Fear-mongering over debt and the misguided policy of continuing to cut government spending in the face of a depressed economy, is creating a permanent class of jobless Americans, Nobel Prize-winning economist Paul Krugman argues.
According to Krugman:
It’s hard to overstate how self-destructive this policy is. Indeed, the shadow of long-term unemployment means that austerity policies are counterproductive even in purely fiscal terms. Workers, after all, are taxpayers too; if our debt obsession exiles millions of Americans from productive employment, it will cut into future revenues and raise future deficits.
Our exaggerated fear of debt is, in short, creating a slow-motion catastrophe. It’s ruining many lives, and at the same time making us poorer and weaker in every way. And the longer we persist in this folly, the greater the damage will be.
Krugman added that, given the mis-guided fear over debt, the corrosive effect –Â social and economic – of persistent high unemployment is being ignored.
As of March 2013, 22 million people were out of work, based on the broader measure of unemployment or U6.
Read More on Paul Krugman’s ‘The Jobless Trap’ Here.
