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28 Nov 2008 12:34 pm
We Have Been Warned
Krugman is dreaming big:
The quintessential economic sentence is supposed to be "There is no
free lunch"; it says that there are limited resources, that to have
more of one thing you must accept less of another, that there is no
gain without pain. Depression economics, however, is the study of
situations where there is a free lunch, if we can only figure
out how to get our hands on it, because there are unemployed resources
that could be put to work. The true scarcity in Keynes's world—and
ours—was therefore not of resources, or even of virtue, but of
understanding.
We will not achieve the understanding we need, however, unless we
are willing to think clearly about our problems and to follow those
thoughts wherever they lead. Some people say that our economic problems
are structural, with no quick cure available; but I believe that the
only important structural obstacles to world prosperity are the
obsolete doctrines that clutter the minds of men.
To which, Krauthammer's column this morning is a useful riposte:
The ruling Democrats have a choice: Rescue this economy to return it to
market control. Or use this crisis to seize the commanding heights of
the economy for the greater social good. Note: The latter has already
been tried. The results are filed under "History, ash heap of."
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