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Why Washington is About to Make the Jobs Crisis Worse
We now live in parallel universes.
One universe is the one in which most Americans live. In it, almost 15 million people are unemployed, wages are declining (adjusted for inflation), and home values are still falling. The unsurprising result is consumers aren’t buying — which is causing employers to slow down their hiring and in many cases lay off more of their workers. In this universe, we’re locked in a vicious economic cycle that’s getting worse.
The other universe is the one in which Washington politicians live. They are now engaged in a bitter partisan battle over how, and by how much, to reduce the federal budget deficit in order to buy enough votes to lift the debt ceiling.
The two universes have nothing whatever to do with one another — except for one thing. If consumers can’t and won’t buy, and employers won’t hire without customers, the spender of last resort must be government. We’ve understood this since government spending on World War II catapulted America out of the Great Depression — reversing the most vicious of vicious cycles. We’ve understood it in every economic downturn since then.
Until now.
The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy — spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in peoples’ pockets, which they’d then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It’s a win-win.
This is not rocket science. And it’s not difficult for government to do this — through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs.
Yet the parallel universe called Washington is moving in exactly the opposite direction. Republicans are proposing to cut the budget deficit this year and next, which will result in more job losses. And Democrats, from the President on down, seem unable or unwilling to present a bold jobs plan to reverse the vicious cycle of unemployment. Instead, they’re busily playing “I can cut the deficit more than you” — trying to hold their Democratic base by calling for $1 of tax increases (mostly on the wealthy) for every $3 of spending cuts.
All of this is making the vicious economic cycle worse — and creating a vicious political cycle to accompany it.
As more and more Americans lose faith that their government can do anything to bring back jobs and wages, they are becoming more susceptible to the Republican’s oft-repeated lie that the problem is government — that if we shrink government, jobs will return, wages will rise, and it will be morning in America again. And as Democrats, from the President on down, refuse to talk about jobs and wages, but instead play the deficit-reduction game, they give even more legitimacy to this lie and more momentum to this vicious political cycle.
The parallel universes are about to crash, and average Americans will be all the worse for it.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.
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Show AllEven if he is only mildly critical of Obama and Congressional Democrats, it's about time Reich started holding his party responsible for this logjam, not only the regressive Repulsive Party.
Now Reich needs to realize that our current economic/political system is rigged for Sociopathic Wall Street, Planet-killing Corporations, and Murderous War Profiteers, so it needs to be replaced by an economic/political system which truly and effectively puts people, not profits and power, first.
Although the GOP didn't even ask for Social Security and Medicare cuts in exchange for cutting a deficit reduction deal, Obama offered to raise Medicare eligibility from 65 to 67 and offered to implement a "chained CPI" that his catfood commission contrived last year. Obama is not just capitulating to the GOP, he is leading them in expanding regressive legislation.
In addition to gutting these programs, the "chained CPI" will result in the inflation rate being further understated than it has been during the past 30 years of the US Gov. cooking the books on inflation and unemployment stats. In addition to cutting already meager Social Security benefits, the "chained CPI" will result in even lower wages for workers and lower interest rates that encourage unregulated speculators to further spike commodity markets, driving up the costs of food and energy for the rest of us.
This "realization" is not going to happen for Reich. This guy is really a broken -myopic- record. He just doesn't get the fundamental dysfunction of the global capitalist class, particularly here in the US. You can increase public spending until the cows come home, but until there is a corporate commitment to just profit instead of unlimited profit along with a commitment to again investing in this country, nothing will change. This means, of course, that nothing is going to change- the turbo- charged profit addiction is beyond help- a reality that Reich can't take in. His public spending nonesense is just frivolous, irresponsible bubble gum that will slow the pain but the deficit will continue to grow, as large corporation have stopped paying taxes essentially. The damn is crashing in for those of us being exploited on the ground. The wealthy and privileged will merely retreat to their gated refuges here and all over the globe.
Our country, our future and our lives have been stolen by the rich and powerful in the best government money can buy. Its time to take it back. Vote liberal and progressive.
NO MORE conservatives!
Direct democracy
In a nutshell: vote third party.
Very few Democratic Party candidates are progressive and no Republican candidates are progressive.
