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The job numbers for March of this year were somewhat impressive; 192,000 was somewhat above the monthly average of around 175,000 since the start of four straight years of uninterrupted job growth from the first quarter of 2010 until the present time. The fact that the official unemployment rate held steady at 6.7%, despite about half a million people entering the workforce in the first quarter of this year. This brings the private sector job count to over 116 million-exactly where it was in January 2008 on the eve of the current crisis. Thus, the current number of private sector jobs slightly exceed the peak at the start of the crisis. According to the Bureau of Labor Statistics (BLS), total non-farm, payroll employment as of March 2014 was nearly 138 million (137,928 to be exact) which is about where it was at the start of the crisis. This latter figure includes almost 22 million public sector employees. The point is that as of the start of the second quarter of this year, Obama has replaced nearly all the jobs lost during the crisis brought on in part by the recklessness of the Bush Administration and their absurd supply side mania on steroids! Though it is though impossible to know the true unemployment rate, the total number of non-farm, payroll employees on the job is possible. The labor force participation rate is at an historic low since 1979 though it seems to be improving.

It is surely the case that GOP obstruction is the only thing in the way of full employment. Obama's progressive given this obstruction (and the continued long term tendency of large corporations to shift jobs overseas) is impressive. Still, over 9 million people continuing to search for jobs (this is only the official figure) is too high. Another round of robust fiscal stimulus is needed to accomplish this goal. Dropping the official unemployment rate down below six percent would be a great thing in a mid-term election year whereby saving the seats of a number of progressive Democrats (or at least stopping Republican gains) is essential. The GOP will fight all the more assiduously for greater unemployment as evidenced not only by obstruction of anything resembling a jobs bill but by promoting more outsourcing of jobs overseas with proposals that any corporate profits earned over seas are not taxable by the US Federal Government! Such thing should be relentlessly resisted.

Republicans explain their opposition to stimulus with long discredited supply side arguments. Recessions are the solution not the problem, they argue, because the down cycle "corrects" the economy, eliminating high cost producers and unproductive capital stock, thus creating greater efficiency, wealth and ultimately, a better economy for all. This is absurd. It is hard to imagine how the destruction of over eight million jobs, trillions of dollars in lost equities and real estate values, the destruction of untold billions in highly productive capital stock and trillions in lost output can be the solution to anything!  This makes the recession all the more egregious when it is recognized that it was the greed and financial corruption that sunk the economy in one fell swoop, not downturn brought on by inefficiency and lack of international competitiveness.

Such a theory could vaguely apply in certain cases in the past such as the 1979-82 recession in which large inefficient industries were forced into "lean production" mode in order to compete on a world scale. Of course, it wasn't just a few obsolete steel plants in the Great Lakes region that forced out of business. The entire heavy industrial base was gutted (along with the loss of over a quarter million family farms) in order to bring down double digit inflation. The strong dollar policy of Paul Volcker's Federal Reserve used high interest rates not only to suppress inflation but to financialize the US economy which destroyed industrial and farm exports in favor of attracting foreign financial capital to the US to develop its "uncompetitive" capital markets. This was the beginning of the long term decline of the US economy and the start of the chronic stagnation of American capitalism.

Supply side theory is based on Say's Law, that overproduction is impossible because supply allegedly creates its own demand and therefore the market will always reach equilibrium, at least in the long run. Keynes noted that markets never really reach equilibrium in the classic sense and almost never at rates of full employment and capacity utilization. There is just a point when the key fundamentals cease adjusting and the overall economy reaches a stasis at some random level of unemployment and overcapacity. It is at this point that recessions concentrate and centralize output, income, wealth and productive assets (often at fire sale prices due to the pressure on small businesses to meet their debt obligations and cut losses) creating greater wealth for the large corporations left standing and misery for the growing reserve army of unemployed, a condition which also suppresses wage growth. It is no wonder that big capitalists and their allies in the GOP love recessions. Such down cycles are a historic path to ever greater control of the economy by a few.

The idea that supply creates its own demand is an antiquated idea based on the ideas of Jean Baptiste Say whose thinking dates back to the late 18th century just before the dawn of industrial capitalism. In the workshop setting which was the basis of Say's thoght, a small artisan (butcher, baker or candlestick maker) would indeed only produce an item for sale to meet his cash needs for his own purchases. Hence, Say reasoned, the revenue gleaned from all small scale production would become a source of demand for everything else produced. Say, and other influential political economists of his day, like Adam Smith and David Ricardo, were theorizing about a pre-industrial era in which capitalism was characterized more by state sponsored international trade (merchantilism) than by large scale factories. In an age of what Marx called "commodity production" whereby large, highly integrated and concentrated monopoly capitalist economies are based on production by large, efficient specialized firms, Say's Law no long applies. The anarchic nature of mass production is based on the search for ever greater profit and does not perfectly equate supply with demand. Overproduction becomes the norm and with it overcapacity, a cessation of investment, recession and chronic stagnation due to a collapse of effective demand. Business cycles develop which are not self-correcting and exogenous stimulus is needed to reach a sustained upturn. In the absence of such stimulus, the system will become more recessionary and unstable as collapse, misery and economic and political polarization threaten the capitalist system itself.

