The US is stuck in an economic quagmire featuring near ten percent unemployment. As politicians argue about the solution -- massive tax cuts or increases in Federal spending -- what's missing is a succinct analysis of the problem. Why has America lost 8 million jobs?
The roots of the jobs crisis stretch back to the Ronald Reagan presidency when conservative economic ideology began to dominate American political discourse. At the forefront of this philosophy were three malignant notions: helping the rich get richer will inevitably help everyone else, "a rising tide lifts all boats;" markets are inherently self correcting and therefore there's no need for government regulation; and the US does not need an economic strategy because that's a natural consequence of the free market.
What followed was a thirty-year period where America's working families were abandoned in favor of the rich. Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages.
Conservative ideology produced a warped and brittle US economy, where more than two-thirds of our GDP was housing related: building, buying, and furnishing new homes or borrowing against existing homes in order to maintain a decent standard of living. When the credit bubble burst, the debt-based consumption model failed, taking down first the housing sector and then the entire economy, resulting in catastrophic job losses.
In order to be sustainable, the US economy has to generate 125,000 jobs each month. (To bring unemployment down to acceptable levels -- below 7 percent -- the US economy needs to generate 300,000 jobs each month for the next three years.) For this to happen, there have to be three positive conditions.
First, consumers have to be willing to spend money. Regardless of the conservative ideology, the US economy depends upon steady consumption by working Americans. The Reagan Republican theory incorrectly assumes that rich folks buying yachts and vacation homes catalyzes the consumer economy. Nonetheless, wealthy Americans have as much income as they have ever had but their purchases of Ferraris or diamonds has not been sufficient to boost the economy. Average Americans aren't consuming because they either don't have the money or are saving it because they are fearful.
Second, businesses have to be willing to hire. At the moment, many businesses -- outside of construction and commercial real estate -- have the funds available to hire but they either aren't hiring or are filling what should be full-time permanent positions with part-time temporary workers.
Third, the new jobs have to be decent jobs paying a living wage. Unfortunately, the Associated Press reported that of the 630,000 jobs created in 2010, 81 percent are low-paying service-sector positions. That's the sad backdrop to terrible unemployment data.
Since the Reagan presidency the number of decent jobs has steadily eroded. When a worker retires from a GM assembly line, and a job that pays good wages, he isn't replaced by his son or daughter; they go to work at McDonalds. There was an under-acknowledged "structural adjustment" that meant the US consumer economy could not function unless average Americans went deeply in debt: borrowed up to the limit on their credit cards or used up their home equity.
It's necessary to understand what went wrong with the US economy because fundamental changes are required to deal with the jobs crisis. So far the political rhetoric has been underwhelming. Republicans blame unemployment on the policies of the Obama Administration and argue the solution is to cut taxes, particularly for the wealthy. Democrats blame unemployment on the policies of the Bush Administration and argue the solution is to increase Federal spending. The New York Times correctly condemned both approaches noting that Republican policies produced the current economic decline and the "cut taxes to solve all problems" clearly does not work. The Times also described the Democratic approach as timid, failing to attack the systemic nature of the problem.
America has economic cancer and radical surgery is required. First, there has to be a massive redistribution of income by increasing taxes on both the wealthy and financial institutions (particularly those that were at the heart of 2008's economic meltdown).
Second, there has to be a second stimulus package that not only supports America's teachers and public safety workers but also strengthens the US infrastructure, in general. It's not logical to propose that American businesses provide better jobs without also ensuring that our schools produce workers who can meet employers' needs.
Third, the Federal government has to be involved in economic policy. The last thirty years has demonstrated that it's insane to assume the free market will do this. What we've learned is that the market follows the path of least resistance and dictates economic policy solely based on greed. Creating wealth for a handful of CEOs isn't consistent with the national interest. What are needed now are economic policies that produce decent jobs for average Americans.
The Federal government has to intervene and create the jobs that the greedy, shortsighted private sector hasn't provided.
If you are a runner in a 1000-yard race, would you give your competitors and teammates a 70-yard advantage? As a nation, we give other developed nations the 70-yard advantage by spending $1 trillion too much on health-care annually; meanwhile, they live longer than we do. The insurance companies love the $1 trillion, the profits, the prestige. Politicians, accepting insurance company donations, protect our bloated system using the scare-words, ‘Socialized Medicine’ (SM); but most countries’ so-called SM systems don’t meet the definition of socialized or socialism.
$1 trillion per year for this nation translates to a $13,000 handicap for each American family in the race-of-life. This handicap means that the same product from Germany for sale at $100 will sell for $107 if made in America. So, the productive jobs go overseas. In fact, with about one fourth of our population, Germany exports about $200 billion more than America. As long as America is bamboozled by the word, ‘socialized,’ we will continue to languish in jobless recoveries and our slipping standard of living.
Of course, there are other things we should do to restore our nation as the best place for production and productivity. But now, the biggest problem is our morbidly-obese-cost health-care system.
and remember they are here in America.