A Progressive Democrat third party can win
I agree; so would a third-party progressive. I'd say that the vast majority of Americans--no matter their party or political affiliation--are so fed up with the massive corruption they would eagerly vote for a smart, serious, and uncompromising progressive.
Forget what no-skin-in-the-game democrats like thom hartmann preach, if ever there was a time to vote third-party, this is it.
I agree with you completely. Mr. Hartmann is nothing but a shill for the Dimocrats. He moved to DC to be closer to those clowns! I'm sick of him criticizing BO and then in the same breath asking us to vote for him!!
'I'm sick of him criticizing BO ...'
I wouldn't call what hartmann ever says about obama 'criticism.' The excuses he makes for the man require extraordinary mental gymnastics, since he will accurately and correctly criticize the republicans, but in the very next sentence, will rationalize the very same actions by obama! He's all party over policy.
I've listened to him for years, and until obama was elected, I loved listening to him; he integrated moral and intellectual policy arguments beautifully. I learned a lot. But now that obama's in office, he somehow is unable to make these arguments against the very same policies, done by a democrat. Hartmann, a champion of democracy just 2 years ago, now gets many of his listeners to accept fascism from a democrat simply because he's a democrat.
Policy over party!
First of all, didn't CD just publish an article by Reich about a week or so ago, which pretty much said the exact same thing as this article?! What a waste of space and sharing of repetitive ideas that are simply wrong and obsolete. Reich needs to officially drop his Keynesian bullshit and come up with an original idea for a change, like maybe completely reconfiguring the monetary system ---- without the Fed in it. Otherwise we CANNOT afford to borrow our way out of this mess, even if we assume that we spend it on the right things. The bankers want to charge us too much interest just from simply introducing new money into the system. This is NOT 1935!!
Obama is corrupt, and the two-party duopoly is corrupt, but I have to say, a third party has NO PRAYER in this political and economic system. A third party would only work in time as an outgrowth of mass organization and direct action campaigns at the grassroots level, which would have to force fundamental changes in things like making campaigns/elections 100% publicly funded, end corporate personhood, and dismantle the lobbying system in this country. So you want 3rd, 4th, ...... party's, we'll have our work cut out for us. It's simply not going to happen by wishing for it, or waving magic wands.
Is the word "Democrat" your security blanket?
Only if we could convince the majority in this nation to be realistically logical and vote in their own best interests. I happened to come across this headline on RealTV.com today..."Tens of thousands of Israelis poured onto the streets in Tel Aviv to protest rising commodity, housing prices and stagnation in salaries" by their extortionist gov and wondering why we haven't heard about it, even on AlJazeer. It seems masses of people are in the streets protesting austerity everywhere, except US
Lets vote for Ventura!!
And direct democracy...
Perhaps the US has grown too large and diverse to be a functioning democracy. I've read consistently since college political theorusts who demand that democracies be limited to relatively very small populations of people with similar interests.
Maybe we need to be broken up. If so I hope they'll be some relocation program. I'd hate to end up a damn "refugee" in the South.
We are, in fact, a Democratic Republic, a horse of a different color. I believe the system to be corrupted but still viable. All we need are a couple more political parties added to the mix.
realtv.com? Or did you mean TheRealNews.com? They just had a story about the tent cities and protests as you describe. I am surprised -- and disappointed -- if Al Jazeera did not cover this.
There ARE protests against austerity in the US, but they are small and scattered. I've been to one or two of these in Phoenix and they are extremely disappointing, mainly because a lot of the people who DO show up don't really understand what is going on, exactly what the issues really are. (I do my best to explain it, but it is tiring and really should get more coverage -- accurate coverage that is -- on our TV stations, but they don't as you already know.)
SocJustice4All, there are small groups of us here in the US trying to protest the austerity measures, but remember, we don't have the class-consciousness (labor union awareness, etc) that other countries have. Also, our oppressors have better perfected their system in the West because they know enough to keep a majority of the people in jobs. The ones who still have jobs in the US are voting for the right wing.
It is the job of Leftists everywhere to bring the battle forward, but especially so in the US, because where the US goes, so goes the world (unfortunately, but true).
Ezeflyer, you continue to try and confuse readers. In our previous dialogues, you've stated that this so-called "Progressive Democrat third party" stays part of the 2 party Democratic Party. Thus, your misleading word usage is called "newsspeak" (Orwell 1984).
