I recently happened to be at an event where billionaire George Soros was being interviewed. The right wing hates Soros because he is: (a) liberal, (b) rich, and (c) fearless. [I could also make a case that they hate Soros because he is (d) Jewish, but I leave that up to you.]
Soros said a lot of things, but he said two sentences that I wish that everyone could hear. This is what he said:
You can't cut your way out of a recession. You have to grow your way out of a recession.
The simple truth in those nineteen words seems to have eluded our policymakers, both Democratic and Republican, for the past four years. Here is a chart that proves it:
The chart has been featured regularly at Daily Kos, but it comes from the Calculated Risk Blog. It graphs job losses during and following each post-WWII recession, month by month, as a percentage of total employment.
As you can see, the job losses in America since 2008 are not only the worst in postwar history, but also feature the weakest "recovery." In every single other recession, employment returned to peak levels in less than four years. (In fact, leaving aside the Bush Recession of 2001, employment returned to peak levels in less than three years.) Yet here we are, four years after the Great Recession started, still almost four percentage points under peak employment.
Which is five million jobs. Five million people who can't find work. Five million people with no income.
So, as Soros and I might ask on Passover, "why is this recession different from all other recessions?" There is a simple answer: the austerity fetish. The bizarre notion that cutting is healing.
The Wall Street Journal recentlyconfessed that without local government layoffs -- police officers, firefighters, teachers and others -- unemployment would be a full percentage point lower. I think that that's an underestimate. If those police officers and firefighters and teachers still had jobs, we would be safer, and our children smarter. But beyond that, as those public employees spent their earnings, a lot of carpenters and waiters and real estate agents and cashiers would be able to get back to work.
And we have no one to blame but the cut-cut-cut policymakers, in whichever party. As Nobel Prize-winning economist Paul Krugman put it three weeks ago:
Consider, if you will, the current state of our nation. Despite hints of economic progress, we're still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technological know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.
Soros and Krugman are right. It's time to end this man-made economic disaster. It's time to stop slashing our own economic wrists. It's time for jobs.
Courage,
Alan Grayson
Follow Alan Grayson on Twitter: www.twitter.com/alangrayson
That is like saying if we had not quite building houses would would have avoided the recession.
The reality is the US had a housing bubble. Too many resources invested in housing, inflated property tax and encourage government hiring, based on available money not real market needs. Trying to reinflate the housing bubble or the related government bubble would be pouring even more resources down these rat holes.
It is not just that people need a job any job. They need to produce things that are in demand from consumers. Consumer demand will not recover even for the employeed 80%+ until savings destroyed in the bursting of the bubble is replaced. Then the jobs created by consumer demand will start to build a sustained recovery as long as politicians avoid creating yet another bubble.
I see Corporations hiring through Temp Agencies so that they don't have to offer benefits. In different time Temp agencies were the way to get into a company and then be hired by them. Not any more. Now the worker will be let go at the end of the appointed time and then rehired at a later date as a Temp worker. Again.
Republicans want to end Social Security. Originally SS was supposed to "Supplement" Retirement Pensions. Now the era of Retirement Pensions is over as fast as Corporations can divest themselves of the obligation.
What do average Americans do with no retirement, no social security, no income, no medical coverage??? Seniors are currently taking in younger family members because they are the only ones with income to maintain a shelter. What do young people do with nothing to look forward to??
http://my.firedoglake.com/pshakkottai/2012/04/20/misunderstood-deficits/
Deficit spending is the only way to grow the economy. Not only in difficult times but ALWAYS.
(Federal Deficits = Net Private Savings+ net imports), applies to USA and other nations that have their own currencies. If all deficits are added, the above equation leads to
(cumulative total govt_deficit) = (total national private wealth) = 60 Trillion, approx.
This is proved in
http://pshakkottai.wordpress.com/2012/02/27/national-debt-and-national-wealth-compared/
http://pshakkottai.wordpress.com/2012/03/30/another-proof-of-mmt-4/
In short, (govt debt) is (peoples' anti-debt) and (govt surplus) is (peoples anti-surplus)!
