Quotes from book
Peddling Prosperity

Peddling Prosperity
Paul Krugman

Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations is a book by Nobel laureate and New York Times columnist Paul Krugman, first published in 1994 by W. W. Norton & Company.

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“Economics is harder than physics; luckily it is not quite as hard as sociology. Why is economics such a hard subject? Part of the answer has to do with complexity. The economy cannot be put in a box. […] Another reason economics is hard is that the critical sociologist is right: it involves human beings, who do not behave in simple, mechanical ways.”

Paul Krugman book Peddling Prosperity

Preface
Peddling Prosperity (1994)

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“Like any major intellectual contribution, Keynes's ideas were bitterly criticized. To many people it seems obvious that massive economic slumps must have deep roots. To them, Keynes's argument that they are essentially no more than a problem of mixed signals, which can be cured by printing a bit more money, seems unbelievable.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

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“As the example of Ronald Reagan shows, real political success comes not simply from appealing to the interests that people currently perceive but from finding ways to redefine their perceived interests, to harness their discontent in favor of changes that you can lead.”

Paul Krugman book Peddling Prosperity

Introduction: Looking for Magicians
Peddling Prosperity (1994)

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“The new trade theory picture of the world looks something like this: Each country has, at any given time, a set of broad resources—land, skilled labor, capital, climate, general technological competence. These resources define up to a point the industries in which the country can hope to be competitive on world markets. […] But a country's resources do not fully determine what it produces, because the detailed pattern of advantage reflects the self-reinforcing virtuous circles, set in motion by the vagaries of history.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 9 : The Economics of QWERTY

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“Where do ideas about economics come from? They come, of course from economists—where by an "economist" I mean someone who thinks and writes regularly about economic issues. But not all economists are alike, and in fact the genus includes two radically distinct species: The professors and the policy entrepreneurs.”

Paul Krugman book Peddling Prosperity

Introduction: Looking for Magicians
Peddling Prosperity (1994)

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“The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a "liquidity trap"; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a tap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

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“It's tempting to give up—either to retreat to the ivory tower, or to start to play the policy entrepreneur game. After all, what is the use of sophisticated policy thinking or careful examination of the facts if simplistic ideas win every time?
One answer is simply that it would be wrong to give up. If the people with good ideas do not fight for them, they have no right to complain about the outcome.
But good ideas will still often lose to convenient nonsense. When that happens, every serious economist is ultimately sustained by a faith that the right ideas will eventually prevail.”

Paul Krugman book Peddling Prosperity

Epilogue
Peddling Prosperity (1994)

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“By 1980, the work of Feldstein, Boskin, Summers, and others had convinced many economists that U.S. taxes were in fact a significant obstacle to investment. Nor was this all: another major U.S. policy, the Social Security system, was also discouraging saving and investment.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 2 : Taxes, Regulation, and Growth

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