Quite possible. But also possible is that the poster in question is confused her/himself?
doubledee,
Very possible? Despite my deficiency in vocabulary skill, I am careful in choosing words, "Hate" and "Dislike" there are vast differences and how you use them. Ezeflyer, try to equate someone who dislikes the liberal to Anders Breivik. Maybe he is "FR"?.
To add insult to injury to the dearth of jobs, every time Obama and the GOP cut Social Security and Medicare, additional older workers are forced to delay or cancel retiring from their family wage jobs, thereby reducing job opportunities for young Americans who are already experiencing the highest unemployment rate of any age group.
You should notice how Robert Reich cloaks his evil message in an entertaining, intriguing little story. He learned the propaganda technique from Edward Barnays just like those he pretends to oppose. He pretends to take the people's side against elite oppression. But in reality he is with the elites, against the people.
Reich wants the government to spend us out of recession and back into "prosperity". The assumption is that this is good, that this is the only "proven" way. In fact, spending munny, whether by the government, by privateers, or by the people themselves (turned into consumption cattle) is itself the great destroyer.
The munny ekonomy, the konsumption ekonomy, has destroyed much of this society and enslaved the great majority of what is left. Everyone knows it. Four times the world average plunder rate, per capita. But you can see Reich and his ilk relentlessly try to bowl over the relevant reality. He wants to suck us back into das konsumption korral, to moo at our kowboys to throw us some more hay. Reich wants buziness as usual. He's personally invested in it.
And he's busy teaching new krops of konsumption kowboys there at Berkeley to carry on the "grand tradition", while the great extinction commences, and the oceans rise, and garbage fills our cultural channels, and fills our souls. Kaching - kaching! Thanks a lot Reich, but no thanks! We have our own way! We're building our local economies, local culture, local prosperity, detached from your emerald cities! Tough luck Reich!
Yes, no additional spending is needed, just shift the spending out of military industrial complex programs and other corporate welfare programs, and in to programs that benefit the working class.
Wow! That's a term I don't hear enough on CD: "Corporate welfare."
I remember way back in about 1990 ABC News did a report talking about an annual expenditure of $300 Billion dollars in corporate welfare. That included specialized tax breaks, kick-backs, outright subsidies of already profitable domestic corporations and subsidies for overseas advertising for offshoring corporations, etc., but did not include the cost of military & CIA overt and covert operations to control offshore resource supplies for certain political crony corporations, of course.
The figure for corporate welfare and subsidies for corporate serving military ops must be many times that sum now.
Social Security and Medicare aside (because every American qualifies for them at some point), the U.S. never spent more than $45 Billion a year on direct anti-poverty welfare programs. That figure was BEFORE Clinton reduced spending on general anti-poverty welfare programs.
One sometimes hears the figure $300 Billion dollars tossed around for the annual amount the super-rich legally and illegally hide offshore in taxable income. That denies roughly $90 Billion dollars (after secondary loopholes) in annual revenue to the federal government that provides for the fat-cats' domestic and overseas military defense and securing of their overseas resource interests, and provides for the domestic infrastructure they love to use to transport, electrify, refrigerate, store, communicate about and protect the goods they sell inside the U.S. They love these government goodies. They just want other tax-payers and foreign borrowing plus interest to pay for it.
But that figure on offshored taxable income is 15 years old--based on a 1996 Department of Treasury estimate--and with record corporate, oil and military industrial profits being what they are these daze I've no doubt that figure has climbed substantially.
It is remarkable how long people can write about deficit spending without suggesting that it make some difference just what one spends a trillion dollars on.
Bingo!
Right now only the government has the ability to create jobs. It's jobs the public needs so they can hang onto their homes, buy the goods big corporations make, put food on the table, clothe their children, pay their church tithes, etc. I do not see that Wall Street and big corporations -- for all the tax breaks and stiumulus money we gave them -- are creating the jobs America needs to put people back to work. With defense downsizing, NASA shriveling to a shadow of its former self, budget cuts to national park and refuge system, there have been massive government layoffs and also in the public sector with large aerospace and aircraft layoffs. All of this trickles down to the state level, too. People don't have jobs, they can't pay their taxes. I lived through the Great Depression of the '30s....been there, saw that....it was not pretty. Only government intervention pulled us out and it took a long long time to do so.
