Can We Spend Ourselves From Recession To Prosperity?
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Paul Krugman - Caricature (Photo credit: DonkeyHotey)
Mounting evidence suggests there are two reasons: (1) We are discouraging employers from hiring and (2) we are discouraging the unemployed from seeking work.
Public policy uncertainty has been shown to be a major cause of employer reluctance to hire new employees, and the Obama administration has made the business community about as uncertain as they can be with ObamaCare, the Dodd/Frank financial regulation and more recently with its bizarre and totally unclear position on tax rates. At the same time we have greatly expanded the rewards for not working — so much so that University of Chicago economist Casey Mulligan estimates that half of the employment we are experiencing is because we are paying people not to work.
Yet there is another point of view. It’s old line Keynesian economics. A few years ago, most economists regarded this approach as a relic of the past. But the usual circumstances of our economic plight have given Keynesianism a breath of new life.
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