Politics determines who has the power, not who has the truth.
Paul KrugmanRead
Close the weak banks and impose serious capital requirements on the strong ones...You see, it may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs.
Interpretation
Financial institutions must be sound and sustainable; prioritizing jobs over financial stability is dangerous.
Paul Krugman emphasizes the need for a strong financial system, suggesting that weak banks should be shut down and stronger ones should have stricter capital requirements. He argues that maintaining unsound institutions solely to protect jobs is not a viable solution, as it jeopardizes the overall health of the economy.
In practice
During a lecture on economic policy, this quote can highlight the importance of sound financial systems.
Politics determines who has the power, not who has the truth.
Our popular economics writers, however, are not in the business of giving their readers a ringside seat on the research action; with no exception I can think of, they use their books to do an end run around the normal structure of scholarship, to preach ideas that few serious economists share. Often, these ideas are not just at odds with the professional consensus; they are demonstrably wrong, and sometimes terminally silly. But they sound good to the unwary reader.
The raw fact is that every successful example of economic development this past century ... has taken place via globalization.
Wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.
It’s not about the budget; it’s about the power...So will the attack on unions succeed? I don’t know. But anyone who cares about retaining government of the people by the people should hope that it doesn’t.
The economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.
While it was an experiment to bring them together, nothing has divided Europe as much as the euro.
Tax laws favor capital over labor, giving capital gains a lower rate than ordinary income. The rich get humongous mortgage interest deductions while renters get no deduction at all.
Economics taught in most of the elite universities are practically useless in my context. My country is dominated by drug economy and a mafia. Textbook economics does not work in my context, and I have very few recommendations from anybody as to how to put together a legal economy.
During the next four years...unless drastic steps are taken by Congress, the U.S. will have nearly 8,000,000 unemployed and will stand on the brink of a deep depression.
Regulatory reform must move beyond limiting the damage that the financial sector can do and ensure that the sector genuinely serves society.
Our financial system is driven by a giant marketing machine in which the interests of sellers directly conflict with the interests of buyers.
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