Relax. The dog & pony show will be over soon. They'll raise the debt limit and it'll all be good again. It always is. However, if this strained & rancid system finally lets go and finally takes The Big Dump, and it all does go down the shitter, then we'll all be the better for it. Sure, it might stop things up for a while, but we'll rota'roota' the thing and move on to a much relieved nation.
The title of this article should be "HOW Washington is About to Make the Jobs Crisis Worse".
The WHY is "because they've been paid to"...
Exactly what I was going to say. Exactly what Reich refuses to say. Exactly why I don't trust him.
Bingo! Reich begins all of his articles with "Why..." and then only touches on "How..."
So true - Reich is a neoliberal shitheel. He's always been fascinated with his own career and completely muffed his one big chance to affect the debate: he refused to break ranks when NAFTA was being forced onto the public. Now he's been coasting through academia (currently in a highly-paid state job) and wants to come off like he suddenly has a new pair.
As someone said about Glenn Beck: "He's a nobody. Don't even ignore him."
As usual, with Reich I have to point out that even if all his ideas were suddenly enacted, without addressing the problem of "free trade" offshoring of jobs there will be no economic recovery. Offshoring is accelerating and attacking more and more upper-middle-class jobs that require advanced degrees in computing, science, engineering and high-tech management.
Too much of our scientific research and development is being moved offshore along with too many patents and critical manufacturing components for vitally needed medicines like penicillin. Along with those things being offshored is GDP, consumer spending, middle-class tax revenues and their wherewithal to help pay for future generations' Social Security.
FDR's job programs got millions of Americans through the Great Depression which lasted from 1929 to 1942. But, in and of themselves, they did not get America out of the Depression and into economic recovery.
War manufacturing jobs in the 1940s were DOMESTIC war manufacturing jobs. Full war mobilization of the economy plus the draft created so many domestic wartime factory jobs that women were hired into the plants for the first time and wages started to climb to draw in the necessary numbers of workers.
Now we have offshored most war manufacturing (except for construction & final assembly of large weapons systems using non-classified smaller parts manufactured offshore). Everything from our military uniforms to vehicle parts to missile wiring, etc., is manufactured offshore and there is no significant domestic job creation resulting from Bush's and Obama's expansionist "wars of choice."
Now we have a volunteer military drawn mainly from the "poverty draft" that is repeatedly toured into combat zones, sometimes as many as 10 to 12 times--doing impossibly psychologically stressing work that used to require the employment of many more soldiers doing far fewer tours. Is it any wonder military suicide rates are through the roof? It decreases the long-term pay-out in military benefits for one thing.
Post-WWII global demand for civilian products manufactured in America (because most other developed nations had their manufacturing capacity severely damaged or destroyed by the war) took the rising domestic demand created by FDR's jobs programs and domestic war manufacturing jobs and, together with the GI Bill, catalyzed the post-war boom into the largest economic expansion in world history until we exported our later neo-liberal economic model to China.
BUT FDR NEVER FACED THE ADDITIONAL HURDLE TO DOMESTIC JOB CREATION OF "FREE TRADE." Unlike the contemporary American blue collar working-class and dying middle-class.
Our tri-partisan economic neo-liberals are in smug self-serving denial about "free trade's" negative impact on job creation. Why? Because corporate profits from offshored manufacturing, rising foreign middle-classes they helped to create, and the "growth markets" those new environmentally unsustainable middle-classes represent are making record corporate profits and keeping "free trade" stock dividends generated by foreign labor fat and flowing.
Our neo-libs like intense domestic job competition with high ratios of employees for any one position because it forces wages down to slowly strangle the revenue streams to Social Security, Medicare and other social programs so the neo-libs can privatize what's left of them to sell for profit to the fading middle-class and soon-to-be dwindling upper-middle-class.
Loss of middle-class jobs and the tax revenue they once generated will surely "strangle the welfare beast," but it will also deny to the working-class and growing unemployed class the financial resources to participate meaningfully in democracy.
Neo-libs and neo-cons would replace such "quaint" notions of democracy with an economically two-tiered, have vs. have-not, authoritarian Banana Republic like the ones our Republican and Democrat presidents have helped to create in places like El Salvador, Guatemala, Honduras, Haiti, etc., only on a much larger scale right here in the U.S.A.