Absent Keynes's policy of "demand management" we have chronic stagnation and unemployment. Conservatives are in denial about this fact, mostly for political reasons. But the explanation for late capitalism's tendency toward chronic stagnation is simple. John Bellamy Foster of the Monthly Review explains;

In...advanced capitalism, exemplified by the United States, as an economic and social order dominated by giant, monopolistic (or oligopolistic) corporations—the product of the concentration and centralization of production described by Marx in Capital. The central trait of the system was a tendency for surplus (value) to rise—a phenomenon made possible by the effective banning of genuine price competition in mature, monopolistic industries, together with continually rising productivity. Under these conditions, the main economic constraint was no longer the generation of surplus, but rather its absorption, i.e., a chronic lack of effective demand....corporations normally refrain from carrying out net investment if expected profits on new investment are weak. Such expectations are affected by the existing level of capacity utilization in industry; the presence of idle plant and equipment deters business from investing in still more capacity. Since a rising surplus tendency, moreover, generally means that real wages are rising less than productivity (i.e., workers are more exploited), wage-based consumption is chronically weak relative to society’s capacity to produce, resulting in increasing excess capacity, and the atrophy of net investment. Under monopoly capital the long-term growth trend is therefore sluggish, characterized by a wide, and even widening, underemployment gap. The economy, in other words, falls far short of its potential growth rate, with underutilization of labor and capital goods. Hence, the normal state of the monopoly capitalist economy, [economists] Baran and Sweezy argued, was stagnation or an underlying trend of slow growth.
As American capitalism increasingly concentrates, effective demand tapers off and can only be supported by increased financial indebtedness (which is highly destabilizing in the long term to the overall economy and detrimental to the financial stability of households) or, the preferable alternative of massive public investment for full employment. Thus, US monopoly capitalism increasingly financializes causing massive indebtedness in order to sustain the system (and corporate profitability) and long term instability. It is well known that the more than $2 trillion in undistributed profits (profit before payments to shareholders but before taxes) corporate coffers not being invested in job creation because the US economy is to stagnant to provide an adequate rate of return to capitalists.  Only a fiscal stimulus can boost employment and spending sufficiently to warrant further such investment in the US domestic economy.

Conservatives will challenge much of the unimpeachable evidence for stimulus by either saying it hasn't worked or or that conversely the US economy is regaining GDP growth and rising employment levels without stimulus "proving" that austerity is indeed working. Both statements are false. We have seen evidence of the stimulus success with rising growth and non-farm, payroll employment levels. And fiscal stimulus is a fact of life at this point; it is always present as "automatic stabilizers", the federal spending that automatically kicks in during down turns, preserves spending levels and places a floor under the economy that would exist otherwise. Economist L. Randall Wray explains why budget deficits are a good thing during recessions;

These automatic stabilizers, not the bailouts or stimulus package, are the reason why the U.S. economy has not been in a free fall comparable to that of the Great Depression. When the economy slowed, the budget automatically went into a deficit, placing a floor under aggregate demand. And in spite of all the calls to rein in deficits, the truth is that deficits will not come down until the economy begins to recover. Even if we eliminated welfare payments, Medicaid, Medicare, military spending, earmarks, Social Security payments, and all programs except for entitlements; and also stopped the stimulus injections, shut down the education department, and doubled corporate taxes, the New York Times estimates that the budget deficit would still be over $400 billion. This example further demonstrates the nondiscretionary nature of the budget deficit. And, of course, this example doesn’t consider how much more tax revenues would fall and transfer payments would rise if these cuts were actually undertaken. With the current automatic stabilizers in place, the budget cannot be balanced, and attempts to do so will only damage the real economy as incomes and employment fall.
Wray also explains, as many other Keynesian economists have, that deficits not only create upturns but that most, if not all, recessions have been preceded by budgetary surpluses or at least, a fall in government spending as a share of GDP. This is precisely what occurred with the Clinton surpluses which produced the downturn of the first quarter of 2001. The collapse of the stock market bubble in 2000 and consequent drop in consumer spending was coupled with rising balance of trade deficits which constituted yet a second "leakage of demand" as it is called. When the federal government spending declined as well, that left no source of effective demand to sustain the US economy. A recession occurred between March 2001 and November of that year but the labor market recovery wouldn't occur until late 2004 after two years of the growth of a stock market and real estate bubble that allowed further wealth effect spending to sustain the economy. Similarly, despite the massive Bush deficits throughout both his terms in office, there was actually a drop in the federal deficit as a share of GDP from 3.5% in 2004 at the peak of the upturn to 1.2% in 2007 when the recession official began. This decline in federal spending as a share of GDP matched the slowdown in consumer spending all during 2007 after the deflation of the housing bubble during the previous year. The result was that spending began to decline causing a slowdown in the US economy well before the consequent financial defaults caused the 2008 crisis. In addition, the balance of trade deficit remained high. The Bush deficits were not as much of a problem as the financial chaos that followed a collapse in spending. In the case of the US, deficits are generally not a cause of economic crisis; it is economic crisis that causes deficits.

Since 2009, the increase in spending caused by the $800 billion fiscal stimulus plus the added mandatory social spending due to the recession helped sustain the growth of the US economy and allowed a recovery to take place. The stimulus worked but we now need much more. Budget deficits are currently the cause of continued unemployment and low federal taxation on the rich rather than spending. Without more spending the economy will not recover to its full potential in the foreseeable future. A recent Federal Reserve working paper observed that the US economy is about "7% below the GDP growth trajectory it appeared to be on prior to 2007." The Congressional Budget Office (CBO) has also repeatedly pointed out the damage to the growth potential to the US economy by the sequester cuts mandated by the Budget Control Act of 2011. In July of 2013, the CBO sent a memo to the Congressional Budget Committee making the following analysis;

