I came across an interesting link in the blog "Mark Mendall's America" today, discussing the pessimism that, with American business and consumers in its grip, threatens the whole world economy. The implication is that if the economy isn't friendly enough to business - if credit isn't sufficiently free-flowing, if labor costs aren't cheap, if markets are unprotected, if consumers aren't nibbling on the lures, then they'll hold their cash reserves hostage. No money for anyone else. (Obviously we're talking about the medium-term here, as the law of diminishing returns will set in after a few years ... leading to something like the 20 years of stagnation Japan has seen.)
The problem with faith-based economics, though, is that it doesn't address the underlying material conditions.
It's great to say, "Consumers need to buck up and spend," like Bush did after 9/11. Or for the economists to say, "Let's encourage business back to the table." (Businesses are indeed composed of "fat cats," and, like cats, must be coddled and cajoled into dealing with actual people. Unlike real cats, our entire social well-being depends on them.)
Yet this rhetoric doesn't deal with concrete policies. Let's look, briefly, at the pundents and their suggestions.
In this corner: Robert Reich, former Secretary of Labor under Slick Willy and member of Obama's "economic transition team." He spells out that US consumers are out of cash and credit now that the housing bubble has burst. Foreign consumers could fix this - if only their economies hadn't been geared to producing cheap goods and had instead given them some sort of consumer wage. Oops.
Guess we shoud've fought harder against NAFTA. When you lose unions, you lose a significant amount of the working class's involvement in the consumption sphere.
In this corner: Peter Morici, former Chief Director/"Head Economist" of the U.S. International Trade Commission. His article points out that the Obama administration's trillion-plus stimulus squandered much of the money and failed to produce an adequate number of jobs. This is ... actually, very true. (Don't worry, the stuff he says about the deficit being bigger than it was under Bushie is also stupidly ignorant, considering Bush didn't have more than a moment of the recession to deal with; any Prez under that pressure would have enacted some kind of stimulus.) Under the Obama model, a lot of that money went to NGOs and nonprofits and private corporations. Under the Republican model, it probably would have gone to private corporations and tax cuts for the rich. The difference is pathetically negligible.
A "New-New Deal" would have been better - but even that hadn't been sufficient in the 1930s. The economy had only been rebooted by World War II, the significant loss of industry and labor in Europe, and the unprecedented rebuidling effort of the Marshall Plan. In order to create jobs on the scale we needed (and still need), we need to bypass big business's profit model entirely. (On a related note, has anybody thought about how the census project is what kept employment even remotely afloat through the Spring? The census happens once every ten years - we only had this boon because it happened to be 2010. That's like calling Christmas sales sign of a recovery. It's seasonal, you idiots!)
Anyway. People don't get fed on prayer; people get fed on bread. People don't get jobs on faith. We get it from employers. And as if bakers hoarded bread, people would riot and take it, if employers refuse to give us jobs, we ought to take the workplaces. Obviously they aren't running the economy in our interests. Perhaps its time control of the economy changed hands.
Preferably before the budget cuts - which will be equally ineffective, and even more harmful for working families- come rolling in.