Reich uses these articles of his to self-servingly jockey for position in some future DLC Dim administration whose Party leadership jettisoned milder neo-liberals like him (who still had some knowledge of and respect for John Maynard Keynes) a decade ago. They were all exchanged for hard-core Milton Friedmanite neo-libs like Robert Rubin, Lawrence Summers and Barrack Obama. Reich needs to wake-up and realize he's no more "safe" than the rest of us from the lethally toxic national economic and anti-democratic effects of "free trade" and all the other neo-liberal snake oil ingredients.
Metal, your post is very informative, especially on "corporate welfare" through defense spending. Without repealing "free trade" treaties, Keynesian economics will only result in helping the economies of China, India and other countries that manufacture for export to the US.
Thanks for the compliment. I worked hard on that little essay.
The problem with repealing "free trade" as it is presently conceived is that so many countries are still depending on even a reduced level of American consumption of their imported goods that the shock to their economies would be traumatic. And in the present weakened global economic situation that just pile onto existing threats to global economic stability.
Those treaties either have to be re-negotiated to include globally enforced labor and environmental protections that themselves would have to be implemented in phases over 10 to 15 years, or the entire "free trade" treaty regime would have to be slowly phased out, agricultural and industrial sector-by-sector, over a 15 year period which is about how long it took them to help put us into flatlined job growth.
I personally do not believe it is possible to globally re-negotiate the treaties to include enforceable and enforced labor & environmental protections due to the incredible diversity political regimes and economies that would have to adapt in systemically impossible ways to such a regulatory scheme. I think the best course is to phase out the treaties, including the WTO, and return sovereignty over trade agreements and trade disputes to the elected representatives of the people.
Bingo! Metal, you pass Go, collect $200!!! Yours is the only post so far that sheds any light on our state of affairs. Obama, the GOP, and the Dems realize the truth of what you say, but get paid to ignore it. Congrats. You should write articles for CD and Firedoglake.
Namaste, Antoine
The problem with reich's analysis is that even if washington dc spends the money it doesn't create jobs or increase demand.
During the Great Depression Harry Hopkins hired 3 million people at prevailing wage in 6 weeks. All with a 3% Overhead. The other 97% went straight to Wages.
Compare that with gov spending today. In New Orleans after the hurricane the gov bid out jobs at well over 100 per hour - it was subbed out multiple times til the person who did the actual work was paid around 10 per hour. That is a 90%+ overhead.
The gov is captured so the economic equation where gov picks up spending to increase demand doesn't work because a tiny percentage actually is spent productively.
They have FDR's jobs programs like the CCC (which was simple, direct and modeled on a more basic version of the Army's boot camp training and vehicle deployment model) as a proven model to work with. They should learn from their own Party's more successful history in these things. FDR had the CCC up and running within weeks of taking office in 1933. That's how simple, cheap to organize and operate it was. It put millions of young men into excellent discipline and physical condition which helped prepare them for fighting in WWII. It also created farm demand and employed millions of American farmers to feed those boys in the CCC camps.
Work for wages creates demand in the economy which creates the need for more inventory creating the need to hire more people whose demand grows itself creating the need for more inventory and more hires to satisfy it. That is Keyne's "virtuous cycle" of upward spiraling demand that reverses deflationary spirals.
It doesn't particularly matter how you get money moving through the economy, although I think it is best to put people to work to earn that money, so long as it's not all concentrated in the hands of the very rich and super-rich and becomes better distributed throughout society.
To oppose government work programs in a prolonged economic slump or deflationary spiral is anti-working-class and therefore anti-American.
I'm not against federal work programs - just pointing out that they Do Not work as efficiently , nor are they as cost effective as the FDR programs. Any job program would be captured just as the rest of the Federal Gov is. So the benefits would be much less than the amount spent.
And actually it does matter how money enters the economy - the current economy is proof of that - money Has to get to the poor and middle class - the true drivers of our consumer driven economy.
Where Harry Hopkins when we need him?
I meant that it doesn't much matter how you get money moving through the economy so long as it is being distributed (or, more positively, paid in exchange for labor) to poor and working-class people to spend at the most widely distributive local level. This is the opposite of capitalist "trickle down theory" and neo-liberal offshoring of jobs which both work worst in deflationary spirals.
