and an unemployment rate 1.5 points lower.
So fiscal austerity is the difference between where we are now and an unemployment rate not much above 6 percent. It’s a policy disaster."
1
2
Business Day
Genetic Changes to Food May Get Uniform Labeling
A move by Wal-Mart to require labels on products that contain genetically engineered ingredients could be influential in developing a national labeling program.
3
Business Day
Staying Ahead of the Tax Man
Personal income in December jumped drastically thanks to dividends, bonuses and other income moving into 2012 ahead of higher tax rates scheduled for 2013.
4
Opinion
Can Obama Do for the Grid What Eisenhower Did for Highways?
President Obama should continue to build the electricity side of his energy policy around a smart grid.
5
Opinion
My Valuable, Cheap College Degree
With costs rising and returns falling, a degree for $10,000 makes a lot of sense.
6
Science
Trying Again on Celluosic Biofuels
Despite last year's problems, the Environmental Protection Agency sets a higher quota for refiners. And it takes steps to combat fraud on renewable energy credits.
7
Opinion
It’s P.Q. and C.Q. as Much as I.Q.
The Great Inflection has transformed the world over the past decade. Each individual has to adapt.
"That means the old average is over. Everyone
who wants a job now must demonstrate how they can add value better than
the new alternatives."
It is all based on unit cost. No sales means no production.
Industry is demand driven.
This piece is feel guilty fiction.
8
Opinion
In an Elephant Killing Zone, a Quiet Moment
A marine conservationist comes ashore and marvels at Africa's array of wild things.
9
Health
Report Faults High Fees for Out-of-Network Care
A health insurance industry report contrasts some of the highest bills charged by non-network providers in 30 states with Medicare rates for the same services.
10
Health
A Doctor's Struggle With Numbers
Oncologists are notoriously bad at predicting survival. We try to provide hope, but not false hope.
11
Opinion
Philosopher Kings and Fiscal Cliffs
Exploiting the public's confusion about fiscal policy for political advantage is a danger not just to the economy, but to democracy.
12
U.S.
Missouri: Veterans in Single Grave Will Be Disinterred for Identification
A single grave site honoring an American crew whose plane crashed during the Vietnam War is being unearthed so examiners can identify the remains.
13
U.S.
Congress Passes Debt Bill as a $1 Trillion Ax Looms
The 64-to-34 vote ended for now a showdown that had threatened the full faith and credit of the United States government.
14
Opinion
The Hidden Prosperity of the Poor
Is life on the bottom and in the middle better than it seems?
15
U.S.
Sit In on College Courses, Without the Visit
High school students who take massive open online courses, or MOOCs, may strengthen their academic resumes while getting a feel for what each prospective college has to offer.
16
Opinion
Treatment, Not Jail, for the Mentally Ill
In an ideal system, the mentally ill who commit minor offenses and pose no real danger to the public would never see the inside of a jail.
17
World
Once More Unto the Breach for Britain
Prime Minister David Cameron's speech on the European Union, as well as the response to it, show the historical ambivalence between Britain and Continent is alive and well.
18
Science
For Sacramento, Energy Upgrades With No Upfront Costs
Owners of homes or commercial buildings can pay back the financing through the local property tax system.
19
Technology
Ericsson Posts Loss, but Sales Increase
The company attributed the net loss to writing down the value of ST-Ericsson, an unprofitable smartphone component venture with the French chip maker STMicroelectronics.
20
Dining & Wine
Bacon, and How It Came to Be
With knives in hand, students face a carcass. In the Midwest, the class is less likely to be a one-time curiosity than on the East or West Coast.
+++++++++++++++++++++++++++++++++++++++++++++++
@15:00
1
Business Day
Staying Ahead of the Tax Man
Personal income in December jumped drastically thanks to dividends, bonuses and other income moving into 2012 ahead of higher tax rates scheduled for 2013.
2
Opinion
Can Obama Do for the Grid What Eisenhower Did for Highways?
President Obama should continue to build the electricity side of his energy policy around a smart grid.
3
Opinion
My Valuable, Cheap College Degree
With costs rising and returns falling, a degree for $10,000 makes a lot of sense.
4
Science
Trying Again on Celluosic Biofuels
Despite last year's problems, the Environmental Protection Agency sets a higher quota for refiners. And it takes steps to combat fraud on renewable energy credits.
5
Business Day
Genetic Changes to Food May Get Uniform Labeling
A move by Wal-Mart to require labels on products that contain genetically engineered ingredients could be influential in developing a national labeling program.
6
Opinion
In an Elephant Killing Zone, a Quiet Moment
A marine conservationist comes ashore and marvels at Africa's array of wild things.
7
Science
From Ozone Depletion, Enduring Effects
In a phenomenon that could contribute to climate change, the hole in the Antarctic ozone layer has changed the way that waters in the southern oceans mix, scientists report.
8
Health
Report Faults High Fees for Out-of-Network Care
A health insurance industry report contrasts some of the highest bills charged by non-network providers in 30 states with Medicare rates for the same services.
9
Opinion
It’s P.Q. and C.Q. as Much as I.Q.
The Great Inflection has transformed the world over the past decade. Each individual has to adapt.
10
Health
A Doctor's Struggle With Numbers
Oncologists are notoriously bad at predicting survival. We try to provide hope, but not false hope.
11
Business Day
A Bad Jobs Report Turns Out to Have Been Wrong
The jobs report for last March was a big disappointment, one that spurred talk of a new recession. Now we learn that report was simply wrong, that March was actually a very good month and that jobs rose much more rapidly in 2012 than we had previously been told.
