To Fix America

by: Ian Welsh

Wed Feb 10, 2010 at 23:53

Don Peck at the Atlantic has noticed that employment is unlikely to recover to pre-great recession levels (let alone Clintonian levels) for a long, long time.  This was totally predictable, and predicted. He also notes that even people like Paul Krugman really have no idea how to fix it.

Yes.  Employment as a percentage of the workforce will not recover for a generation.  And my bet is that median real income won’t either.

As for how you fix it, first you need to have a model for why it happened in the first place.   I’m not going to give that model today (read Wealth and Democracy, by Kevin Phillips, he has a big chunk of it).  Instead I’m going to say what needs to be done.

Fixing America

Because any economic growth right now increases the prices of oil, which then strangles the economy, you must reduce dependence on oil, or you can’t fix your problems.

Because banks aren’t lending, and because they are a net drag on the economy having destroyed more wealth than they created, you must break up the major banks or take other similiar actions to the same ends, or you don’t fix your problems.

Because defense spending is essentially un-productive you must  end the American empire, cutting “defense” spending by at least half, and “intelligence” spending by three-quarters, or you don’t fix America.

Because education is the backbone of modern economies and good education is what allows democracies to work, as the founders understood, you must fix education, so that everyone who is qualified can get a degree without being burdened by a decade of debt and so that the the lower class is able to get through university again, or you don’t fix your problems.

For the same reasons you must fix education at the primary and secondary levels by removing it from the property tax base, or you don’t fix your problems.

Because oligopolies strangle innovation, produce inferior services and soak up oligopoly profits they haven’t earned break up your major oligopolies outside the banks, starting with the telecom companies, or you don’t fix your problems.

Because government is now a bidding operation in which monied interests buy the policies that are good for them and not for America you must fix campaign finance, or you don’t fix your problems.

Because a lopsided wealth and income distribution leads to deep social pathologies, reduction in real demand, short term risk taking and looting by the financial class and the destruction of functional democracy you must reinstitute steep progressive taxes on the 1950’s level, or you don’t fix your problems.

Because locking up more people per capita than any other nation in the world is massively economically inefficient and causes severe social pathologies you must break up the prison-industrial complex, or you don’t fix your problems.

Because police states are not efficient, and for the sake of your own souls, you must end the drug war and the paramilitarization of US police forces, or you don’t fix your problems.

Because real modern infrastructure is one of the keystones to economic growth and competitiveness you must build out proper transportation (high speed rail) and internet (cheap, un-metered high speed to every home) or you don’t fix your problems.

Because intellectual property laws are strangling rather than aiding innovation and are locking culture beind walls, you must reform reform your intellectual property laws, or you don’t fix your problems.

Because the US can’t afford to be wasting 6% of GDP, not insuring many of its people and getting awful results even for the insured, you must move to a rational form of comprehensive insurance like single payer, or you don’t fix your problems.

Because the US and many other countries in the world cannot flourish in a world trade system which allows massive trade and money flow deficits, the world trade system, and most especially the free movement of money needs to be heavily reformed, starting with a Tobin/Pigou tax which scales the cost of currency changes to carbon output, or you don’t fix your problems.

And, sadly, this is a partial list.

Which is to say, the problem in the US right now is that virtually nothing of any significance works.  Not the military, who with 50% of the world military budget is being fought to a draw by ragtag militias, not the political system, and definitely not the economic system.

Fixing this, fixing America, is a literally monumental task, like building pyramids. It will take a generation, perhaps two, of very committed people.

I fear that those people don’t exist in large enough numbers, at least not in any position of power or able to seize power.

I hope Americans prove me wrong.

Ian Welsh :: To Fix America

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To Fix America | 19 comments
Now that's a platform. (4.00 / 5)
It might not hurt to nail this on the town hall door.  

It's "just" a platform (0.00 / 0)
Everyone on this website will agree with each of those points, and guess what? Most of them were more or less inside Obama's campaign blueprint (as well as HR Clinton's and the other Dem candidates).

