The Only Thing We Have to Fear Is Fear ... of Government

"We misread how bad the economy was, but we are now only about 120 days into the recovery package."

-- Joe Biden, July 4, 2009

What happened to all those green shoots, the cautious optimism, the market rallies and the dreams of 201ks again becoming 401ks?

Maybe we should ignore the chatter of "near bottoms" in share prices, "slowdowns" in mortgage foreclosures, "moderation" in housing price declines, "renewed" banking confidence and all the other pseudo-indicators. Instead, let's look at what really matters most: jobs. We face a shortfall of about 28 million jobs (according to analysis of Bureau of Labor Statistics data by Leo Hindery, chair of the Smart Globalization Initiative at the New America Foundation).

Where are those jobs going to come from and how do we keep them in this country?

The stimulus package took a puny poke at the problem. It was conceptually flawed from the get-go when Congress refused to let it make up for the obvious shortfall in state revenues that was sure to result from the financial crash of the economy. When Wall Street went belly up and we put the entire shebang on the dole, the real economy was starved for credit and crashed. Workers were laid off in a hurry and state revenues collapsed leading to fiscal crises. Since states have to balance their budgets they were forced to layoff public workers, further depressing their economies. It's so bad that California is passing around Confederate IOU's to plug their revenue gap.

And conservative Republicans and Democrats didn't want to let stimulus money cover these gaps? Why? Because they hate government and want as much money as possible to go to private contractors and tax cuts.

To paraphrase Nobel laureate Joseph Stiglitz, it really doesn't make much sense to layoff teachers in order to hire construction workers, when what you really need is both (unless the contractor firms are contributing to your campaigns.)

If we all weren't so afraid of big, bad government, we'd realize the obvious: expanding the public sector is the most efficient way both to create jobs and stimulate the economy. Let's do the math: Assume a new government job would cost about $60,000 (about $40,000 in pay; the rest in benefits and administrative costs). Then $787 billion stimulus could have generated more than 13 million jobs! (13,116,667 to be exact.)

Of course those jobs would last only for the life of the stimulus grants. But they would provide one hell of a jolt to the economy and put a lot of smiles on the faces of displaced workers. The indirect impact on private sector jobs just through added consumer spending would be colossal. We'd have a jobs-oriented boom instead of a fantasy finance casino.

How do we pay for it since we've already spent several trillion on TARP, the stimulus and other bank guarantees? Here's a package that would drive Joe the Plumber nuts: 1) a small excise tax on each and every financial transaction that would yield somewhere between $50 and $500 billion per year. 2) a 10 percent surcharge on those earning $1 million or more that would yield about $120 billion per year.

Not only would both measures raise badly needed revenue, but they would help reduce the fantasy finance bubbles caused by having a bloated financial sector with far too much money in the hands of the few. (See The Looting of America).

And in case you're worried about not having enough work to do, think New Deal type programs (with jobs that are not likely ever to leave the country):

"[WPA] workers constructed or repaired more than 125,000 buildings, including 83,000 schools; 800 airports; 950 sewage plants; and 650,000 miles of roads. They built or improved 78,000 bridges and 25,000 playgrounds; terraced 271,000 acres of eroded land; and taught two million people to read. They also ran a famous Federal Art Project, which hired destitute artists to create murals for public buildings, posters, and paintings. The WPA produced a highly regarded series of state guidebooks and an acclaimed collection of interviews with former slaves, and it played a major role in building the San Antonio Zoo, New York City's LaGuardia and Washington's Reagan airports, and the presidential retreat at Camp David. In 1965, on the program's thirtieth anniversary, The New York Times quoted a dispossessed North Carolina tenant farmer living in an abandoned gas station, who had been rescued by a WPA job. 'I'm proud of our United States, and every time I hear The Star Spangled Banner I feel a lump in my throat,' he said. 'There ain't no other nation in the world that would have had the sense enough to think of WPA."

-- Adam Cohen, Nothing to Fear

Sooner or later, we'll be forced to choose. Either we will continue to bailout bankers and cater to implacable conservative politicians, or we will directly employ those who truly need the work until the economy actually recovers.