Home first......learned that in kindergarden, they have not.
WHY does our Prez think he is the Prez of the WORLD?????
The absolute audacity of it all...............
The ignorance of it all.............
To do so, they will look at it as hurting THEIR pockets.
Too self centered to realize America has been sold out,
and thrown to the ditch-
as the middle class have been.
The question????????
Is it now too late?????......
and correction.......we are in a DEPRESSION now.
Media spin, with kool aide thirst.....has it as an illusion.
Yes, another crash is on the way.....
Arianna said it right: "The audacity of hope, the timidity to govern."
The regulatory environment is not a fundamental deterrent, just an excuse. Most penalties and inspections are toothless, as can be seen in the case of the salmonella peanut butter, the numerous BP refinery violations that did not deter the company from anything, and the BP oil spill.
Whats left is to stimulate production. Get wages up and get people working. Businesses can do some of it, but they can't do it on their own. The Federal government needs to make massive investments in infrastructure. There needs to be investment in rail and light rail transportation. I'm for an increase of 10 to 25 cents on the fuel tax. Oil companies need to pay royalties on oil from federal lands regardless of the cost of a barrel of oil. We need investments in research and development and we need research in the area of efficiency. I'm not talking about 10 percent increases either. We need increases in efficiency by orders of magnitude.
if you are stating 'at the pump'.
Americans will spend when they 'see' fit and right now they dont- suggesting they do wont make them do so....
Also they see jobs DECLINING...
As for number three, I note the author doesnt SPECIFY how the govt should be involved, I think we tend to confuse the effects of GLOBAL Capitalism with the machinations of American political parties-
As for number three,
It's not logical to propose that American businesses provide better jobs without also ensuring that our schools produce workers who can meet employers' needs.
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That, dear friends, is another problem. Many years ago, in the mid 1800's, the United States developed the 'Factory Schools' we are still using today. Those schools were instituted to provide literate, obedient workers for the emerging Industrial Factories. That very same system in still in place today. That is why most school systems are failing in the education of their charges. The Young People of today aren't as receptive of the curriculum developed in the mid-1800's since we aren't IN the 1800's anymore. An old outdated education system that needs to be rebuilt from the ground up to meet the challenges of a New Millennium. Why is it we were always told 'Get a good education and go out and get a good job.' We never heard 'Get a good education and go out and start a good business.' Anyone with intelligence can realize why that never happened since the maintenance and upgrades on the Yacht needed to be done and we were the ones who provided the cash to do so. At least they allowed us that spiffy rowboat we hauled on the roof of the family car... which by the way is for sale cheap since we'd like to eat sometime this week.
QW
You are correct: Jobs are not the only way to make money. Small business, Real Estate investment, etc. have sustained my family through this tumult.
That being said there are several salient points missing as to what to do about the mess.
Most importantly we need to again tax imports in a big way to create opportunities in American manufacturing and farming for investment. Repeal the income tax and once again fund our Federal Government solely thru tariffs like we did for a century and a half or so.
Tie the value of the American dollar to the value of the American Home (since we killed the gold standard). The Banksters will hate that as it will mean the falling home prices screws up their bottom lines, and everybody else’s (actually, factually, that is what is happening now already, just we should formalize it), and they will get off their collective asses and do something about foreclosures which are going UP even as house prices continue to go DOWN.
Next we need to drag every American Corporate board member down to the local Mission to live there for a month so they can see what not hiring folks is doing to us all as they practice their "loyalty" as they sit on their profits doing nothing.
Then we need to pass a Law called the Foreclosure Forgiveness Act that will re-instate people’s credit scores for those who got Foreclosed on due to economic devastation brought on by the Banks.
Republicanism, Reaganism, Conservatism and Repub Religionism(worship of money, power and authority; Gospel of Prosperity, the Natural Order of Things) and extremely prideful American exceptionalism is what hit us, and nearly destroyed us.
This GOP conspiracy began in 1968(Kevin Phillips, southernization of the GOP:(God, Gays Guns and abortion)) which seduced Pope John Paul II(my religion, NOT me) and his merging with the GOP. It was done for money(30 pieces of silver) and the promised illusion of getting more power, from the GOP. The illusion of power and the sin of Pride tempted him, and he succumbed.
They have proven to be vicious, vile, hateful and very deadly. They would very much like to "end our Rule of Law and our democracy"(Scalia). And all the while, claiming to spread democracy over the rest of the world. But their idea of democracy is very/extremely different from yours and mine.
Scalia and his SCOTUS brought about the next step in their conspiracy: the Jan. 2010 ruling that business could put unlimited amounts of money into political elections. Unions cannot do the same because they do not have those huge amounts of money.
The final step in their plan will be the election of Sarah Palin, Jeb Bush or Newt in 2012; more likely Palin. Thus turning America into a Theocratic Fascist nation, not unlike Iran!
St. Reagan began the Fascism of our nation, GWB completed it. GWB began the Theocratizing of our nation; likely, Palin will complete it.