Unemployment will almost certainly (be) in double-digits next year — and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics’ household survey, you can bet there’s another either too discouraged to look for work or working part time who’d rather have a full-time job or else taking home less pay than before (I’m in the last category, now that the University of California has instituted pay cuts). And there’s yet another person who’s more fearful that he or she will be next to lose a job.
Reich goes on to point out the basics of underemployment and the accompanying lack of consumer spending, and lays out in plain English the case for greater stimulative spending. While the debt is worrying, Reich argues that now is no time to worry about the debt and uses the example of Depression-era spending under FDR followed by post-war growth to argue that spending is the correct course to take.
Reich is also pointing out that in bad economic times, we tend to get ugly politics, which is an understatement. If you agree with his points, our country is essentially risking a long period of internal strife because of the overly simplistic views about government spending and debt that dominate our broken discourse.
Even Uncle Alan admitted that the “entire intellectual edifice” that underpinned neo-liberalism was a disaster. One can’t help but conclude that a lot of the recent insanity in politics results from the collapse of an economic belief system that was dominant in the empire for decades, and has yet to be fully discredited in the society at large. (Can you say “Russia?”)
So obviously Reich is arguing for a Keynesian approach.
One of the most entertaining quips by John Maynard Keynes is this bit from The General Theory of Employment, Interest and Money.
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
To put this in regional terms, we should start building and repairing things like bridges, transit and schools, although I have to admit there would be a certain satisfaction obtained by burying money in crazy places. We could then sit back to watch as the GOP-multi-level marketing machine goes to work. In a short time there would be an entirely new class of bidness guys and gals selling various plans designed to profit from digging for the loot, and many of them would need new cars and furniture.
All of this is to say that I don’t understand why Reich isn’t in the government again. With continued woes in the housing sector, ordinary consumers being hammered by usurious banks and a bleak employment outlook, it’s baffling that the Obama administration hasn’t put Reich into a key post.
I guess it’s because Obama is from Chicago?