More on unemployment

Conventional wisdom, as embodied by the O.E.C.D. economic outlook, has it that macroeconomic policies to combat unemployment have been exhausted. Not so, argues Paul Krugman who rightly believes that politicians pay too little attention to unemployment. Krugman identifies sensible actions:

• We could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. 
• We could have a serious program of mortgage modification, reducing the debts of troubled homeowners. 
• We could try to get inflation back up to the 4 percent rate that prevailed during Ronald Reagan’s second term, which would help to reduce the real burden of debt.

Unorthodox policies should continue to be debated even if they are not in line with conventional wisdom and diametrically opposite to the pain medication prescribed by Republicans.

These policies would be unorthodox — but so are the economic problems we face. And those who warn about the risks of action must explain why these risks should worry us more than the certainty of continued mass suffering if we do nothing. 

In pointing out that we could be doing much more about unemployment, I recognize, of course, the political obstacles to actually pursuing any of the policies that might work. In the United States, in particular, any effort to tackle unemployment will run into a stone wall of Republican opposition. Yet that’s not a reason to stop talking about the issue.