…Under the best of conditions, we will endure a Long Slump. If we respond incorrectly, as we have been, the Long Slump will last even longer, and the parallel with the Depression will take on a tragic new dimension…
–Joseph Stiglitz in “The Book of Jobs,” Vanity Fair, January 2012 edition
Please don’t waste a lot of time reading my post tonight. Just head on over to THIS LINK and checkout yet another example of why I’ve said, countless times, that the only pundit with whom I find myself in agreement, just about 100 percent of the time, is Columbia University Professor and Nobel Prize winner Joseph Stiglitz.
Via the January 2012 edition of Vanity Fair, once again, Stiglitz doesn’t disappoint in his article, entitled: “The Book of Jobs.”
Here are just a few of the latest gems from the guy whom I’ve described as “the most important person on the planet, today”…
The Book of Jobs
January 2012 Edition
It has now been almost five years since the bursting of the housing bubble, and four years since the onset of the recession. There are 6.6 million fewer jobs in the United States than there were four years ago. Some 23 million Americans who would like to work full-time cannot get a job. Almost half of those who are unemployed have been unemployed long-term. Wages are falling—the real income of a typical American household is now below the level it was in 1997.
We knew the crisis was serious back in 2008. And we thought we knew who the “bad guys” were—the nation’s big banks, which through cynical lending and reckless gambling had brought the U.S. to the brink of ruin. The Bush and Obama administrations justified a bailout on the grounds that only if the banks were handed money without limit—and without conditions—could the economy recover. We did this not because we loved the banks but because (we were told) we couldn’t do without the lending that they made possible. Many, especially in the financial sector, argued that strong, resolute, and generous action to save not just the banks but the bankers, their shareholders, and their creditors would return the economy to where it had been before the crisis...
...The banks got their bailout. Some of the money went to bonuses. Little of it went to lending. And the economy didn’t really recover—output is barely greater than it was before the crisis, and the job situation is bleak. The diagnosis of our condition and the prescription that followed from it were incorrect…
If I were to simply rephrase everything Stiglitz tells us in this piece, I’d be doing all who are reading this a disservice. Read his words.
He concludes the article with a one-two punch, concisely describing exactly what we need to do to avert a Depression as severe as the one this country experienced in the 1930’s.
First, he states that we must embark upon a massive investment program. Then, he describes the second-half of his solution, as he closes out his piece, which is to "...fix the financial system...What’s needed is to get banks out of the dangerous business of speculating and back into the boring business of lending. But we have not fixed the financial system. Rather, we have poured money into the banks, without restrictions, without conditions, and without a vision of the kind of banking system we want and need. We have, in a phrase, confused ends with means."
...A banking system is supposed to serve society, not the other way around.
That we should tolerate such a confusion of ends and means says something deeply disturbing about where our economy and our society have been heading. Americans in general are coming to understand what has happened. Protesters around the country, galvanized by the Occupy Wall Street movement, already know.
If you’d like to learn more about Stiglitz, who’s almost as well known around the globe for his environmental activism as he is for his economic brilliance, click upon THIS LINK to his Wiki page.