It obtains that all these darn recessions and stuff that make people unhappy could have been stopped in their tracks by something just so stunningly simple and obvious that — sheesh! — we all ought to be really ashamed of ourselves for not thinking of it sooner.
But that’s why we have Paul Krugman, America’s leading economic humorist. Why this guy isn’t in the White House I can’t figure. Obama is probably penciling him in right now for Secretary of the Treasury in his next term, and if he isn’t, well, then, we should all sign a petition to demand it.
You see, Krugman picked up on a recent report from those overpaid criminals over at JP Morgan that estimates the new iPhone will add between a quarter point and a half point to GDP in the fourth quarter this year. Get it yet? No?
Okay, another hint: new products like the iPhone add to economic growth because people are constantly spending money to replace obsolete or broken gear. But we don’t always produce enough obsolescence or break enough stuff. So we don’t spend enough all the time to keep the economy growing all the time. That’s why we have recessions. Not enough demand.
Well, what can we do about that? Anyone? Do I see a hand up back there?
Right! From Professor Krugman himself:,
Why suffer through years of depressed output and high unemployment while waiting for enough obsolescence to accumulate? Why not have the government step in and spend more, say on education and infrastructure, to help the economy through its rough patch? Don’t say that the government can’t add to total spending, or that government spending can’t create jobs. If you believe that the iPhone 5 can give the economy a lift, you’ve already conceded both that the total amount of spending in the economy isn’t a fixed number and that more spending is what we need. And there’s no reason this spending has to be private.
Breathtaking! We just need the government to keep spending enough — on cool things we all need like “education and infrastructure,” and throw in a little green energy and high-speed rail — and we can have a constant growth rate as high as we like it. Why settle for 4%? Why not 8%? Or 12%?
After all, it’s not costing American consumers anything. The government is doing the spending, not them.
I’m glad we all have this straight now, and we can put Americans back to work, get the housing market moving again and start paying attention to the things that really matter instead of fussing all the time about the economy.
Thank you, Professor Krugman. You deserve another Nobel Prize. Maybe two — because if it were up to me, I’d give you one in Chemistry, for proving that alchemy really does work, and that all you need is an economist to turn lead into gold.