The problem is that Government is not able and/or not willing enough to transform it into actual policy and legislation. Why? Because everyone in Government is seeking reelection while the kind of measures that are suggested by this wonderful list of issues are politically risky and are of the kind that don't pay out before a few years, if not decades.

To solve this problem, I think there are only two ways:
- make it such that the executive branch's main concern is action, not re-election; that is: limit POTUS to only one term (that might be extended to, say 6 years instead of the current 4) so POTUS' eye is on policy making, not job approval rating;
- make those issues so widely understood and popular among the general public that the right's "Anti-American" meme doesn't work with the opinion, every time that progressive policy is put on the table.

[ Parent ]
It can be fixed (0.00 / 0)

The economy (and stock market) move in secular trends that lost between 15-20+ yrs in length.  The great depression began in 1929 and ended in the early 50's (20+yrs).  It was followed by a period of economic boom in the 50's & 60's (less than 20yrs) and followed by stagnation starting at the end of the 60's to 1982.

The last secular trend started when Bush came into office and we've had economic weakness since then.

We're 10yrs into this and if history is a guide it may very well be another 10+yrs before we're able to return to strong economic growth.

This secular trend has everything to do with debt (personal, corporate, banking balance sheets - not federal deficits).  Until we write down the debt and restructure the balance sheets of American citizens and banks we're not going to see strong growth.

There is absolutely no discussion of this problem anywhere in our news media.

Krugman realizes this and has talked about balance sheet impairment for the banks.  Of course his solution (nationalization) gives Obama the heebie jeebies.  This is why he's sympathetic to half measures like QE & supportive of Fannie/Freddie turning into a slush fund for the Banks.

If you want to see how we get out of this mess - study the Japanese situation.  Their secular bear trend started in 1990 and their lost decade has turned into a lost generation (20yrs now).


I have no comment sig

Those Cycle Lengths Don't Correspond To Reality (4.00 / 4)
The only sense in which the US didn't recover from the Great Depression until the early 50s is the stock market. But that's partly because the 1929 stock market was ridiculously over-valued.  The real economy had grown enormously in the meantime.  GDP had virtually recovered by 1936/37, and employment had recovered by 1942.

In short, although there were a few brief recessions along the way, the US economy was basically on a relentless growth trajectory from 1933 to 1973.  That's forty years, not 20. And average wages have been virtually flat ever since then.  The period from 1973 to 1983 was a period of stagnations, but the growth ever since then has been ridiculously concentrated among the top 1%:

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
charts don't lie! (4.00 / 2)

Well - charts don't lie.  Yes - I was thinking in terms of stock market cycles (as that's what I focus on during the day at work) that probably don't have as much relevance as actual employment numbers.


I have no comment sig

[ Parent ]
H/T, walterk (4.00 / 2)
Ain't many of us who concede as gracefully as this when points are made against our arguments. We should all be so willing to listen.

[ Parent ]
Lower number of jobseekers (4.00 / 1)
There are two ways to lower unemployment, (1) increase the number of of jobs, and (2) decrease the number of people looking for a job.

Too many people are are in situations where their family unit needs 3 or 4 lowpaying, no benefit jobs to survive. There needs to a re-emphasis, via carrots and sticks on getting people 40 hr/wk, benefited jobs. Somehow employers that play a bunch of games with work weeks and benefits need to be punished for relying on part-time labor to game the system.

If we can turn enough families that need 3 jobs into families that need one, the unemployment rate will fall, plus we get the societal benefits of parental involvement in education, etc.

Way to Fix America (4.00 / 1)
Lower work week to 30 hours.

In America, people now adays are either overworked or unemployed. Easy fix for both.

I don't think the number of work hours are nearly as significant (4.00 / 1)
As the number of dollars per household income.   People work the number of hours necessary to survive or accomplish there needs and wants.  If you want to decrease hours, then you first need to increase hourly wages.