(Govt_debt / GDP) is exactly the same as (peoples' wealth/ GDP) and can be any number not limited to 100%. This means NO debt ceiling, NO borrowing from itself and NO need for a federal reserve.”
"You can't cut your way out of a recession. You have to grow your way out of a recession" is correct.
http://www.huffingtonpost.com/robert-reich/romney-middle-class_b_1257859.html
Robert Reich: The Downward Mobility of the American Middle Class, and Why Mitt Romney Doesn't Know
"January's increase in hiring is good news, but it masks a bigger and more disturbing story -- the continuing downward mobility of the American middle class.
Most of the new jobs being created are in the lower-wage sectors of the economy -- hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago..."
Two-thirds of the occupations with the most growth in the 2010-2020 period are low-paying jobs:
http://www.huffingtonpost.com/jared-bernstein/bls-employment-projections_b_1284244.html
Jared Bernstein: Stop the Presses: New Employment Projections!
Only one engineering discipline mentioned in the BLS Fastest Growing Occupations out to 2020: biomedical engineer:
http://www.bls.gov/emp/ep_table_103.htm
Fastest growing occupations
No recovery is possible without good-paying jobs.
Why? We have been transitioning for 15 years from an economy that could employ lots of people, many with poor to OK educations -- to one that only has jobs for low skilled people -- and we fill these jobs with illegal immigrants -- and very high skill jobs -- and we don't train enough or allow enough immigration to fill these. That's why there are jobs employers can't find people to fill.
We are reaping the results of an educational system that has been declining for 40 years. If an employer can get a well educated worker in India or China for next to nothing, why would they hire an American with a poor 10th grade education and a lot of attitude, at much higher cost in wages, health care and other benefits?
Our economy will have to muddle through the way it is starting to, one kid at a time deciding to get a real education in some field that somebody wants.
Haven't you noticed that the companies who beg for college educated foreign workers never say a thing about what's lacking in our own students and workers? Have you heard about the new Google or Microsoft Advanced Degree Scholarships?
NO and NO.
What you do hear about is people being overlooked and kids being afraid to take up technical subjects because the job they're aiming for might to overseas or to a foreign worker here -- while they are stuck with the student loans.
I am sorry that you think it's all our fault that nobody wants to hire Americans. While we do have problems in education, I think we have far bigger problems in the area of citizenship and politics. Too many companies want to be American in name only. They want the benefits of being an American company but show no loyalty or interest in the American people.
How they expect people will be able to afford their products as their incomes go spiraling down is beyond me.
I totally agree. Because the politician in the beltway have not responded in the right way, it’s going to be a very bad election year for incumbents. They have failed to understand what is going on in the economy. Now, it is time to send them back to their private sector jobs.
”If, however, a government refrains from regulations and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer.”
John Maynard Keynes, The Economic Consequences of the Peace,1920,”
Each civilization has always strived and desired to create sufficient government financial resources to perform the following services for the general public
1. Provide for the common military defense.
2. Pay for the construction of the common infrastructure elements that we all enjoy.
3. Take care of those citizens that cannot take care of themselves.
4. Pay for police, fire fighters, and a judicial system.
5. Provide various other non-essential government expenses such as libraries, museums, zoos, parks, hospitals and other similar services that serve all of the total population.
Bureaucratic government employees at every level of government therefore are NET CONSUMERS of the nation’s financial resources, and DO NOT CONTRIBUTE to the creating any new financial resources or NATIONAL WEALTH that might be available to be taxed to pay for various government activities.
All US citizens must realize that without greedy businesses making profits that contribute to the accumulation of NATIONAL WEALTH, there would not be any jobs, not even government jobs or government programs or government contracts, because without profitable businesses the government would not have any NATIONAL WEALTH created by those businesses and then available to be FORCIBLY CONFISCATED from the profitable businesses and individuals as taxes in order to pay government bureaucratic payrolls and other government expenses.
"Consumers" consume the food, shelter, clothing that the "Producers" create.
Really, what percentage of the US citizens are supported by taxes collected from the "Wealth Producers" that create wealth in the USA?