Good thread you two. I posit is does matter how you inject the money into the system. The Summers stimulus plan was a wholesale injection and that did not work. Fact is that hot money helped screw up the world economy. How to do retail is the question. And I agree with an FDR type plan that puts money in the hands of young men so they can have a sense of purpose and send some money home (I wonder if they would do that these days) so the folks home is not foreclosed. Get young folks to love this land by caring for it with park work, forest trails, forest thinning, insulating houses, working together. But to do that we need to reestablish a middle class (quick) and not just as a political term, but as a functional economics.... so folks can trade services with one another and multiply each others worth.
Robert Reich plays into the whole Democrats versus Republicans as if the Democrats are the solution. I also have to agree with the response by rtdrury who says "He pretends to take the people's side ... But in reality he is with the elites..."
Spending our way out of a recession is simply silly. Americans actually need to spend less, especially on the useless consumer products that American multi-national companies are spewing out of China while promoting a scorched earth policy with regards to the natural resources we need to perpetuate this archaic system. Instead we need to abandon our MIC, eliminate corporate friendly policies, close the gap between the haves and have nots and most importantly introduce a system of democracy in this country in which ALL politicians must represent the public interest or else suffer severe consequences.
In dissecting this well written piece of propaganda by Reich, it is easy to see how most Americans fall for this sort of crap. I begin with the first paragraph where Reich writes.... "...almost 15 million people are unemployed, wages are declining (adjusted for inflation), and home values are still falling" Reich downplays the degree of US poverty by focusing on a 'conservative' estimate that only 15 million are unemployed. In reality millions of unemployed are not counted (such as prisoners who in many instances are "employed" but without wages), many have given up looking for work and even more work for subsistent wages which may actually be worse than being unemployed.
Secondly Reich talks about "declining house values" which is not the issue. Declining home ownership is the real issue (unless you're a bank!) to the majority of people. Who cares if house values go down for awhile if you are being foreclosed on. If you rent a room, you may actually appreciate declining home values as it may translate into lower rent. Only if you buy houses for speculation, rather than buying a home to live in, are the market forces of the real estate business relevant.
The reason for this type of wording by Reich is to frame the discussion in the popular parlance of economic rhetoric that began several generations ago so as to avoid having any discussion outside of the established, rhetorical etiquette defined by the wealthy and to limit the debate to the constraints of the well-to-do investors. To some it is brilliant propaganda... to others it is passe; a tired and condescending broken record that guarantees the exclusivity of government.
Reich reinforces this stale and narrow minded approach in his second paragraph when he writes... "Washington politicians... are now engaged in a bitter partisan battle over how, and by how much, to reduce the federal budget deficit..." The use of the word "partisan" implies that we have two ideological camps (as if the masses couldn't possibly handle any more than two points of view!), but nothing could be further from the truth. Both parties only differ in their means to achieve the same objective; to please those responsible for getting them and keeping them in power. Unfortunately I am not referring to the electorate, but to the handful of wealthy people and companies that shower a chosen few with the obscene amounts of money required to participate in this dog and pony show collectively called the electoral process.
There is absolutely nothing remotely partisan about this debate as an almost infinite amount of possibilities to tackle the debt exist that will never even be discussed because both parties are in complete agreement that their allegiance requires them to avoid reasonable alternatives.
Reich finishes his piece with a final reinforcement of status quo when he writes... "Americans... are becoming more susceptible to the Republican’s oft-repeated lie ... that if we shrink government, jobs will return, wages will rise, and it will be morning in America again. Democrats refuse to talk about jobs and wages, but instead play the deficit-reduction game..." and ultimately... " give even more legitimacy to this lie." According to Reich the Republicans are liars (I don't disagree with this statement) and the Democrats (Who Reich wants us to assume are not liars) are making a strategic miscalculation that could cost them the election in 2012. The point by Reich is the voter must understand that the Democrats truly represent them, but that the smart Republican political machine has tricked their party into straying from the accepted path of fiscal sanity.
As long as the electorate struggles between voting for a Democrat or a Republican, the powers that be will win. Robert Reich does his best to keep all discussion within this narrow framework and with considerable success, but to the detriment of a fair and just society.
