Paul Krugman: Running Government Like A Business or Family


 

I’ve spent a lot of time trying to knock down the bad analogy between governments and individuals, and the line that the government should act like an individual family or business, and cut back when times are tough. The key point is realizing interdependence: your spending is my income, my spending is your income, and if we all try to slash spending at the same time the result is a depression. Somebody needs to step up and spend when others won’t — and the government can and should be that somebody.

That said, the funny thing is that real individuals and businesses don’t behave the way the balanced-budget scolds claim. Businesses often borrow and spend when borrowing is cheap or they see high payoffs to investing; so do families. So Think Progress is doing good by pointing out how many of those deficit-fearing Congresscritters turn out to have quite large personal debts.

Running Government Like A Business or Family – NYTimes.com

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