Government pays for government payrolls, government benefits, government contracts, and other government activities with taxes collected from the "Wealth Producers" that create wealth in the USA.
Peggy Fikac, in the Houston Chronicle of Sunday August 14, 2011 quotes Texas Governor Rick Perry with saying,
“As Americans, we realize that there is no taxpayer money that wasn’t first earned by the sweat and toil of one of its citizens. That’s why we reject this president’s unbridled fixation on taking more money out of the wallets and pocketbooks of American families and employers and giving it to a central government.”
I like that statement.
The same is true for all levels of government! Only the private sector businesses and corporations generate and create JOBS for US citizens to create new NATIONAL WEALTH for those same US businesses, and that new NATIONAL WEALTH is then available as business profits, private personal income, property taxes and personal inheritance to be CONFISCATED through taxation TO PAY FOR GOVERNMENT BUREAUCRATIC EMPLOYEE PAYROLLS, GOVERNMENT CONTRACTS, OTHER GOVERNMENT EXPENSES, at every federal, state, county, and local level.
US labor costs many many times as much as Foreign Labor according to the DOL website:
ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/ichccpwsuppt01.txt
The additional US payroll tax cost of Extended Unemployment Benefits, National Healthcare Reform, vacations, holidays, sick pay, and social security costs are also added to US company payroll costs and economically preventing the location of new manufacturing jobs into the USA, and/or preventing the keeping of existing US jobs in the USA.
The increasing cost of compliance with existing and future environmental laws is deterring the creation of any new jobs the USA.
The cost of electrical energy that is generated in the USA in compliance with US EPA regulations was at many times the cost for the same amount (kilowatt hour) of electrical energy in most Asian countries and is still about twice the cost of US electricity
50fen/kwh = $0.078666 USD/kwh compared to $0.13-$0.15 USD/kwh in USA
http://news.xinhuanet.com/english/2009-11/19/content_12492364.htm
These costs are hindering the US businesses that are economically competing for obtaining manufacturing jobs for US citizens in the USA instead of those businesses having to relocate or create those jobs in/to foreign nations as allowed and economically required by US FREE TRADE AGREEMENTS.
Because it looks like you are suggesting that American workers should take drastic cuts.
Are American business owners and managers willing to accept the same drastic cuts? How about the people selling houses? How about doctors, lawyers, hospitals?
If the price of everything went down 90%, then wages could go down 90% and we could all be happy making what a Chinese factory worker made.
The US government must pass new US laws that encourage US businesses to re-industrialize and conduct business in the USA by repealing the existing FREE TRADE AGREEMENTS and other US laws that discourages and economically prohibits US businesses from doing business and creating jobs in the USA.
Workers do not have title to or own the things that they were paid to work/produce by those greedy businesses and greedy corporations!
Workers work for and are hired by greedy businesses and greedy corporations that create JOBS only to CREATE WEALTH for those same respective greedy businesses and greedy corporations!
Non-productive de-industrialized countries like Spain should go bankrupt when they cannot repay the money that they borrowed and spent, just like some (US) families should go bankrupt when they cannot pay their credit card charges.
These government paid for jobs are nice but the USA cannot afford to pay for people to perform these jobs until we re-establish our economic strength.
These efforts take tax US dollars and employ people to do things that do not accumulate or create any new wealth for the nation.
That amount of wealth available for the various governments at various levels available to TAKE from the workers and then spend on non-wealth producing activities is limited.
If President Obama wants US jobs to be created and/or stay in the USA, then why did President Obama create all of his new FREE TRADE AGREEMENTS that will economically require more US businesses to relocate their jobs to foreign nations?
The USA needs more profitable corporations so that the Federal Government can confiscate part of that profit as corporate taxes and also confiscate another part of that profit as income taxes on the dividends paid to the individual stockholders plus capital gains on the profits if the individual stockholders sell their stocks at a profit.
There are economic limits to the amount of wealth created by the wealth producers that produce the things (food, shelter, and clothing) necessary for support of human life that can be CONFISCATED from the producers of the things necessary to sustain life and then spent on non wealth producing tax supported bureaucratic government services, government contracts, wealth distribution and other government activities.