Midya's Weblog

Would higher interest rates really drive up unemployment?

Don’t get me wrong, I’m not for raising interest rates at the moment.  What I am for is Krugman coming out and telling me just what drives employment, and while we’re at it, unemployment.  He loves to oversimplify things.  To his credit, he is writing a column so there is just so much room.  Still, are high interest rates really what drives unemployment.  For my money, I’d say that political uncertainty and government over regulation are what is driving our current unemployment.  If you can’t turn a profit due to the high costs of red tape and taxes, if you don’t have a market for your goods because the government has set such high barriers to entry for small firm and if you can’t compete with foreign governments that subsidize their goods and oppress their people then interest rates are the least of your problem. 

Somewhat higher interest rates are only a problem because of Krugman’s friends meddling with things in the first place. 

Krugman: A Cross of Rubber

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This entry was posted on January 31, 2011 by in Uncategorized.
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