As you requested, the Congressional Budget Office (CBO) analyzed a proposal under which the automatic spending reductions in effect for 2013 would be canceled at the beginning of August and none of the reductions scheduled for 2014 would be implemented...canceling the automatic spending reductions effective August 1 would increase outlays relative to those under current law by $14 billion in fiscal year 2013 and by $90 billion in fiscal year 2014...Those changes would increase the level of real (inflation-adjusted) gross domestic product (GDP) by 0.7 percent and increase the level of employment by 0.9 million in the third quarter of calendar year 2014 (the end of fiscal year 2014) relative to the levels projected under current law, CBO estimates...The full ranges CBO uses for those parameters suggest that, in the third quarter of calendar year 2014, real GDP could be between 0.2 percent and 1.2 percent higher, and employment 0.3 million to 1.6 million higher, under the proposal than under current law.
America desperately needs a massive public investment campaign for full employment in such sectors as mass transit, including a high speed cross country passenger railway system similar to those in Europe and Japan to save energy and create jobs. We also need an energy conservation program for weatherization and alternative energy research. Fixing America's crumbling infrastructure would also create jobs and improve quality of life and public safety. Finally, we need to invest in health care and education. Such spending not only creates jobs in the short but improves the working of the economy in the long term. One study in 2008 by Robert Pollin, an economist and leading proponent of green jobs as a path to recovery, estimated that a mere $100 billion investment in alternative energy and conservation efforts would create over 1.5 million jobs in at least 34 states.

Such efforts are necessary if we are to save the economy and society from collapse. The left is in disarray and so the political efforts are lacking. The far right is determined to save the rich at the expense of society. In the end, what is essentially an economic crisis will be shown to be one that stems from political breakdown as well.

Originally posted to steve1960 on Sat Apr 26, 2014 at 02:48 PM PDT.

Also republished by Keynesian Kossacks, Money and Public Purpose, and Community Spotlight.

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Comment Preferences

  •  Thanks for this excellent and well written post (7+ / 0-)

    steve.

    You had me with this most accurate description.

    The point is that as of the start of the second quarter of this year, Obama has replaced nearly all the jobs lost during the crisis brought on in part by the recklessness of the Bush Administration and their absurd supply side mania on steroids!
    I also appreciated your reference to Keynes  
    '
    America desperately needs a massive public investment campaign for full employment in such sectors as mass transit, including a high speed cross country passenger railway system similar to those in Europe and Japan to save energy and create jobs. We also need an energy conservation program for weatherization and alternative energy research. Fixing America's crumbling infrastructure would also create jobs and improve quality of life and public safety. Finally, we need to invest in health care and education. Such spending not only creates jobs in the short but improves the working of the economy in the long term. One study in 2008 by Robert Pollin, an economist and leading proponent of green jobs as a path to recovery, estimated that a mere $100 billion investment in alternative energy and conservation efforts would create over 1.5 million jobs in at least 34 states.
    I founded Keynesian Kossacks however, have not done enough to promote or write for it. Perhaps you would consider joining it?

    I've republished you excellent call to action and proposal there where I hope we still more diligent and active members than myself.

    "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

    by HoundDog on Sat Apr 26, 2014 at 03:22:58 PM PDT

  •  But, but, but..who's stagnation is it... (5+ / 0-)
    Recommended by:
    Chi, telebob1, Jim P, Odysseus, Choco8

    the billionaires are making plenty of money. Why would they want to spend any.

    Aren't workers their biggest cost and don't they have billions socked away and don't they already make billions every (not millions) year. Why would they want to put up w/more workers?

    Just an annoyance.  

    Power/Control is what they want now, the money is pouring in as it is. Buying the U.S. Congress and trying to control the world is the new game.

    And, and isn't speculating far more fun than playing Treasury interest rates.
    And besides think of all the pain they can inflict on the worlds non-wealthy while they enjoy driving up the price of all commodities humans need.

    What's wrong w/stagnation if you're a billionaire? They've rigged the govt inflation indexes so although we pay more for our basic needs it's not reported. Reaping the billions while we're told costs aren't going up. Keeping the budget suppressed while they hoard all productivity and deny cost of living increases.

    Every year they amass more billions. Who's stagnation is it.

    Sociopaths, aren't they amazing. Lord help us.

    It just seems all the good ideas and common sense in the world won't outmaneuver the human tools the  likes of the koch's, simmons, coors, waltons and petersons own.

    "I freed a thousand slaves, I could have freed a thousand more if only they knew they were slaves" Harriet Tubman

    by BrianParker14 on Sat Apr 26, 2014 at 03:53:53 PM PDT

  •  Nice diary. (8+ / 0-)

    Massive investment in infrastructure is necessary not only for the application of targeted Keynsian stimulus, but to meet the two greatest threats of our time: anthropogenic climate change, and the capture of our government by oligarchs. Since the primary drivers of climate change are highly profitable to oligarchs, these two problems are intertwined. We will not solve one without addressing the other.

    I have some thoughts on this topic that I'm hoping to turn into a diary. You also might like to read my little fiscal policy primer that draws heavily on Wray and Mosler.

    ...if you plant ice you're gonna harvest wind. (RH/JG)

    by telebob1 on Sat Apr 26, 2014 at 05:36:52 PM PDT

    •  Hmmm. Now that you mention it... (4+ / 0-)
      Recommended by:
      telebob1, WheninRome, Eric Nelson, jbsoul

      the line connecting the dots of the earth-devastation enterprises, and the purchase of law-makers/media (our culture's narrative-makers) is screamingly obvious.

      Plus, the oligarchs are trying to buy up all the things people will need come the fuller effects of climate change, such as water. It would make a useful diary, indeed.


