AMERICA OUT OF WORK
For many unemployed workers, jobs aren't coming back
The U.S. unemployment rate will remain elevated for years, experts say, a grim prospect for Americans who have exhausted their benefits.
The U.S. economy will eventually rebound from the Great Recession. Millions of American workers will not.
What some economists now project — and policymakers are loath to admit — is that the U.S. unemployment rate, which stood at 9.6% in August, could remain elevated for years to come.
The nation's job deficit is so deep that even a powerful recovery would leave large numbers of Americans out of work for years, experts say. And with growth now weakening, analysts are doubtful that companies will boost payrolls significantly any time soon. Unemployment, long considered a temporary, transitional condition in the United States, appears to be settling in for a lengthy run. moreOf course, there is no valid reason for why we should choose such a ridiculous public policy...
FDR and Labor: Earning Our Way Out of the Great Recession
Monday, 09/6/2010 - 11:29 am by David Woolner
Roosevelt historian David Woolner shines a light on today’s issues with lessons from the past.
In a recent editorial in the New York Times, former Labor Secretary, Robert Reich, writes that this Labor Day promises to be one of the worst in decades. Organized labor, he notes, is down to a mere seven per cent of the private work force; unemployment remains high; and the prospects for a further recovery of the economy remain uncertain at best. Professor Reich goes on to argue that this dismal state of affairs is unlikely to improve until we address the deep structural flaws in our economy; flaws which have made it impossible for the American consumer — i.e. the middle class American worker — to sustain the level of spending needed to keep our economy going.
He rightly blames this state of affairs on the steady decline in working wages that has occurred in the past three decades as US companies brought in new labor-saving technologies or shipped jobs to non-unionized low wage areas overseas. He also correctly points out that much of the economic growth that the US has experienced since the early 1990s — growth that occurred in spite of the fall in wages — was fueled by three basic phenomenon: the vast increase of women in the work force; an increase in the number of hours people worked to make up for lower wages; and the massive use of consumer debt, fueled in part by the housing bubble.
In an eerie parallel to the 1920s, he observes that thanks to this real decline in income, even a return to near full employment will not be enough on its own to get us out of this mess. Why? Because as it stands today the “vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.” Nor, he says, should we look to the rich to stimulate demand, since the rich — who now take in nearly 25% of the nation’s total income as opposed to 9% in the late 1970s — spend a much smaller portion of their incomes than the rest of us. moreOnly we have a problem. The economics profession doesn't know how to do fiscal stimulus anymore.
Economists Haven't Got a Clue
Death By Globalism
By PAUL CRAIG ROBERTS
Have economists made themselves irrelevant? If you have any doubts, have a look at the current issue of the magazine, International Economy, a slick publication endorsed by former Federal Reserve chairmen Paul Volcker and Alan Greenspan, by Jean-Claude Trichet, president of the European Central Bank, by former Secretary of State George Shultz, and by the New York Times and Washington Post, both of which declare the magazine to be “ahead of the curve.”
The main feature of the current issue is “The Great Stimulus Debate.” Is the Obama fiscal stimulus helping the economy or hindering it?
Princeton economics professor and New York Times columnist Paul Krugman and Moody’s Analytics chief economist Mark Zandi represent the Keynesian view that government deficit spending is needed to lift the economy out of recession. Zandi declares that thanks to the fiscal stimulus, “The economy has made enormous progress since early 2009,” an opinion shared by the President’s Council of Economic Advisors and the Congressional Budget Office.
The opposite view, associated with Harvard economics professor Robert Barro and with European economists, such as Francesco Giavazzi and Marco Pagano and the European Central Bank, is that government budget surpluses achieved by cutting government spending spur the economy by reducing the ratio of debt to Gross Domestic Product. This is the “let them eat cake school of economics.”
Barro says that fiscal stimulus has no effect, because people anticipate the future tax increases implied by government deficits and increase their personal savings to offset the added government debt. Giavazzi and Pagano reason that since fiscal stimulus does not expand the economy, fiscal austerity consisting of higher taxes and reduced government spending could be the cure for unemployment.
If one overlooks the real world and the need of life for sustenance, one can become engrossed in this debate. However, the minute one looks out the window upon the world, one realizes that cutting Social Security, Medicare, Medicaid, food stamps, and housing subsidies when 15 million Americans have lost jobs, medical coverage, and homes is a certain path to death by starvation, curable diseases, and exposure, and the loss of the productive labor inputs from 15 million people. Although some proponents of this anti-Keynesian policy deny that it results in social upheaval, Gerald Celente’s observation is closer to the mark: “When people have nothing left to lose, they lose it.”
The Krugman Keynesian school is just as deluded. Neither side in “The Great Stimulus Debate” has a clue that the problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, and careers associated with it, have been moved offshore and given to Chinese, Indians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated. more