THE UNEMPLOYMENT CRISIS.

THE UNEMPLOYMENT CRISIS. High unemployment is still imposing an enormous social cost in this country. Not only does it create misery for those who are unemployed, but running an economy substantially below capacity harms those people who have jobs. Kids, I remain a staunch Keynesian and believe that we should have a much more expansive fiscal policy. I want to call your attention to this article by Brad De Long which calls for a sense of urgency in attacking unemployment and says that this is “a uniquely propitious moment for the U.S. government to spend more and tax less.” Professor De Long asks why there isn’t more support for a more aggressive fiscal policy. I think that one reason is suggested in his article. The fiscal stimulus plan that was passed fifteen months ago was “half the size recommended by Democratic economists” at the time. I think that at that time there was very little public discussion of how big the stimulus should be. The possibility that it was too small (or too slow) was not much discussed, although in the unsettled circumstances, there was bound to be disagreement. If a range of estimates had been presented initially, efforts to take a second look now would have more success.