Cutting investment spending: Making things worse -- forever

Making things worse -- forever

by digby

Noting Jared Bernstein's reporting on how the misguided insistence on cutting government spending is delaying a robust recovery, Krugman adds this:

But it’s even worse than he says. Why? Because if you look at what’s being cut, it’s heavily focused on investment:










That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.


It's very hard not to believe the conspiracy theorists who say that this is consciously being done to lower wages and standard of living. Can anyone really be this dumb?

.