You've hit on a lot and you've got some of the essentials correct. I wish to comment on one aspect of your thesis, that has occurred to me recently. You mention falling housing prices as irrelevant; that it even might mean cheaper rents, and, of course, mortgages.
This is deliberate. The housing bubble was expanded to shift housing wealth to the investment class. "Flipping" - i.e. speculation was enacted for a while, inflating prices. They signed everyone up, including the family pet, for an unsustainable mortgage. Then crashed the system, extracting the wealth of mulitple flips and leaving the last one holding the bag on an "underwater" property, then quickly, and in many cases illegally, foreclosed on millions of properties. These now sit vacant, ready to be sold off on the cheap - there is simply a surplus of supply and no demand, with no jobs that can pay a mortgage at "normal value"
Most of this "normal value" came from inflation on homes constructed 40 years ago. For instance my folks bought their last home in 1973 for $30,000 and it sold in 2000 for $240,000. An 800% increase - though in real terms this only kept up with inflation, while wages did not. I could not afford to buy their home in 2000, although my net income was 2x my father's of 1973, and although I had no family and he had a family of 4 children in 1973.
Even people who kept their houses, paid their mortgage off on a $150,000 "starter home" are sitting in paid off houses worth a fraction of what they paid into their mortgage for 20 or 30 yrs. The house I live in now was bought by my grandparents for cash in 1973 for $17,000. It has a 1/4 acre of land and a resale value of $35,000. In 1973 dollars it is worth $4000. It has lost 75% of its real value. The only real, tangible asset of these people with paid off mortgages is GONE! Worthless in the pile of uninhabited houses - real objects sitting with real value on the books of banks who created the money to buy it in the first place out of thin air, and then extracted the real value of your life in order for you to keep it.
Now, what has been keeping the "job creators" from offering us all minimum wage jobs? It's the fact that over the last 40 yrs, you can't afford to rent or buy a home on minimum wage, at least anytime before 2010. You can find work for minimum wge, but most of the US would be homeless if we all were paid $7/hr. Not a very "secure" society for the "job creators", is it.
Now, they have extracted all the increase in REAL value - that value over the value raised by inflation, during the housing bubble that ended in 2007, and they are well on the way to offering each and everyone of us homes we can afford on minumum wage.
Thus, we have no longer worry about off-shoring jobs. Once the educated, skilled labor in the US can afford to live in an actual house on $7/hr we'll have plenty of jobs, just no discretionary income to afford anything more than bread and the Fox News circus and no rising value of a real tangible asset to secure us economically against infaltion. And we'll be supplying the Chinese and Indians, with a population 10x that of the US, with cheap, throwaway trash called consumer goods.
They are not offshoring jobs, they are importing slave-labor levels of economic potential for the masses. Welcome to New China!
"...they are well on the way to offering each and everyone of us homes we can afford on minumum wage...Thus, we have no longer worry about off-shoring jobs."
"They are not offshoring jobs, they are importing slave-labor levels of economic potential for the masses."
I don't think we'll see houses that cheap. I think a lot of that land will be stripped of houses and sold and used for other purposes.
They are offshoring jobs, GDP, middle-class tax revenues and consumer spending AND importing slave-labor levels of economic servitude to propitiate upper-class delusions of godhood.
As long as corporations can hire foreign workers to work for less than a dollar and hour in countries that require no labor or environmental protections no American worker will be wage competitive with that foreign worker regardless of how much their hours, benefits, unionization levels, etc., get cut. Offshoring has been accelerating simultaneous with worsening long-term and short-term unemployment. Offshoring is now taking larger and larger bites out of the upper-middle class--attacking jobs once considered "safe" from offshoring that require advanced degrees in computers, science, engineering and high-tech management.
No other president has faced the additional hurdle to economic recovery post-crash of neo-liberal "free trade"--not that the current Dims or Rethuglicans give a shit.
Okay, I'm not dense, they are off-shoring jobs. I worked in IT and computer programming. You can't make a living at it here anymore. Indians will do the same work for $30US/wk.
But how many jobs, relative to the China/India population can they really off-shore. If they off-shored EVERY job, that is 100,000,000 jobs going to a population of 3 BILLION people. It's chump change in relation to the number of jobs they'd NEED to create there if they were to raise those two countries to Euro-American living standards.