      A government is a body of people usually notably ungoverned. -- Firefly

      by Jim P on Sat Apr 26, 2014 at 06:34:08 PM PDT

      [ Parent ]

    •  It's a good kick start but higher wages are key (1+ / 0-)
      Recommended by:
      decisivemoment

      If 98% of us wind up with much more money in pocket over the next decade we'll buy up those surplus production goods. This will also help investment in renewable energy, large recycling and repurposing projects too.

      More over with pockets containing some expendable cash we in savings and lower need for short term debt, this can also create new markets for expensive, high quality goods built to last which should also be readily upgradeable and modifiable to prevent the need for cheap obsolescence.

      Which, by the way, fits philosophically and economically with the original purpose of high taxes on capital gains. That being that in the short term high taxes on capital makes it less attractive to flip in the short term. Until that capital depreciates over a number of years to where it is cheaper for a new buyer to pay those lower taxes, it encourages those who own capital goods to develop them and increase their overall value.

       

      •  And for that . . . (0+ / 0-)

        you need a rebalancing of the tax structure so that taxes on dividends and CEO pay go up and taxes on middle class labor are held stagnant or maybe even drop a little.

        A good part of the reason companies do what they do is that it's "tax-efficient."  Make it tax-efficient to hire middle class people to work.

  •  You're definitely right that we need more stimulus (1+ / 0-)
    Recommended by:
    Eric Nelson

    My layman's understanding of the current economic situation includes the following points:

    1.There is a debt problem, but it is with private debt.  Republicans who worry about deficits never acknowledge that in this country and in much of the world private debt has been and continues to be much much greater than public debt.
    2.  In spite of this corporations are holding onto trillions of dollars that they refuse to use for investments.  They could help us solve the unemployment problem but won't.
    3.  Since people at the lower end of the wealth scale spend much higher percentages of money they receive than those at the other end, government support at the lower end works much better than low taxes and give-aways at the other end.
    4.  The entire economy would be more efficient with improvements in the infrastructure, including roads, bridges and mass transportation.
    5.  Because of points 1 and 2, the federal government is the only player with the means to solve the problems of unemployment and slow economic growth.
    6.  Those who oppose new stimuli, are either naive about economics or purposely intend to weaken the entire economy for short term personal gain.

    What am I missing?

    "Trust only those who doubt" Lu Xun

    by LookingUp on Sat Apr 26, 2014 at 06:24:33 PM PDT

    •  You don't think that public debt, which (0+ / 0-)

      allows the oligarchs (who are dissed appropriately elsewhere in this discussion) to "double-dip" is not a problem?

      To me, it's a huge problem.

      •  Public "debt", which is not really debt at all (2+ / 0-)
        Recommended by:
        SGA, LookingUp

        Securities are nothing more than savings accounts at the Fed.

        These come into existence as a result of Govt deficits. Which occur when the Govt adds more money to the economy through spending than it removes through taxation.

        Govt deficits = Non-Govt surplus
        Govt "debt" = Non-Govt financial wealth

        So in what way is public "debt" a problem in your view?

        "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

        by Auburn Parks on Sun Apr 27, 2014 at 09:57:18 AM PDT

        [ Parent ]

        •  In two ways (1+ / 0-)
          Recommended by:
          Superpole

          First, deficit spending is made necessary by huge tax cuts to the wealthy

          Second, these very same "wealthy" persons disproportionately own buy up the debt, requiring the taxpayer to fork out interest payments to them for decades to come.

          IOW, it's a powerful twofer that transfers wealth upwards.  

          Again, to me that is a huge problem.  But apparently you see things differently.  Whatever.

          •  There's no need to be dismissive. (1+ / 0-)
            Recommended by:
            LookingUp

            Here are the owners of T-bonds:

            http://www.npr.org/...

            Seems to me that the vast majority of Bond ownership belongs to 3 categories

            The Federal Govt itself, approximately 40%
            Foreign Govts that net export to us 30%
            Mostly pension funds about 15%

            Meaning that about 15% of the T-bonds are owned by the wealthy.

            Its no coincidence that Pension fund assets and Govt Bonds have increased in line with each other over time:

            https://research.stlouisfed.org/...

            "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

            by Auburn Parks on Sun Apr 27, 2014 at 10:13:37 AM PDT

            [ Parent ]

            •  Of course, the trillions of $$s the US government (1+ / 0-)
              Recommended by:
              Superpole

              owes to itself is merely an accounting artifice.

              In reality, those funds do not exist.

              •  Yes. And it doesn't change the premise of my (1+ / 0-)
                Recommended by:
                LookingUp

                comment. Trust funds, pension funds, and foreign Govts own most of the T-bonds.

                Not exactly the horrible subsidy to the wealthy that you described earlier.

                If you don't think the Govt should provide a risk free place for citizens to deposit their money and guarantee a positive rate of interest, thats fine. But the amount of interest spending is not that large, and we control it. Its a policy decision made by the Fed and TSY wrt the Federal Funds rate and the duration length of securities issued.

                Its the irrational fear of T-bonds, bond vigilantes, and debts to our children blather that is the real problem. These myths contrive to keep the deficit far too low to maintain full employment given our current economic reality and income distribution. But the T-bonds themselves are rather benign and irrelevant.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Sun Apr 27, 2014 at 10:46:13 AM PDT

                [ Parent ]

          •  And wrt deficits. regardless of who pays the taxes (0+ / 0-)

            FICA is the most regressive federal tax and it accounts for about 45% of all federal taxation, with the progressive income tax accounting for another 45%:

            http://www.taxpolicycenter.org/...

