James Fallows
on the real crisis facing the US: entrenched unemployment:
The federal deficit is a serious challenge in the long run. The real emergency is how many people are still out of work. That's the deficit that matters. Almost nothing can do more harm to a nation's cultural, social, political, and of course economic fabric than sustained high joblessness. And of [course] nothing can do more, faster, to reduce a federal deficit than a restoration of economic growth. That political and media attention got hijacked to a fake debt-ceiling "emergency" is 1937 all over again -- but worse, because in principle we had the real 1937 to learn from.
(Emphasis mine.)
12 comments:
Well yes, unemployment is certainly a problem. But it can't be solved by taking on more debt.
If I am out of work that certainly is a problem. However, I don't help the problem by borrowing money to maintain my spending level when I was working.
We had a bubble economy and the bubble burst. We are going to have to live within our means as a country and not think we can just borrow and spend our way out of this. That is what Greece has done and if we follow we will end up like Greece.
First step: We need to reduce regulations and expand the use of natural resources here in the US employing Americans rather than purchasing commodities from abroad.
If I am out of work then it is plainly stupid to borrow money to put in a solar system that will actually raise my energy costs. If it actually cut my energy costs then of course it would make sense.
Similarly, the US should not be borrowing money to build infrastructure that raises energy prices. Just the opposite. We should open up additional areas to oil and gas exploration to reduce imports and low energy costs.
Bottom line. The "green" energy agenda is making the economic situation much worse than it needs to be. Democrats will have to make a choice. Jobs or "Green".
I should mention that the other thing the US could do that would really help is a devaluation of the dollar. Makes exports cheaper and imports more expensive so over time we get more of the former (and the jobs) and less of the later.
Of course this has been happening slowly already and is likely to continue. One could make it go faster. However, since much of our dept is held overseas we will likely see interest rates rise.
Nations aren't people--analogies between them aren't very meaningful.
Temporarily taking on more debt can certainly address unemployment--govt spending creates jobs. Enough of that leads to a positive feedback that can pull the economy out of its hole.
No one has ever said the debt shouldn't be addressed. They have said that NOW isn't the time to do it. The time is when the economy is going strong, as it was when Clinton left office. Instead Bush gave away all the surplus in tax breaks for the rich.
If you're out of work you don't just cut your spending--you look for a second job, moonlight, something to tide you over. In that nation's case (if you insist on such analogies) that would be raising taxes on people whose taxes have been decreasing for decades. (Those declining rates are a big reason why we're in this mess.)
What evidence is there that overregulation or underutilization of resources is responsible for the current US economic problems?
The US isn't "out of work" -- that's where you analogy fails. It has taken a voluntary pay cut and needs to go back and ask for full wages again. Then there will be money for "solar systems" that save money in the long run (esp when you include the health effects imposed by fossil fuel use, and the climate debt they are causing).
Baloney--the "green agenda" is not responsible for our economic problems. It didn't make bad loans or fail to adequately regulate Wall Street or give the surplus to rich people or start two expensive wars or cause health care costs to rise. It's just a whipping boy of the right and would be no matter what, and it's completely irrational to argue against a cleaner world that uses energy more efficiently.
I agree the green agenda is not responsible for the bubble economy. That was housing/wall street/gov.
However, if when we consider what to do now we need to generate more national income, like you said, find another job.
One way to do this is to develop national resources hear in the US. We we produced all of our oil domestically all of the money going overseas($400B/yr) to purchase oil would be staying home creating jobs. At $50k/yr that's 8m jobs.
Yes, one can create jobs with government spending but you have to pay back the debt or you end up like Greece.
"Temporarily taking on more debt can certainly address unemployment--govt spending creates jobs. Enough of that leads to a positive feedback that can pull the economy out of its hole."
I think this is true for a typical "business cycle" recession. However, what we have now is not a business cycle recession but a bursting bubble economy. Otherwise the stimulus would have worked as you suggest.
"What evidence is there that overregulation or underutilization of resources is responsible for the current US economic problems?"
It is not responsible for the bubble economy or the bursting. It does have an effect on ones ability to pull out. Just compare CA with ND unemployment (10% vs 3%). ND is developing gas and oil with private investment, not taking on additional gov debt. CA is going "green" energy.
"when you include the health effects imposed by fossil fuel use"
I have an open mind on this issue. Can the health savings be proven by experience? Can you find a medicaid/medicare cost vs air pollution correlation (forgetting causation for the moment)? Are you proposing medicaid/medicare money be diverted to subsidize "green" energy? Is anyone?
"The US isn't "out of work" -- that's where you analogy fails. It has taken a voluntary pay cut and needs to go back and ask for full wages again."
"Voluntary pay cut" You lost me on this one David. We are going to ask OPEC for an oil discount? China to forgive the debt? Who exactly to we ask for full wages again?
On a related issue. Do you think we are better of as a country with the UAW wages high and domestic auto market share low (fewer jobs) or UAW wages lower and domestic market share high (more jobs)?
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