Twenty years ago, on the eve of the first of the great post-Bretton Woods recessions, unemployment did not appear to be a major problem for advanced economies. Today, of course, unemployment is back with a vengeance. In Europe, in particular, the seemingly inexorable rise in the unemployment rate has led to the creation of a new word: Eurosclerosis. While the United States has not seen a comparable upward trend, many people on both sides of the Atlantic believe the United States has achieved low unemployment by a sort of devil's bargain, whose price is soaring inequality and growing poverty.> Why has unemployment risen? Will it continue to rise? What can be done to reverse the trend? These daunting questions have been the subject of massive amounts of research. Many economists have coalesced around a common view of the nature of the unemployment problem. In his remarks before the bank's 1994 symposium, Krugman restates that conventional wisdom.