            The accounting relationship remains.

            The Govt deficit = The private sector's surplus (with a net zero trade balance).

            So if you think that the deficit is too large. Then you also must believe that the private sector surplus is too large.

            Do you really believe the private sector has too much income right now?

            "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

            by Auburn Parks on Sun Apr 27, 2014 at 10:16:42 AM PDT

            [ Parent ]

            •  Yes, absolutely (2+ / 0-)
              Recommended by:
              Eric Nelson, Superpole
              Do you really believe the private sector has too much income right now?
              or else this would not be the case: Why Is US Business Sitting on $Trillions of Cash?
              •  Thats funny that you mention that. Most of that (2+ / 0-)
                Recommended by:
                Eric Nelson, LookingUp

                Corporate "cash" is actually Govt "debt". The same debt that the corporations and right wing continually deride. Classic hypocrisy LOL. Does anyone actually think Apple has $100B deposited into a checking account? Thats risky as hell. Thats why they use the world's largest and safest bank instead, the Fed.

                On a more serious note. I would never argue with you about the fact that the economy would be much better if the $17T in annual US income was distributed more equitably.

                $15T to the bottom 90% and only $2T to the top 10% (A 90-10% ratio) vs the current $9T for the 90% and $8T for the top 10%.

                If the bottom 90% had $6T more dollars to spend per year, obviously the economy would be doing much better.

                The problem is that taxing rich people will not immediately fix this distribution problem. If we put a 90% tax on all incomes over $10M per year, then maybe the distribution would change by itself within 10 years.

                but raising taxes on people making $100K a year or more to reduce the deficit will in no way improve the incomes of the bottom 90%.

                The most effective way to do that is with a bigger deficit, directed at the bottom 90%. Either through suspending the regressive FICA tax or by just mailing everyone checks every month until we get back to full employment.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Sun Apr 27, 2014 at 10:57:54 AM PDT

                [ Parent ]

  •  So how are we going to put all those unemployed (2+ / 0-)
    Recommended by:
    snoopydawg, Eric Nelson

    50 somethings back to work. Middle-aged women were particularly hard hit in this last downturn. Middle aged unemployed teachers, clerical workers, civil servants, etc. aren't going to very good at large scale public works projects I suspect.

    What we need is another WPA.

    •  This is the purpose of the Job Guarantee (3+ / 0-)
      Recommended by:
      Librarianmom, greenotron, Eric Nelson

      Similar to the WPA, but universal and permanent.

      Federally funded, locally coordinated jobs performing socially useful work at a living wage. Available to all comers, where they are, as they are.

      It creates a de-facto minimum wage, provides on-the-job training, keeps resumes from getting stale, and is strongly countercyclical. We could do it for about 1-2% of GDP, which would help counteract the demand leakage from net imports.

      ...if you plant ice you're gonna harvest wind. (RH/JG)

      by telebob1 on Sat Apr 26, 2014 at 08:58:49 PM PDT

      [ Parent ]

  •  If by stimulus you mean an effective jobs program (5+ / 0-)

    then I am with you, if you mean more tax cuts or the bullshit "public/private infrastructure bank", or any one of a number of boneheaded neoliberal ideas of "stimulus" put forward by this administration, then I disagree.

    "Intelligence is quickness in seeing things as they are..." George Santayana

    by KJG52 on Sat Apr 26, 2014 at 07:31:12 PM PDT

    •  Actually, FICA tax cuts are the most efficient (1+ / 0-)
      Recommended by:
      telebob1

      multiplier when looked at through the lens of the length of time until the financial impact is felt. FICA is the most regressive federal tax, meaning that its multiplier is higher than more progressive taxes like the income tax.

      IMHO, if its worth spending the money on during a recession, it was worth doing before the recession.

      Therefore, in a perfect world, working and middle class tax cuts would be preferred method of increasing private sector incomes and thus aggregate demand and jobs.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sat Apr 26, 2014 at 07:37:57 PM PDT

      [ Parent ]

      •  Both of these. (2+ / 0-)
        Recommended by:
        Auburn Parks, Eric Nelson

        Payroll tax cut reduces countercyclical drag during recovery, federal job program increases countercyclical stimulus during downturn. Both have been used before and have broad popular support, so could be implemented in a non-obstructionist congress.

        These two steps, if made permanently, would go a long way to restoring equitable returns to labor, although many other changes are necessary too.

        ...if you plant ice you're gonna harvest wind. (RH/JG)

        by telebob1 on Sat Apr 26, 2014 at 08:18:59 PM PDT

        [ Parent ]

        •  Right on. Tax cuts serve their purpose for (2+ / 0-)
          Recommended by:
          telebob1, Eric Nelson

          increasing AD. But I'd first focus on like a 10 yr $1 T program to make America 90% renewable.

          IMHO, we should spend at least 6% of GDP on infrastructure, basic research and education federally every year. That's roughly the same amount we invest in the military ~$900B per year.

          Taxes should rise and fall as is necessary to manage inflation but investment spending should be a permanent collective social goal to systematically improve our standard of living and real wealth.

          Financial wealth is infinite, Real wealth is the important one.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Sat Apr 26, 2014 at 08:29:14 PM PDT

          [ Parent ]

  •  Excellent work Steve. T'd & R'd and republished (2+ / 0-)
    Recommended by:
    telebob1, potatohead

    to the Money & Public Purpose Blog.

    Always remember the most important accounting relationships in Economics:

    Spending = Income
    The Govt Deficit = The Private Sectors surplus (wa net zero trade balance)

    Where do conservatives think that money the Govt spends goes anyway? It goes to the people.

