"Think about it: is America — not state governments, but the nation as a whole — less able to afford help to troubled teens, medical care for families, or repairs to decaying roads and bridges than it was one or two years ago? Of course not. Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact. Why can’t we keep doing good things?
It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.
In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.
And shredding the social safety net at a moment when many more Americans need help isn’t just cruel. It adds to the sense of insecurity that is one important factor driving the economy down."
State governments, unlike the nation's overnment, cannot just sort of invent money, or pretend it exists. Yes, America does have to find people to buy it's debt, but playing with the interest rate makes that a mostly doable thing. No ne wants to invest in individual states, it seems, and they are required to balance their budget. This undermines the efforts of the nation of a whole.
The quote above is from: http://www.nytimes.com/2008/12/29/opini on/29krugman.html
It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.
In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.
And shredding the social safety net at a moment when many more Americans need help isn’t just cruel. It adds to the sense of insecurity that is one important factor driving the economy down."
State governments, unlike the nation's overnment, cannot just sort of invent money, or pretend it exists. Yes, America does have to find people to buy it's debt, but playing with the interest rate makes that a mostly doable thing. No ne wants to invest in individual states, it seems, and they are required to balance their budget. This undermines the efforts of the nation of a whole.
The quote above is from: http://www.nytimes.com/2008/12/29/opini
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