Monday Business Edition
I seem to be writing a lot about Economics these days. Starting with The Big Fail (last week’s Monday Business Edition) there are 7 diaries-
What are my qualifications to do this? Absolutely none. I’m a critic, not a reporter Jim; except that as a History major I was required to take Economics 101 (where I got a gentleman’s B). You might say I’m Neo-classically trained because along with millions of others my principal text was Economics by Paul Samuelson.
But I don’t often rest my hat on my own analysis, I prefer to cite others who have not ‘spent decades unlearning‘ the foundational principles of their “Science” (dismal though it is) in favor of Snake Headed Oil Salesmen hissing from the serpents in the garden (that’s another Stargate joke).
The Real Lesson of Labor Day
By Robert Reich
Friday, September 3, 2010
Welcome to the worst Labor Day in the memory of most Americans. Organized labor is down to about 7 percent of the private work force. Members of non-organized labor – most of the rest of us – are unemployed, underemployed or underwater. The Labor Department reported on Friday that just 67,000 new private-sector jobs were created in August, which, when added to the loss of public-sector (mostly temporary Census worker jobs) resulted in a net loss of over 50,000 jobs for the month. But at least 125,000 net new jobs are needed to keep up with the growth of the potential work force.
(T)he real problem has to do with the structure of the economy, not the business cycle. No booster rocket can work unless consumers are able, at some point, to keep the economy moving on their own. But consumers no longer have the purchasing power to buy the goods and services they produce as workers; for some time now, their means haven’t kept up with what the growing economy could and should have been able to provide them.
(The) Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures – Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage – leveled the playing field.
In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.
1938 in 2010
By PAUL KRUGMAN, The New York Times
Published: September 5, 2010
The economic moral is clear: when the economy is deeply depressed, the usual rules don’t apply. Austerity is self-defeating: when everyone tries to pay down debt at the same time, the result is depression and deflation, and debt problems grow even worse. And conversely, it is possible – indeed, necessary – for the nation as a whole to spend its way out of debt: a temporary surge of deficit spending, on a sufficient scale, can cure problems brought on by past excesses.
But the story of 1938 also shows how hard it is to apply these insights. Even under F.D.R., there was never the political will to do what was needed to end the Great Depression; its eventual resolution came essentially by accident.
I had hoped that we would do better this time. But it turns out that politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes. And it’s slightly sickening to realize that the big winners in the midterm elections are likely to be the very people who first got us into this mess, then did everything in their power to block action to get us out.
If you still have the stomach for it I’ll also cite this analysis on Open Left brought to my attention by Jay Ackroyd on Eschaton–
When we say “the Dems hate the Left” or they’re beating up on “dirty fucking hippies”, what we’re REALLY saying is that, for the Third-Wayers, neoliberalism vs. social democracy is actually the whole ballgame. The last vestiges of American social democracy - the New Deal and all its accoutrements - must be wiped out, at all costs.
They haven’t been able to say so – because they need the votes of the “little people”. But there’s almost no play left in that gambit. With each [dispiriting] election betrayal (Clinton and NAFTA, Obama and Health Care, Obama and Social Security) the Democratic brand gets weaker and weaker.
We on the Left, the “netroots”, etc., need to understand the centrality of this point more than we do. The coming fight over Social Security is not one issue among many, it’s the defining issue of this period. Third Way politics is dependent on the bubble economy. This has failed. We can’t go back there. We have to make this known.
As Jay says- “Eventually you have to consider the possibility they are getting the policies they want to get.”