"Oh. My. God. .... We're doomed." -- Paul Krugman

[ Parent ]
I'm afraid Ralph Nader may now be right. (4.00 / 7)
Until the system entirely collapses nothing will be done because the vested interests are still making money from the way thing are. In 1932 people were honestly terrified at the collapse of the economy, fearing a Russian-like revolution. Unemployment insurance, food stamps, medicare and social security did not exist. We are the victims of our own success. Until people are not just angry but really afraid things won't be fixed. But,waiting in the wings, are a new security state and fascistic tendencies that weren't quite ready 80 years ago. There's no guarantee a new FDR will emerge to lead us out of this mess and more likely something quite the opposite. And, sadly, it's becomming evident that Barack Obama is no FDR.  

"Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it." - Mark Twain

Good list (4.00 / 1)
Ian, you've generated a good list of what needs to be done. But how? One first step would be to get a few more progressives elected to Congress. Getting Ohio Secretary of State Jennifer Brunner elected to the Senate would be a big step forward.

But we also need a more long-term effort. I suggested one possible way in my book Inciting Democracy (free dowload): building a massive grassroots movement of skilled and knowledgeable activists by setting up an inexpensive educational program for activists.

In Short, Obama Was Wrong (4.00 / 8)
Turning your back on fundamental, transformational change, and embracing failed Republican/conservative ideas really isn't the way to fix America's problems.

You actually have to look at what the problems are (including the things that conservatives say you shouldn't look at our talk about), the way that you indicate, Ian, in order to start figuring out how to fix them.

It really doesn't work to begin the process by saying, "How can we compromise with Republicans?"

Who knew?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

Or in agreement with your theory of cluelessness (4.00 / 2)
It doesn't help when the "Progressive" leader says that we don't begrudge banking CEO's their $17 millon bonuses.  The beginning of most radical change is the emergence of a great leader.  

Clearly I and at least seven or eight other people do begrudge the bonuses.


I'm with Simon Johnson here: how is it possible, at this late date, for Obama to be this clueless?......

Oh. My. God......

We're doomed.    -----  Paul Krugman

"Oh. My. God. .... We're doomed." -- Paul Krugman

[ Parent ]
Fixing America (0.00 / 0)
One is sorry, but one is left rather cold by this piece.  To say that America's problems are uniquely massive rings false in an era where virtually every nation in the world is suffering from terrible economic problems.  That has much more to do with the failure of a viable, humane, and democratic alternative to capitalism to emerge, and that, in turn, is more the fault of the global left than anything else-too many attempts to revive the "god that failed."  

It is nice to acknowledge that America once had high tax rates-just like Great Britain or Sweden-but on the other hand events in world history have gone too much in various directions to be so complacent that "Americans don't have the will to change, nothing will get better."  Things could work differently, in surprising ways.  

Coulda, woulda , shoulda (4.00 / 3)
I think the writer is looking more for concrete ideology than for hopefully possibility.  We bought all the hope we can handle in the last election.  The premise isn't that the U.S. is all alone, but rather, the U.S. is uniquely our problem AND that the U.S. is uniquely (in relation to the rest of the industrialized world) without a safety net for it's working people.  The system insures those at the top on the backs of those in the middle, but has no similar insurance for those who are the true producers.  I think ultimately we don't need to fight semantical wars.   The problems are pretty obvious.  The solutions are the challenge.

I think the chilling element in this article is the unspoken reality that the leadership of this country is refusing to address these problems in a way meaningful for the people.

"Oh. My. God. .... We're doomed." -- Paul Krugman

[ Parent ]
Yet another laundry list of complaint (0.00 / 0)
with nary a hint of how to accomplish what commanded.

"It sounds wrong...
     ...but its right."

We can't find solutions (4.00 / 3)
Until we agree upon what the problem is.  I think a full discussion of what the problem is could lead to subsequent agreement by enough people to actually mount a solution.  Or is it possible that you don't believe there are problems?  

"Oh. My. God. .... We're doomed." -- Paul Krugman

[ Parent ]
There are problems in the nation and the world (0.00 / 0)
On that we can agree.  

"It sounds wrong...
     ...but its right."

[ Parent ]
To Fix America | 19 comments

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