{"id":6648,"date":"2012-03-06T16:30:47","date_gmt":"2012-03-06T21:30:47","guid":{"rendered":"http:\/\/stateimpact.npr.org\/new-hampshire\/?p=6648"},"modified":"2012-03-06T16:31:19","modified_gmt":"2012-03-06T21:31:19","slug":"why-one-economist-says-austerity-is-hurting-job-growth","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/new-hampshire\/2012\/03\/06\/why-one-economist-says-austerity-is-hurting-job-growth\/","title":{"rendered":"Why One Economist Says Austerity Is Hurting Job Growth"},"content":{"rendered":"
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GoatChild \/ Flickr<\/p>

Here's one interesting perspective on the downside of government austerity<\/p><\/div>\n

As we’ve mentioned before, one of our key online lurking destinations for economic news is the New York Times.<\/em>\u00a0 And while we don’t often draw on op-ed’s, a recent offering from economist Paul Krugman<\/a> caught our attention.<\/p>\n

In “States of Depression,” Krugman (a self-professed liberal<\/a>) faults the national push towards austerity for the slow economic recovery.<\/p>\n

For those of you familiar with the political-economic arguments about austerity vs. stimulus, this probably doesn’t sound like new ground.<\/p>\n

But what is <\/em>interesting is the comparison Krugman draws between the current recovery, and what our economic rebound looked like during the first Reagan Administration (or “Morning In America,” if you will).\u00a0 The key difference, Krugman says, isn’t federal government spending per se–it’s spending that money at the state and local levels:<\/p>\n

<\/p>\n

“These state and local cuts have led to a sharp fall in both government employment and government spending on goods and services, exerting a powerful drag on the economy as a whole…<\/p>\n

Start with government employment<\/a> (which is mainly at the state and local level, with about half the jobs in education). By this stage in the Reagan recovery, government employment had risen by 3.1 percent; this time around, it\u2019s down by 2.7 percent.<\/p>\n

Next, look at government purchases of goods and services<\/a> (as distinct from transfers to individuals, like unemployment benefits). Adjusted for inflation, by this stage of the Reagan recovery, such purchases had risen by 11.6 percent; this time, they\u2019re down by 2.6 percent.<\/p>\n

And the gap persists even when you do include transfers, some of which have stayed high precisely because unemployment is still so high. Adjusted for inflation, Reagan-era spending<\/a> rose 10.2 percent in the first 10 quarters of recovery, Obama-era spending only 2.6 percent.”<\/p><\/blockquote>\n

Krugman points out that under Reagan, of course, some of that spending was tied to the arms race.\u00a0 But a lot of it was also local governments providing–and expanding on–basic services, like public safety and education.\u00a0 And that expansion, Krugman writes, created government jobs:<\/p>\n

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