Paul Krugman now argues we are in a "Third Depression." http://www.nytimes.com/... While most economists are giving the "jobless recovery" more time, Krugman has a handle on the reality. Since the US does not report full unemployment figures as those who have "given up looking" are dropped from the figures, we hover at just below 10%, but most economists also agree that under-employment is at 17% or more and real unemployment at about 20%. This is depression era standing. But one only needs read the history of the Hoover administration to realize that Hoover's advisers were doing the same thing. They generally denied the catastrophe and their advise was to do nothing. See Ellis W. Hawley's The New Deal and the Problem of Monopoly for details.
The basic problem we face is fear, fear of Depression. We are slipping into it and hoping that we are instead recovering. The banks are still not lending and not lending to small business as the Financial Times reports today. This is to be a real global depression and we are only at the beginning. See my earlier post for details at:http://www.dailykos.com/story/2010/6/5/873208/-Bank-Holiday-Now 1929 was the start of that one but the real loss of jobs and collapse of business did not accelerate until 1931 to 1934.
Still some philosophers and pundits make ridiculous statements based on absurd hope. For example, Prof. Florida. Once in a while you read something that creates storms of laughter all around, so divorced from reality are the assumptions or the conclusions of the author. This was certainly the case with Prof. Florida's comments in last week's Financial Times, there is a Newsweek interview that has most of his comments at:(http://www.newsweek.com/2010/05/17/blue-collar-blues.html). It was obvious that something strange was about to take place when we found at the beginning of the fourth paragraph he was taking projections for reality, "Consider this simple fact: the US economy remains on track to generate 15m new jobs over the next decade, according to the most recent Bureau of Labor Statistics projections...."
Dr. Florida then tells us that half of these projected jobs will be well paid to begin with, high skilled, high wage, but not all will require college degrees. Well, something for nothing, that's what young people want to hear, no waiting, right to the top, no need to earn your stripes, no degree necessary! He then goes on to list the usual drop-outs who did well, Steve Jobs, Michael Dell and Bill Gates. He then,sadly notes that half of the new jobs will be in low paying, low skilled work in the routine service sector, especially health care. We have already seen this in Japan in the past decade, so nothing new here.
The emphasis of the rest of his article seems to be an effort to extol the virtues of the service sector as future employment for Americans without education. Recently an Indian colleague of mine remarked on how anti-knowledge, anti-science and anti-education America was becoming. Shaking his head he mumbled, "In a decade Americans will be useless for anything but digging ditches." But Florida sees a silver lining here. He argues, "Service jobs are the last frontier of inefficiency,..."as if we did not already off-shore everything that was possible in manufacturing and service. To argue that "high paying" service jobs in the realm of $30,000, will save America is a real hoot. Imagine someone with a $30,000 a year income trying to pay for a house, car, rise a family, send their children to college and buy foreign manufactured products. It is certainly the last call on an America that could demand goods for debt. Like Roman farmers driven by the debt of three Punic Wars from their farms into the slums of Rome, in two decades Americans will be lucky to be able to live in their cars if things do not change.
To dream that we will be saved by retailers like Zappos, Best Buy and Whole Foods (can someone on $30,000 a year even afford to shop at Whole Foods?) whose employees will be better at getting widgets made abroad to impoverished, uneducated Americans is the height of absurdity. The only practical path to sustainable economies now is investment in local manufacturing, a reduced carbon footprint and clean fuel. Education will be the needed commodity to arrive at that happy end.
To understand what is happening now and why the Republicans are acting as they are, as well as being able to predict their behavior in the future read Thurman W. Arnold's The Folklore of Capitalism (1937). Arnold was FDR's main lawyer in the Justice Department. He shows how the Republicans were just as extreme in the 1930s after creating the depression as they are now, again after creating our depression. They are acting the same and using almost identical tactics.
To avoid the worst Krugman thinks one trillion will do the job. I think that will only work if there is direct government spending on large projects like rebuilding the nation's power grid, new CETA program for small businesses and non-profits and a WPA program for cities and towns.
Niccolo Caldararo, Ph.D.
Dept. of Anthropology
San Francisco State University