As usual Paul Krugman's column in The New York Times is right on the money and particularly appropriate this Labour Day. As usual what he has to say has implications for Canada too:
The idea that" ...fears of regulation and higher taxes are holding businesses back...is just a right-wing fantasy. Multiple surveys have shown that lack of demand — a lack that is being exacerbated by government cutbacks — is the overwhelming problem businesses face, with regulation and taxes barely even in the picture.
"For example, when McClatchy Newspapers recently canvassed a random selection of small-business owners to find out what was hurting them, not a single one complained about regulation of his or her industry, and few complained much about taxes. And did I mention that profits after taxes, as a share of national income, are at record levels?
"So short-run deficits aren’t a problem; lack of demand is, and spending cuts are making things much worse. Maybe it’s time to change course?"
Krugman says he's ready "to cut Mr. Obama a lot of slack on the specifics of (the budget proposal he's scheduled to announce" as long as it’s big and bold. For what he mostly needs to do now is to change the conversation..For the sake of the nation, and especially for millions of unemployed Americans who see little prospect of finding another job, I hope he pulls it off. "
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