Thursday, 19 July 2012

End This Depression Now! (Book review)

I suspect some of my regular readers may wonder what sort of person takes a book on holiday with this title and then recommends it.

This book, by Paul Krugman, is not about a psychological condition but about the current economic condition – Paul Krugman being a heavyweight economist who is able to clearly explain the current euro crisis and the financial woes facing most western economies.

Krugman’s core argument is that there is plenty of evidence that current economic policies are hostage to a political philosophy as opposed to being shaped economic ‘know how’.  Current economic policies are not working, even though a shift could bring a speedy end to the misery being experienced by so many. The shift advocated is a U-turn on austerity and speedy public spending.

It may be difficult for politicians to make yet another U-turn but I think it is a debate worth having and, if that switch takes place, it could have a big impact on procurement policy.  Of course public spending options go beyond procurement and could be through increased spending on benefits, etc.

Nevertheless, to me, the recent floods mayhem could provide an easy justification for an increase in public spending. Investing in speedy infrastructure flood defences and compensation may be very palatable to an electorate which could suffer further financial hardship during the home straight to the next election.  It would also enact what Krugman is advocating. (Perhaps I should add that although some of my neighbours suffered significant flood damage, thankfully, I was spared).

Anyway, Krugman provides a particularly good explanation for the state we’re in.  He helps us understand the Greek dilemma and why it is different from that of others in the Eurozone.  He provides a historical context to some of the European dogma. He helps us understand the flaws in austerity strategy. Finally he advocates a strategy for moving forward.  I certainly found the book informative and an easy read. 

I also found the book reassuring as I previously advocated a procurement strategy to accelerate the economic recovery and considered international lessons on austerity strategy  - thankfully I see no reason to change my opinions (let me know if you want a copy of either of those papers).

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