12
Opinion
Philosopher Kings and Fiscal Cliffs
Exploiting the public's confusion about fiscal policy for political advantage is a danger not just to the economy, but to democracy.
13
U.S.
Missouri: Veterans in Single Grave Will Be Disinterred for Identification
A single grave site honoring an American crew whose plane crashed during the Vietnam War is being unearthed so examiners can identify the remains.
14
U.S.
Congress Passes Debt Bill as a $1 Trillion Ax Looms
The 64-to-34 vote ended for now a showdown that had threatened the full faith and credit of the United States government.
15
Opinion
The Hidden Prosperity of the Poor
Is life on the bottom and in the middle better than it seems?
16
U.S.
Sit In on College Courses, Without the Visit
High school students who take massive open online courses, or MOOCs, may strengthen their academic resumes while getting a feel for what each prospective college has to offer.
17
Opinion
Treatment, Not Jail, for the Mentally Ill
In an ideal system, the mentally ill who commit minor offenses and pose no real danger to the public would never see the inside of a jail.
18
World
Once More Unto the Breach for Britain
Prime Minister David Cameron's speech on the European Union, as well as the response to it, show the historical ambivalence between Britain and Continent is alive and well.
19
Science
For Sacramento, Energy Upgrades With No Upfront Costs
Owners of homes or commercial buildings can pay back the financing through the local property tax system.
20
Technology
Ericsson Posts Loss, but Sales Increase
The company attributed the net loss to writing down the value of ST-Ericsson, an unprofitable smartphone component venture with the French chip maker STMicroelectronics.+++++++++++++++++++++++++++++++++++++++++++++++
@20:55
1
Opinion
Have Math Skills; Seeking Planet-Saving Career
In the handoff of insights from one generation to the next, what's the best advice these days?
2
Science
From Ozone Depletion, Enduring Effects
In a phenomenon that could contribute to climate change, the hole in the Antarctic ozone layer has changed the way that waters in the southern oceans mix, scientists report.
3
World
The Role of the Military and Veterans in Politics
The interplay between politics, the military, and veterans is a complicated subject matter, writes Tim Hsia who is in the Army Reserves as an R.O.T.C. instructor at Santa Clara University.
4
Health
A Doctor's Struggle With Numbers
Oncologists are notoriously bad at predicting survival. We try to provide hope, but not false hope.
5
Opinion
Philosopher Kings and Fiscal Cliffs
Exploiting the public's confusion about fiscal policy for political advantage is a danger not just to the economy, but to democracy.
6
U.S.
Missouri: Veterans in Single Grave Will Be Disinterred for Identification
A single grave site honoring an American crew whose plane crashed during the Vietnam War is being unearthed so examiners can identify the remains.
7
U.S.
Congress Passes Debt Bill as a $1 Trillion Ax Looms
The 64-to-34 vote ended for now a showdown that had threatened the full faith and credit of the United States government.
8
Opinion
The Hidden Prosperity of the Poor
Is life on the bottom and in the middle better than it seems?
9
U.S.
Sit In on College Courses, Without the Visit
High school students who take massive open online courses, or MOOCs, may strengthen their academic resumes while getting a feel for what each prospective college has to offer.
10
Opinion
Treatment, Not Jail, for the Mentally Ill
In an ideal system, the mentally ill who commit minor offenses and pose no real danger to the public would never see the inside of a jail.
11
World
Once More Unto the Breach for Britain
Prime Minister David Cameron's speech on the European Union, as well as the response to it, show the historical ambivalence between Britain and Continent is alive and well.
12
Science
For Sacramento, Energy Upgrades With No Upfront Costs
Owners of homes or commercial buildings can pay back the financing through the local property tax system.
13
Business Day
A Bad Jobs Report Turns Out to Have Been Wrong
The jobs report for last March was a big disappointment, one that spurred talk of a new recession. Now we learn that report was simply wrong, that March was actually a very good month and that jobs rose much more rapidly in 2012 than we had previously been told.
14
Technology
Ericsson Posts Loss, but Sales Increase
The company attributed the net loss to writing down the value of ST-Ericsson, an unprofitable smartphone component venture with the French chip maker STMicroelectronics.
15
U.S.
Michigan: Three Dead in Chain of Crashes
Blinding snow squalls, high winds and a slick highway led to a milelong series of crashes in Detroit that left at least three people dead, including a 7-year-old boy and 9-year-old girl.
16
World
What's the Worst -- and Best -- Metro in the World?
Prince Charles took the London underground to mark the 150th anniversary of the launch of subterranean travel in the British capital. Share your subway experiences with Rendezvous.
17
N.Y. / Region
Images Complicate Jury Selection in Cannibalism Case
Lawyers for Officer Gilberto Valle said the release of three bizarre pictures, similar to others found on cannibalism Web sites, would only increase the negative media attention on him.
18
U.S.
Some Sheriffs Object to Call for Tougher Gun Laws
Sheriffs from across the country, mostly in rural areas, split with their urban counterparts on gun control.
19
Dining & Wine
Bacon, and How It Came to Be
With knives in hand, students face a carcass. In the Midwest, the class is less likely to be a one-time curiosity than on the East or West Coast.
20
U.S.
Focus on Mental Health Laws to Curb Violence Is Unfair, Some Say
Critics say focusing on mental illness as a component of gun violence unfairly singles out people more likely to be a victim of violence than a cause.I am away for the rest of the day.
|
