I posted recently disagreeing with a David Brooks column in the NYT where he said that the economic cyclicalists (a reference to Paul Krugman) were wrong and the economic structuralists (including himself) were right.
Today’s Krugman column, “Easy Useless Economics,” is a “right back atcha” to Brooks.
“A few days ago, I read an authoritative-sounding paper in the American Economic Review, one of the leading journals in the field, arguing at length that the nation’s high unemployment rate had deep structural roots and wasn’t amenable to any quick solution. The author’s diagnosis was that the U. S. economy just wasn’t flexible enough to cope with rapid technological change. The paper was especially critical of programs like unemployment insurance, which it argued actually hurt workers because they reduced the incentive to adjust.
“O.K., there’s something I didn’t tell you: The paper in question was published in June 1939.
“And, once again, authoritative-sounding figures [like you, David Brooks] insist that our problems are ‘structural,’ that they can’t be fixed quickly. We must focus on the long-run, such people say, believing that they are being responsible. But the reality is that they’re being deeply irresponsible.
“What does it mean to say that we have a structural unemployment problem? The usual version involves the claim that American workers are stuck in the wrong industries or with the wrong skills.
“Instead, the economy has bled jobs across the board, in just about every sector and every occupation, just as it did in the 1930s. Also, if the problem was that many workers have the wrong skills or are in the wrong place, you’d expect workers with the right skills in the right place to be getting big wage increases; in reality, there are very few winners in the work force.
“Every time some self-important politician or pundit starts going on about how deficits are a burden on the next generation, remember that the biggest problem facing young Americans today isn’t the future burden of debt…. It is, rather, the lack of jobs, which is preventing many graduates from getting started on their working lives.”
At the bottom of Krugman’s column, it says, “David Brooks is off today.” I think Krugman would argue that Brooks is “off” every day.