    And buying T-bonds is like a voluntary taxation, why dont conservatives like that? Nobody is forced to deposit their money at the world's largest and safest bank, The Fed.

    And since we control our own interest rates, we can always ensure that interest payments never "crowd out" the budget like the ridiculous CBO budget projections purport to show.

    "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

    by Auburn Parks on Sat Apr 26, 2014 at 07:34:29 PM PDT

  •  nice try (2+ / 0-)
    Recommended by:
    Claudius Bombarnac, greenotron

    but the cause of our current economic stagnation is a little more foundational and global to be permanently effected by a short term spending spree by the government.

    Energy is too expensive, commodities like food are too expensive, this is due to the global resource squeeze: globalization and increased population and increased demand from China and other rising Asian countries are the cause of that. That depresses growth.

    Aside from energy and resources being expensive, technological innovation is just not a driver for growth much, since the new technologies (facebook, iphones!) have only a marginal effect on productivity at best.

    Add to that, the depressed wages in the developed countries due to the competition from globalization, and you have the recipe for stagnation that really has no end in sight.
    Time to start looking at things in new ways, beyond the orthodox economics of the past 50 years that say the answer to everything is "more growth."  Not this time.

    •  Domestic food prices when adjusted for inflation (1+ / 0-)
      Recommended by:
      WheninRome

      are in line with historical norms. Gas is on the high side today historically, but growth since 2004 is been mild.

      http://www.aei-ideas.org/...

      http://inflationdata.com/...

      As far as real wage stagnation. Thats simple. Since 1983, real wages have only gone up as the unemployment rate approaches and gets below 5%. The problem is that this situation of real wage growth has only occurred 15 years, or less than half the time. Its no coincidence that real wages today are lower than 1989.

      https://research.stlouisfed.org/...=

      The good thing is that unemployment is a simple fix in the aggregate. Unemployment is just about always a result of deficient demand as capitalism runs on sales. Thankfully, we have a fully sovereign fiat currency and we can create as much demand as we like. Mail everyone  a $1000 check every month until we get back to full employment and real wage growth for the middle and working classes.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sat Apr 26, 2014 at 08:15:30 PM PDT

      [ Parent ]

    •  Unfortunately, the current crony capitalism (0+ / 0-)

      with it's emphasis on wealth accumulation demands exponential growth. Any corporation with zero growth for more than a few years is deemed a failure and is subject to buy-out and subsequent asset stripping.

    •  isn't there some way to have an economy (0+ / 0-)

      that isn't reliant on growth to provide the surplus value that gets sent to workers as their share of profit?

      it seems every environmental crisis is worsened by this endless quest for growth. the population will increase until that last horrible expansion that takes it over what is sustainable by the ecosphere - what will our economy be then, when we are sitting poisoned in our own waste?

      we have to get used to using much less, recycling, using renewable resources & conservation & solar & wind energy. maybe there are enough jobs in the conversion to this system, that the economy could provide enough to keep us out of poverty. forests should be the model - using local resources, self-sustaining, self organizing, each tree a city of cells complete in itself.

      maybe the rich are doing us a favor by not circulating their hoarded trillions, which would be turned into CO2 & the other pollutions that are inevitably caused by economic activity.

      "Never let your sense of morals get in the way of doing what's right." - Isaac Asimov

      by greenotron on Sun Apr 27, 2014 at 12:31:59 PM PDT

      [ Parent ]

  •  Main Narrative Of Obama's President (2+ / 0-)
    Recommended by:
    dfarrah, Superpole

    should have been his endless push for more stimulus amid GOP resistance. Biggest mistake of his Presidency was focusing on deficit reduction in 2010. It destroyed what should have been the narrative. The best we could do now is make it the central narrative and hope to get midterms that give us a Democratic congress. Might be too late to make that happen but if the public sides with the Democrats push for a stimulus we could see the GOP come around before 2016 in the face what could be a disastrous election for them.

  •   bring back the new deal (2+ / 0-)
    Recommended by:
    Auburn Parks, Eric Nelson

    in order to really reduce the number of unemployed, you do a nationwide program, involving conservation,. education infrastructure, research and development, and work projects. spending 12 trillion over the next 10 years, which is a third of the projected budget for that decade, will create tens of millions of jobs, protect our special places, eliminate backlogs and modernize our infrastructure. we have been deferring maintenance for30-40 years. there are thousands of crumbling bridges, and dams that are holding back shrinking water levels. remove the dams, such as Glen Canyon and hetch hetchy. and let nature restore itself. revive the ccc and create a department of Conservation, and move the epa, park service, forest service, fish and wildlife service and ccc into it, with budgets of 20 billion annually for those agencies, for a total of 100 billion. move places like the san rafeal swell, la badaja mesa and other blm lands  into the park service, forest service or fws and classify them as national monuments. put CCC camps in every state and Puerto rico, and open it up to anyone aged 16 or older, regardless of gender, ethnicity, sexual orientation etc. those who are older will be put in leadership positions that dont require as much physical strain. pay the workers between 12-13 an hour, with healthcare and other benefits included. for infrastructure, put in high speed rail across the country. if fricking Morocco can have high speed rail, so can we. replace outdaed and deficient bridges and modernize the power grid, investing in solar panel to put on rooftops.

    •  But But But, we are going to run out of Money! :) (0+ / 0-)

      Because everyone knows that the US Dollar was invented by the private sector and the Govt has no authority over our national currency. Congress must take out a mortgage from the wealthy just like the rest of us!

