Mr. Krugman is the latest Nobel Laureate for economics, a Princeton University professor, and a widely read columnist of The New York Times. Therefore, what he says, regarding the economy of the US and, expectedly as well as subsequently, of the whole world should hold water. He says that solutions in the form of massive government spending cannot replace the more sustainable solutions to unemployment.

The New Deal is Barack Obama’s proposed solution for recovery from the gigantic US financial meltdown. This giant infrastructure takes after FDR-style recovery programs that did not really make the US recover from the Depression during FDR’s time. The New Deal created and provided jobs before but did not really spell economic recovery for the US. Paul Krugman offers an analysis. The New Deal of the FDR era did not spend enough and unemployment was not surveyed more thoroughly.

New Dealers also raised taxes many times over to finance government spending. They demanded for higher wages at a time when businesses could hardly keep their heads above water. If companies paid their employees more, they will not be able to hire the unemployed because their resources are tight. So, the unemployed remained unemployed. And the economy remained unmoved from its dismal situation. Paul Krugman, however, suggests that the New Deal is still the way out of the economic abyss provided that it pumps in more government spending.

Obama wants to “create or save 2.5 million new jobs.” But this will depend on the private sector’s capability to create more jobs. Still, the New Deal is the real deal in this time of dire straits.

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Via The Wall Street Journal