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To the Editor:
Paul Krugman is surely on the winning side of the debate over government stimulus versus austerity. Most recently, he argued succinctly ("The Story of Our Time," column, April 29) that "this is a time for above-normal government spending to sustain the economy." But for how long will this time period last? "Until the private sector is willing to spend again" is his answer. This is unconvincing. Another chapter is needed in "The Story of Our Time."
Private-sector spending comes, directly or indirectly, mostly from household consumption, which will not accelerate until households are willing and able to "spend again" — that is, until household incomes accelerate. There's the rub. Without a set of policies to increase wages — the real median wage has risen by only 1 percent since 2000 — it is unlikely that consumers will be able to rise to the occasion.
NEIL TALBOT
Brooklyn, April 30, 2013
The writer is an economist.
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