McCloskey, Deirdre. "The Economic Sky Isn't Falling." PRUDENTIA December 16, 2009.

My non-economist friends keep asking me about an essay by Paul Krugman published on September 2, 2009 in the NY Times Magazine. It seems to be a summary of his old book on the "return to Depression economics." As usual with Paul, it's cute and lucid and 85% correct. And as usual the 15% that's not correct turns out to be pretty important. The basic mistake that Krugman and many economists and most journalists make is to suppose that the present bad situation (any present bad situation) is a Crisis of Capitalism. It's not. It's a routine severe recession. I don't say that it's fun (or a vacation, as my former colleagues at the University of Chicago have it). I don't say that government should do nothing to offset it. But I do say, as an economic historian, that we should realize that it's happened forty times since 1800, and every time the average person and the very poor have ended up with higher real incomes than at the previous peak. Every single time. Even during the horrible governmental foul-up 1929-1941 in the US. . . . Read the rest here: http://www.deirdremccloskey.com/editorials/krugman.php.