      What nonsense!

      Great comment btw/.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sun Apr 27, 2014 at 08:07:47 AM PDT

      [ Parent ]

      •  the government can never run out of money (0+ / 0-)

        further than 12 trillion investment will pay for itself many many times over in tourism, decreased government welfare payments, improved infrastructure which can handle 50 years or so of modern cars trucks etc. and in intangible ways, as folks feel good about themselves, cities get cleaned up, and the entire national mood improves.

        •  Umm, I think you've missed my sarcasm. (0+ / 0-)

          And the entire gist of not only my specific comment to you, but of my entire existence here at Kos.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Sun Apr 27, 2014 at 09:01:54 AM PDT

          [ Parent ]

  •  In the 1990s... (2+ / 0-)
    Recommended by:
    MGross, nextstep

    ...Japan had the same idea to save their economy. It didn't help and they are still mired in 200%/GDP debt.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Sun Apr 27, 2014 at 08:37:32 AM PDT

    •  As usual, your ignorance is vast. (0+ / 0-)

      What does "mired in 200% GDPdebt" mean?

      In the real world, it simply means that the Govt has created and spent currency valued at 200% of their economy. This currency is now held by private sector participants as safe, financial wealth.

      Why is that a problem in YOUR fantasy world?

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sun Apr 27, 2014 at 08:51:08 AM PDT

      [ Parent ]

  •  Well, No (0+ / 0-)

    We don't need another round of fiscal stimulus. What we need is to fix our trade laws, so that companies can't continue to use low wages in other countries to depress wages in this one.

    Specifically, we need an international minimum wage.

    That will immediately encourage companies that want to sell here to increase production here. That will kick off a building boom, followed by an expansion in manufacturing. Both of those things will increase the number of jobs here, stimulating the economy.

    Any other kind of stimulus will be short-lived and leave high rates of unemployment. Ultimately, that will just keep us stuck in the problem we have right now.

    So, instead of stimulus we need to fix the trade laws. The cause of the problem is wage arbitrage. The solution is to end it.

    •  You know what's even less likely... (1+ / 0-)
      Recommended by:
      Auburn Parks

      ...than getting the GOP to pass another stimulus bill?

      Specifically, we need an international minimum wage.
      Getting other countries to agree to that.  Frequently, ability to compete on labor costs is their only advantage over the US.

      They're not going to agree to slit their own throats...

    •  unemployment is always a result of too low (0+ / 0-)

      aggregate demand, as capitalism runs on sales.

      Our net importer position has definitely contributed to our shortfall in aggregate demand. But its much easier to increase aggregate demand via fiscal policy than trade policy.

      I'm not saying that our trade policies don't need to be changed at all, I'm just saying that either suspending the regressive FICA tax or sending everyone a check for $1000 every month until we get back to full employment is much faster than the trade route.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sun Apr 27, 2014 at 11:28:36 AM PDT

      [ Parent ]

      •  Keynes believed, as did Marx, that stagnation was (2+ / 0-)
        Recommended by:
        Auburn Parks, Liberal Thinking

        ...the inevitable result of declining investment opportunities. Marx referred to a long term tendency for the profit rate to fall. By Keynes's time such a tendency was eliminated by the rise of monopoly capital which gradually banned price competition and concentrated output and profits. The problem became finding profitable outlets for investment as chronic stagnation created demand shock. Keynes saw the falloff of investment and the consequent downturns as caused by a fall in the marginal efficiency of capital, that is, lower and lower rates of return. Falling interest rates and production costs would be matched by falling returns so long as demand remained low. Only stimulus could resolve the crisis. I agree with Keynes on this point. But there are still many more orthodox Marxists that believe that even stimulus won't boost falling profits until the price of capital falls so steeply that a total restructuring of the capital stock and its further concentration can restore profit rates. For a good refutation see Doug Henwood of the Left Business Observer.

        •  No Profitable investments only because of the (0+ / 0-)

          shortfall of aggregate demand = sales.

          Capitalism runs on sales. Give people more money to buy things and capitalists will find a way to service that demand.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Mon Apr 28, 2014 at 02:06:14 PM PDT

          [ Parent ]

        •  Simulus Doesn't "Solve" the Demand Problem (0+ / 0-)

          It just sweeps it under the carpet. What really fixes the demand problem is transfer of funds from the very rich to the working part of the economy.

          If stimulus comes with hikes in the top tax rates to pay for it, then it can help solve the demand problem. So, if the plan is to add, say, 1% to the top tax rate and spend that extra money on, say, infrastructure projects, then fine. That will pump money in to the economy.

          But unless we fix the trade deficit all that money will soon end up in other countries. The consumers will get it and spend it to buy goods manufactured elsewhere.

          We have to fix that systemic problem. The way to do that is to make it profitable for companies to produce here. When they do that the wealth is created and stays in our economy.

          So, if you want stimulus, in whatever form, to work, then you have to plug the hole in the boat first. Otherwise, you're just spending money to improve the economies that produce what we consume.

          •  In what world does suspending FICA or sending (0+ / 0-)

            everyone a $1000 check per month not "solve" the demand problem?

            Increase taxes on the wealthy all you want, but the Dollar issuer doesn't need that revenue in order to spend its own currency.

            "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

            by Auburn Parks on Tue Apr 29, 2014 at 01:09:56 PM PDT

            [ Parent ]

            •  Do You Understand Inflation? (0+ / 0-)

              You hand people a check for $1K. Where does that money come from? Do we just borrow it from China? Where does the money go when people spend it? If they go to Wal-Mart and buy, well, almost anything, that money is going to China.

