Last year around this time, a similar thing happened in the economy: the breaks went on, and what was seen as modest growth seemed to just screech to a halt. Looking beyond the usual political answers (i.e., it’s Obama’s fault, the stimulus doesn’t work, etc.), there was a real worry about Greece and Ireland basically going bankrupt. Well, Greece is working to stave off any kind of default in the world financial market by being more austere in their budget — which is just going to inflame the great many who are still unemployed.
But here in the U.S., where unemployment is stuck at over 9%, there’s a growing problem of chronic unemployment — where people who are no longer eligible for benefits essentially fall off the radar of being counted as unemployed. This is a particularly bad situation to be in. What is basically happening is that the part of the labor force that’s out of work right now is losing more than just money. What they are also losing are the on-going skills that develop when a person is working in a job. The longer a large part of the labor pools remains unemployed, longer the overall economy suffers. Why? Because the cost of developing the very skills needed for employment go up the longer people are out of work. Couple that with cuts in state budgets where training programs are funded (and that includes state colleges and universities), and you have a systemic problem that’s going to take a long time to recover from if we keep cutting, cutting, cutting budgets to bone.
Too much of the political narrative has been taken up with a singular focus on austerity measures like cutting the deficit, cutting Medicare, cutting social services that affect the poor and middle class, with huge tax cuts for the wealthy means that the onus is on businesses to provide the jobs that will put money in the pockets of people, who will then use that money for health care, privately funded education and the like. The problem? Well, the sheer amount of inequality in the society that would result from this would be staggering. Nicholas Kristof in Sunday’s NY Times was talking about the very same issue (i.e., what do you get when you have a country that has a low tax rate for the wealthy, very few regulations on business, huge capital outlays to the military, a social conservatism that promotes prayer in schools, and very harsh sentences for criminals?). That country is Pakistan, and while we’re not on the road to their kind of low tax/low business regulation utopia, we are headed for an American version of it.
I mean with the radical Reganomics of trickle down wealth that being touted in the halls of Congress these days, a few things are pretty clear: 1. American based corporations will not invest the lion’s share of the money they get in tax breaks into hiring domestic workers. Rather, they will often take that money and invest it in countries where they already have established interests and would like to see further growth. 2. Whatever jobs are created here, are not going to pay the kind of wages that will allow for individuals and families to pay for medical care, education and the like — since, you know, Republicans are busily trying to cut government servies that helped create the middle class. 3. The marketing machine of the Republican party will continue to create the “crisis of the day” that hogs the media spotlight, until (and this is hoping for a lot) Democrats and those who support their politics start pushing back hard. And yes, that starts squarely with the leader of the Democratic party: Barack Obama. His centrist politics are fine at times, but what he lacks is the ability to to take the paucity of jobs seriously. He used too much political capital on other priorities other than jobs, jobs, jobs, and let the right frame the economic woes in their own terms. Granted, the President of the United State does not have a magic wand to create jobs, but he does have the bully pulpit to demand that banks we (the taxpayers) have bailed out start lending money to small businesses so they can start hiring people. He can frame the long-term and short term investments that need to be made so people in industries that were hardest hit in the recession can start working again, and look to actively invest in businesses that are poised for growth — but just need some help to get going. Now, he has done some of that, but not enough. Nor has he taken the microphone to tout his successes (and that includes Democrats as well). Since a lot of the “market mentality” is psychology, it’s important to take action in areas that will shift the market mentality from caution to hopeful with policies that have some real teeth. Many (if not most) Americans don’t want to “go back” to Bushworld policies, but they will embrace the 2012 version of it if Obama and the Democrats stop being consistently tepid in their response to the Great Recession.