A nation has many duties, but none more important than putting its people to work. If Obama, Biden, and a slew of dilly-dallying Democrats can't do it, history teaches us to fear a new wave of unscrupulous leaders who might forge more jingoistic ways to deploy our people.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.

Follow Les Leopold on Twitter: www.twitter.com/les_leopold

Comments

[pharmmajor]

This is a highly-flawed solution. No good will come out of giving the government more power and reach in the long-term to produce jobs that will only last for a short term.

[SinfullySublime]

I can see no alternative to another bloody revolution.

[Ben6768]

I live in Europe, and the government does things well :

--- very intelligent people assigned to industrial policy, to plan 5, 10, 15 years ahead into the future to create cooperation between the public and private sectors
--- there are huge state owned companies that are profitable and well run by some of the brightest people in the country.
--- we have good infrastructure with bullet trains, and clean modern stations and roads.
--- it is an honor to work for the government.
--- universal health care system with computerised records, unlimited coverage, short waiting times ...
---universal retirement system, with a guaranteed pension.

All of this is competently done by the government, in our name.

However in the US, government is demonised. This is the strategy of the big interest groups, so they continue to rob the American people.
The only thing that stands in between the American people and the crooks trying to rob them, is government. So lets start new political parties and elect good new polititians, because our life depends on it.

The U.S. of today is like North Korea : it does not matter that people suffer and die, as long as the orthodoxy of either communism or capitalism is preserved, in its maximum purity.

[SinfullySublime]

Your perspective is greatly appreciated, THANK YOU!

[Chip W]

But I want my Freedom, and Liberty. And also I'm against Tyranny. I don't want to be enslaved like you. I don't want the government telling me what to eat and when I can pick my nose for fear of losing my health insurance. We're losing our freedoms!! We're losing our freedoms!!
The Constitution! Free enterprise! The productive supporting the unproductive! It's my money! Money, money, money! Oh yeah, and Freedom - that's what it's all about! And money!
Government bad!!

[mbaty]

WE are the government. The government is ideally our collective tool with which we allocate our shared resources in ways that benefit all of us.

[jsgaetano]

The story always remains the same- if it's good for America, conservatives oppose it.

[drkazmd65]

Mr. Leopold,... I have just become your fan.

With Grandparents that survived (and thrived!) during the Great Depression in part due to WPA (Grandpa worked for a year on a WPA project in Indiana just prior to getting married),...Why is this such an outrageous idea today?

Put my older brother (an Industrial Union Electrician) back to work full time (as opposed to his current off & on working) helping lay out parts of a new 'smart grid'. Put one of my younger brothers (with a BA Degree in science education) back to work full time with a REAL salary. Put my Mother-In-Law back to work (MS Psychology) assessing at risk families for the County Courts - at least as much as her health will permit.

All of 'us' who make a living, who pay taxes, who buy goods & services, will help rebuild the economy.

[Krishnamurthi Ramachandran]

Dear,Mr,Les ,
Well and wish to hear the same from you.
Your article on The only thing we have to Fear Is Fear......­...Governm­ent ,dated 7th July,2009,was a marvel one,I have fully digested it.
If we want to improve the economic status for Americans,there should be a restructured economic and social plans from Obama administration.
Here, in India,Mixed Economy doctrines still works better compared to Western Nations.
For more employment means more production ,more income ,and more revenue to Government.
All infra structure segments to be created,that will solve present Americans under employed,and to employment to more youth,adults.
If there is a way,there is a will.

[Gemma08]

Duh... even we eejits in the third world know that..

[tpk2002]

Yikes. Your title says it all...

[RoloTomassi]

Spot on Les; once again you have nailed it.

Everything that is being done now is under the misguided notion that the financial industry / corporatists will save us; it is understandable why some would grasp at this illogical last straw, as the aforementioned effectively killed-off more traditional means of recovery in their despicable quest for economic domination.

Rebuilding a 21st century version of our former manufacturing base is the only viable option for true recovery, and that rebuild would encompass many variations of the concept of industry.

But alas, I fear that the corporatists are so wholly in control now that nothing short of political upheaval can change our course.

It's a sad future to contemplate, but that is the inevitable consequence of a society living by the mantra that greed is good; such is ultimately a path to unintended self-destruction.