Here’s Paul Krugman from yesterday’s column (he liked Larry Summers’ speech at the IMF annual conference):
But what if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?
Why might this be happening? One answer could be slowing population growth. A growing population creates a demand for new houses, new office buildings, and so on; when growth slows, that demand drops off. America’s working-age population rose rapidly in the 1960s and 1970s, as baby boomers grew up, and its work force rose even faster, as women moved into the labor market. That’s now all behind us.
Okay, sounds plausible. But, you know, I’m thinking there’s a better, simpler, answer: There’s a whole lot of cash sitting idle on business balance sheets (and money is dirt cheap [interest rates are very low]). Cash that, if invested in new ideas, would create employment and grow the economy.
So why then is all that cash sitting idle? Well, when we’re talking small businesses—the suppliers of 52% of America’s paychecks—41% of those surveyed in October by the National Federation of Independent Business say government is the problem. You’ll never hear that from Summers or Krugman…