              Which part of it stops in the U.S. and increases wealth here? Which part helps our economy?

              If you want to have any long-term affect on this economy then you need to increase production here. The way to do that is to fix the trade leak. I guarantee it's the most cost-effective way of increasing employment and wages here, which I think is the point.

              •  "Do You Understand Inflation?" (0+ / 0-)

                Yes, but unfortunately you do not seem to.

                You talk about how their is a trade deficit which means Americans dont have enough income to create full employment, and you never worry about the inflationary impact of Americans having that many more dollars to spend.

                And yet when I suggest a policy to enact the same desired result that you want. To get back to full employment, now all of a sudden you are worried about inflation. How does that make sense?

                Inflation is the difference between the amount of money spent and the number of goods and services produced.

                Surely you don't believe that right now we are producing as many goods and services as possible. Which means there is room for an increased money supply and spending until we get to full employment and capacity.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Wed Apr 30, 2014 at 01:09:00 PM PDT

                [ Parent ]

              •  Americans spend very little on net imports (0+ / 0-)

                We only import 3% of GDP more than we export. Thats not outrageous. It just means that wages have stagnated domestically, so give people a raise by sending them money every month until real wages start to increase again, and then reduce the checks or stop them altogether. Sure some will trickle out of the country, maybe another percent or two. But we can always afford full employment domestically as we can't ever run out of fiat money.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Wed Apr 30, 2014 at 01:11:40 PM PDT

                [ Parent ]

              •  s (0+ / 0-)

                "If you want to have any long-term affect on this economy then you need to increase production here."

                If people have higher incomes and spend more, then production will increase to meet the extra demand. More people will be employed. Capitalism runs on sales.

                "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                by Auburn Parks on Wed Apr 30, 2014 at 01:12:34 PM PDT

                [ Parent ]

      •  Easier, But Not Effective (0+ / 0-)

        It may be easier to stimulate demand by spending money, but in a worldwide economy we are stimulating the world economy when we do that. If you think giving money to the rich will trickle down to the workers, then you might be interested in this. But as long as money is draining from the economy through trade, it's going to be ineffective.

        The deficit that matters is the trade deficit. It has to be fixed before anything else will work. If we had balanced trade, then I'd be more in favor of a stimulus. But not until.

        As for FICA, it isn't regressive. It's just part of the minimum wage. Employers need to pay workers enough to live on while they're working and when they can't work. FICA needs to be expanded so that employers are actually paying for the labor they use. In particular the medical tax needs to be about four times as high just to balance the books.

        Employers have gotten a free ride with FICA because worker productivity is up over 80% in the last thirty years. But their share of FICA has remained constant. It should be significantly increased.

        The problem is really with the income tax. We need to raise the top rates to be at least 50% and eliminate special treatment for investment income. We also need to expand the estate tax to every dime over the first $10 million for those passing on businesses directly to someone taking over within the family and $1 million for all other estates.

        And we should have a uniform tariff sufficient to pay for things like our military spending overseas. Right now the taxpayers are footing the bill for the military, but since that spending isn't tied to trade it incentivizes trade at the expense of local investment.

        If we had these policies in place then unemployment would be vastly lower. Our policy of pushing wealth-producing jobs out of the country has resulted in almost one full point of extra unemployment here. That's about a million people out of work because of bad trade policy. Fixing it ought to be our first priority.

  •  Instead of calling it stimulus which in turn.. (2+ / 0-)
    Recommended by:
    jbsoul, Superpole

    ..brings out the "borrowing" meme, and all the debt & deficit nonsense.

    Call it taking back what was stolen in the first place - trillions, because of our tax structure and other tax expenditures misappropriated to the top

    America desperately needs a massive public investment

    [- Yes & Yes]

    And this financializing the economy into a gambling casino economy because of the lack of investment in manufacturing which shifted into Wall Street bloated pockets
    ..financialize the US economy which destroyed industrial and farm exports in favor of attracting foreign financial capital to the US to develop its "uncompetitive" capital markets.
    Tax the f'ck out of those in "capital management" to get what was improperly stolen from the laborers in this country and pump it back where it belongs:
     
    a cessation of investment, recession and chronic stagnation due to a collapse of effective demand.
    Demand that is eroded by high unemployment and 35 years of stagnant wages

    And this:

    Finally, we need to invest in health care and education. Such spending not only creates jobs in the short but improves the working of the economy in the long term. One study in 2008 by Robert Pollin, an economist and leading proponent of green jobs as a path to recovery, estimated that a mere $100 billion investment in alternative energy and conservation efforts would create over 1.5 million jobs in at least 34 states.
    ~~~~~~~~~~~~~~
    Also

    Things that do not belong as commodities when the profit motive is a negative incentive to the quality or availability of the product or service:

     ♦ Health care insurance (therefoe single payer)

     ♦ Education - common core and the testing industry to commoditize education even more than it has been

    Aim for a permanent WPA that does not end but remains in full force in order to maintain a negative unemployment number - say minus 3%-5% range and keep it there.

    Labor as an asset not as corporations consider - a liability

    Thx steve1960 for the very informative timeline, reference work, and putting it together

  •  63,000 Bridges are Falling Down (0+ / 0-)

    How about starting with all the seriously defective bridges in the U.S.?  Hundreds of thousands of new engineering and construction jobs would be created just by doing what we should have done all these years of neglect.

    But I doubt Obama wants to spend the money since he seems to be most proud of cutting the deficit in half while massively reducing the number of government employees during the worst recession since WWII.

    FDR must be rolling over in his grave.

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