High unemployment rate has become a "new normal" in the United States, while policymakers should avoid falling into the inertia trap and use greater fiscal and monetary policy firepower to tackle the jobs crisis, U.S. Nobel Prize-winning economist Paul Krugman said on Monday.
The latest jobs report from the U.S. Labor Department showed that the number of Americans with jobs is still down two million from six years ago and more than four million of the unemployed have been out of work for more than six months, with the unemployment rate hovering at 7.6 percent, Krugman noted in his latest column article on The New York Times.
"Why isn't reducing unemployment a major policy priority? One answer may be that inertia is a powerful force, and it's hard to get policy changes absent the threat of disaster. As long as we're adding jobs, not losing them, and unemployment is basically stable or falling, not rising, policy makers don't feel any urgent need to act," he contended.
Another answer is that the unemployed don't have much of a political voice. Corporate profits are sky-high, stocks are up, so things are O.K. for the people who matter, Krugman said.
If Washington would reverse its destructive budget cuts, if the Federal Reserve would show the "Rooseveltian resolve" that Fed chairman Ben Bernanke demanded of Japanese officials back when he was an independent economist, "we would quickly discover that there's nothing normal or necessary about mass long-term unemployment," he said.