Skip to main content

The economy, today, OR flapping around like a landed, dying fish

Two liberal economists whom I trust when they write about the national economy are Robert Reich, Clinton’s Secretary of Labor and now a Professor of Public Policy at UC Berkeley; and Paul Krugman, longtime columnist with the New York Times and 2008 recipient of the Nobel Prize in Economics.

Reich has a recent post in his blog with the lengthy, very descriptive title "Why No Amount of Fiscal or Monetary Stimulus Will Be Enough, Given How Small A Share of Total Income the Middle Now Receives" where he tells us what can’t happen and needs to happen to give the American economy some much-needed OOMPH.

The Fed interest rate is near zero, so there’s both little room to lower it more, AND there’s no purposeful reason to lower it since businesses have money already they aren’t spending (and, thus, aren't looking for loans). [Consumers aren’t buying much, so there’s not an incentive for businesses to spend money by expanding.]

The problem we have is consumption. And citizen consumers aren’t motivated to spend in these flat-as-a-pancake economic times.

Also, citizens are uncomfortable spending money since, generally, they already owe so very much.

Writes Reich,

After three decades of flat wages during which almost all the gains of growth have gone to the very top, the middle class no longer has the buying power to keep the economy going. It can’t send more spouses into paid work, can’t work more hours, can’t borrow any more. All the coping mechanisms are exhausted.
And, putting a cattle prod to China — to make that nation up the value of its currency, for one thing — won’t help because, well, China is simply intransigent, and any fix from China would be snail-slow developing, any how.

The answer to the fix we’re in, Reich tells us is …
… reorganizing the economy to make sure the vast middle class has a larger share of its benefits. Remaking the basic bargain: linking pay to per-capita productivity.
In other words, promise of more money to the middle class will spur citizen consumers to feel better about their lives, be more confident, and begin to spend, again. All of which will cascade into greater and greater feelings of confidence and happiness and all will be well.

A recent column by Krugman, "1938 in 2010," compares the economic situation that Obama has to figure out how to deal with to where Franklin Roosevelt was in 1938.

Roosevelt’s policies to save the nation from the Great Depression were too cautious two years into his first term as president, just as Obama’s initial policies to save America from the Great Recession were too cautious.

The policy of each president hadn’t accomplished enough and Roosevelt was publicly unpopular because of economic stagnation, just as Obama is, today.

Each president found himself in “a political trap”: More stimulation (or stimulus, in Obama's case) was desperately needed, “but in the public’s eyes the failure of the initial program to deliver a convincing recovery discredited government action to create jobs.”

So, what did FDR do? Nothing really; that is, he made no economic move. What happened was World War II, and with all the immense spending that came with that, the economy began to purr like a kitten, albeit during a time when massive amounts of  kill-and-be-killed was happening.

Obviously, the last thing America needs now is more war. But what?

Krugman concludes his column thus:
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.

But always remember: this slump can be cured. All it will take is a little bit of intellectual clarity, and a lot of political will. Here’s hoping we find those virtues in the not too distant future.
Krugman's optimism is nice, but the country sure doesn't seem to be moving in a direction of "intellectual clarity." It's hard for me to be hopeful.

I think both Reich and Krugman are right, I just don't see that which they righty see as what needs to be done getting done.


Popular posts from this blog

More Homeless Hate from Marcos Breton

There was a long spell a handful of years ago when Marcos Breton said something so fully ridiculous in one of his hateful screeds against homeless folk that it appeared to be very apparent he had been taken off the Homeless Beat by his superiors. Unhappily, after a few months, Breton was again writing disparaging columns about homeless folk

In today's Bee [3/5/17], Breton has written one of his longest columns. Online, it is titled "The price downtown Sacramento is paying for Mayor Steinberg’s homeless crusade
Read more here: It goes on for days. The message, essentially, is this: Homeless people poop; they're getting a great deal of what they want from the overmuch-helpful mayor; and business people proximate to Chavez Park are made miserable by the forever-disgusting homeless that are there in great number.

O.K. Let's get into all this a bit. Except in Breton's mind, homeless pe…

The first-person dimension of homeless Sacramentans suffering from Schizophrenia

"Disabilities and dysfunction process from having been shunned and denied access to needed opportunitites and networks of support."
~ the brothers Lysaker in Schizophrenia and the Fate of the Self What is schizophrenia? How many are homeless Sacramentans?

Perhaps 15% of the Sacramento homeless population suffers from schizophrenia. The percentage is difficult to determine for many reasons that branch from both the fuzzy definition of the malady and that many people within the homeless community who have the illness (1) are in denial and are undiagnosed and (2) have the illness as a diagnosis only – the disability can be faked by people who are successful claimants of social security and other benefits.

What is schizophrenia? One webspace gives us this definition: The most chronic and disabling of the severe mental disorders. Typically develops in the late teens or early twenties. The overt symptoms are hallucinations (hearing voices, seeing visions), delusions (false beliefs ab…

Homelessness and Remembrance

This is a follow-up on the matter of remembering homeless people who have died and the Wall that Libby Fernandez wants to build in remembrance of the deceased. [See earlier blogpost "Tell Libby NOT to build her wall."]

This blogpost is prompted by a Philosophy Bites podcast released in the last couple days -- titled "Cécile Fabre on Remembrance." Fabre's take on why we honor or grieve for certain individuals or certain collections of individuals is not greatly helpful -- since his focus is mainly one of fallen war heroes and war casualties -- but it does open up the issue of why should there be a remembrance effort for deceased homeless people at all. Who is served by it? And has the effort been perverted by the avarice of charities in their insatiable drive for donations.

It is, for starters, a curious thing for "homeless people" to be a collective that is honored. I write that NOT because I don't want the best for homeless people. But, homelessn…