Here’s a letter that I sent today to the New York Times:
Paul Krugman insists that the nearly ten trillion dollars of projected U.S. government budget deficits over the next decade is a “phantom menace” (“The Phantom Menace,” Nov. 23). The real problem, according to Mr. Krugman, is that government’s spending plans are too modest (!). He believes that only by spending even more will Uncle Sam assuredly save Americans from “the greatest economic catastrophe since the Great Depression.”
Suggesting that today’s downturn is similar to the Great Depression is recklessly misleading. Between 1930 and 1933, real U.S. GDP fell by 29.3 percent. Compare this figure with today’s: from its all-time high in the second quarter of 2008, real U.S. GDP is now (as of the third quarter of 2009) down by 3.0 percent.* On the employment front, in 1933 fully one in four Americans was unemployed; today’s number of unemployed is one in ten.
Reasonable people can disagree about the proper role of government in dealing with recessions. But to suggest that today’s troubles are remotely akin to those of the 1930s is decidedly unreasonable; it’s a demagogic scare tactic unfit for a serious scholar.
Donald J. Boudreaux
* Recent data on real U.S. GDP can be found here; it’s from these data that I calculated the figure of 3.0 percent.