THINK OUR ECONOMY IS BAD?

UPDATE:  DOES THE WASHINGTON POST READ MY BLOG?

Here's an item that was published in today's Post:



Rebuilding America With Federalism



 August 21 at 7:06 PM
Felix Rohatyn is an investment banker; he was chairman of the Municipal Assistance Corp. during the 1970s New York City fiscal crisis. Peter Goldmark has served as executive director of the Port Authority of New York and New Jersey, president of the Rockefeller Foundation and publisher of the International Herald Tribune.
"This country needs to invest and grow again."
Wow!  Too bad these guys didn't publish this when Conservatives, Republicans and the Tea Party went ballistic when Obama proposed exactly the same thing about 5 years ago.  



TAKE A LOOK AT WHAT’S HAPPENING IN EUROPE


Remember back in 2007-2008 when our Wall Street geniuses crashed the worldwide economy, all the conservatives were railing against the TARP, GM and Ford bailouts, FED monetary easing, bailouts for AIG, Citigroup, Merrill Lynch, etc. etc. etc.?  At the time the argument was framed as a choice: government intervention (a la FDR’s New Deal) VS austerity (slashing government spending, firing government employees, cutting salaries).  Fortunately the US took the route of, let’s call it, moderate government intervention since nearly all of Obama’s proposals went nowhere due to Republican opposition.  (Never let it be said that Republicans miss ANY opportunity to stick to ordinary Americans.) So now we have regained nearly all of the wealth that was destroyed back in 2008 (who’s regained it is another issue), our GDP is back up to where it was in 2007 prior to the collapse, unemployment is at 6.6%, stock market is at record levels, and things are finally beginning to look up.  Not that everything is hunky dory – the housing and construction sectors are still down and low paying poverty-inducing jobs are still the norm.  But thank God we aren’t Europe.

Back when the second greatest worldwide economic collapse occurred, the European economic community as a whole went for the austerity option.  And six years later it’s not a pretty picture. 

Look at current unemployment rates for example:

COUNTRY
PERCENT UNEMPLOYMENT
USA
6.6%
France
10.2%
Greece
27.9%
Italy
13%
Ireland
13.5%
Spain
26.3%
Portugal
16.8%
Germany
5.3%
UK
6.3%

True, the United Kingdom and Germany are doing better than we are for reasons that I’m not aware of (Germany is Europe’s largest economy and has good balance of payments accounts?  The UK is not as tightly tied into the European Union as the rest of Europe?) but Europe’s other major nations are just not faring so well.  That’s the reality. 

From a Washington Post article a week ago, the Euro zone nations have not had any significant GDP (Gross Domestic Product) growth since the 2008 collapse.  In fact, France’s economy has been flat for the past year and Germany’s economy shrank by 0.2%.  Italy has had a triple dip recession that has wiped out all growth since 2000.  Spain, an exception, has registered positive GDP growth of late (0.6%) but is stuck with an unemployment rate above 20%.  In comparison, the US has a positive GDP growth rate of 4% which has been pretty much the average norm for the past thirty years.  

Europe chose not to do the kind of even modest monetary stimulus that we’ve had here in the US, although lately the European Central Bank has been muttering about economic stimuli but Germany doesn’t agree.  No.  Europe, in the throes of a wave of “let’s punish the working and middle classes for all their profligate spending even though they aren’t the ones who made the rules” panic, chose the austerity route and it shows. 

As lackluster as our US economic recovery has been (for most people, that is, not the wealthy who have roared back quite nicely, that you very much) we are doing far better than Europe.  European nations slashed public spending, eliminated government jobs, reduced worker salaries, cut vacation time, cut pensions, and more – all austerity measures designed to restore economic recovery.  Looks like that didn’t work out all that well.  In fact, you could call it a conservative public policy failure.  But I won’t.

And to me, non-economist that I am, it makes sense.  We have a consumer economy as does Europe, and when folks don’t have money to spend (whether discretionary or non-discretionary) they can’t buy stuff.  And that “stuff” is not only a market basket of fruits, veggies and chicken wings, but it also means that they don’t spend money on services either.  I would say that the relative health of the US economy compared to that of Western Europe is probably the best argument for government intervention around.  Early on, Paul Krugman, was the only well known economist who was advocating for more government stimulus and he was roundly castigated by the conservatives – both politicians and economists.  You don’t see all that much criticism today.  

Now you may be wondering why it is that I’ve penned this piece.  Well, I’ll tell you.  Following the Great Depression, FDR injected massive amounts of “stimulus funds” into the economy through his New Deal programs. Washington’s Federal Mall with its iconic Federal Agency buildings with millions of square feet of space?  A New Deal product.  The spectacular murals that grace the lobbies of many of these 75 year old buildings?  A New Deal product.  The National Park System as we know it today?  A New Deal product.  Social Security?  A New Deal product. New York’s Lincoln Tunnel and LaGuardia Airport? New Deal products.  That bridge over Larkin Creek on Mill Road where I grew up that still stands? Courtesy of the New Deal. 

Sure a few of FDR’s New Deal programs were declared unconstitutional by the Supreme Court.   But most were not and the results in both concrete and social program terms are all around us today.  They have literally formed our national character.

So let’s imagine that following the election of Barak Obama in 2008 (an avowed FDR admirer) Congress had cooperated with him and the modest programs like his Infrastructure Development Bank he proposed rather than ensuring that he was a one term President as many Republicans vowed.  Can you imagine that today we might have an electric grid that’s not waiting for the next earthquake, hurricane or Snowmageddon to plunge half the country into darkness?  Can you imagine that maybe we would have highways and bridges that are no longer crumbling and collapsing?  That we might have truly high speed internet service like they have in Europe?  Can you imagine that we might have high speed rail lines between some of our cities?  Or, heaven help us, Mag-Lev trains like China and Japan, for God’s sake?  Or maybe we might have a space program again and, who knows, maybe a permanent station on the Moon or Mars.  These are not all that difficult to achieve, certainly when compared to what the New Deal accomplished. 

But no.  The conservatives and their Tea Party minions in Congress wouldn’t even extend unemployment benefits so desperately needed by ordinary, out of work Americans.  Infrastructure repair?  A Liberal/Socialist/Communist plot, I suppose.  Or some equally insane justification. 

Thanks.

For Another Day:



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