But the long-term goal is to reduce the cost of living in the US until I can afford to work for $30/wk and not revolt. Then, we'll have one nice big 8,000 mile in diameter "company store" to be working for.
They may turn some vacant houses into vacant lots, but they can't have us all in the streets and under bridges. There's no profit in that! And "vacant" lots, "undeveloped" woodlands, etc are anathema to these people.
I don't see what "alternate use" there is, what infrastructure do they need - interment camps? They can conduct their whole feudal enterprise from a luxury suite with a broadband connection now, they don't even need a stock exchange building or even floor-traders. Most trades are made by computers thousands of times faster than any human can do it.
But I beleive my thesis stands. Purposely reducing the cost of living reduces the minumum cost of labor and that is their plan, one big planet-wide "manor".
[Edited for details]
"Homo hominii lupus." (lit. 'man is a wolf unto man'}
-- Roman saying
Orwell's 1984 was one big "manor" of a sort. I think the ruling oligarchs here and abroad see First World countries, "developing" countries with huge over-populations, and Third World countries with smaller populations somewhat differently. The goal of their version of "free trade" is a theoretically endless neo-liberal race to the bottom in wages, working conditions and environmental plundering on the cheap. Only the biosphere has limits and industrial resources are mostly finite. They will hit one form of wall or another at very high speed.
Some far-right whackos in America have already suggested open air tent/labor camps and putting the indigent and forced prison labor to work doing menial step'n'fetchit or cleaning work, or working in the fields doing stoop labor previously performed by undocumented workers. Prison labor is a booming American enterprise that pays anywhere from .23 cents an hour to two dollars an hour for some prisoners. Prisoners now do a variety of domestic manufacturing jobs making everything from riot helmets to electrical wiring formerly performed by free workers.
I don't think the super-rich particularly care about housing affordability. I believe they've deluded themselves into a puerile insular Ayn Rand fantasy bubble (surrounded by yes-men) wherein they believe those who they regard as unemployable will swiftly whither away--especially if Republicans can realize their goal of cutting $127 Billion from the Food Stamp program and eliminating $Trillions from Medicare and Social Security.
I don't think they care if they drive down wages faster than the cost of living is lowered so that millions more end up homeless and hungry. Millions already are homeless and hungry. One quarter of American kids already live at or below poverty. I don't think they have any concept of social responsibility except to themselves and the people who directly serve them.
They control the 24/7/365 mass media propaganda machine (the best in history). They've already pitted even white Americans against one another on a scale and with a vehemence that any adult generation of whites from 1865 to 1980 would've found deeply anti-American. They are out to "decrease the surplus population" as Ebenezer Scrooge put it and they intend to do this on a global scale. They will be most ruthless about this in the Third World, whose resources they most covet, but their casual mass cruelty could foment a multi-factional civil war or war of Balkanization inside America itself.
Those who vastly outnumber them will have to push back to try to survive as best they may or perish after nasty, brutal and short lives.
mostly agree but the major difference between now and WWII was that the US produced most of the goods it consumed, thus providing decent paying blue collar manufacturing jobs, today this is a consumer society were the majority work in retail, so even if people do start to spend their buying power is far less, you should acknowledge this, and your role with Clinton in NAFTA as a root causes to this fragile economy Mr. Reich !
The billions of dollars being spent by governments and businesses each year on "homeland security' is mostly wasted on corporate welfare programs that make nobody more secure while making a few people very wealthy.
How secure is a nation that has outsourced the manufacture of basic hardware (nuts, bolts, screws, etc.) How do you keep your infrastructure or military machine functioning if the only source of such products is your enemy?
The only reason the allies won WWII is because of North America's vast resource, transportation and manufacturing base that was hard to attack. The axis powers started the war to enable them to control more resources and they lost the war because they ran low on resources once the allies cut the supply lines off.
The real reason "Why Washington is About to Make the Jobs Crisis Worse".
Reich says "government spending more is not difficult".
Wait a minute right there, Robert, you are now in your own "parallel universe," because this government spending on anything but war and national security rackets is impossible because we have this government.
And where is the money to do an FDR "save the system" going to come from?
Right now Robert, first the debt ceiling has to be raised because there is no more money to spend except on the interest on the debt and War.
They are all caving in to keep the Bankster War Robbers happy.
This is a real National Emergency that Congress and Obama have shown no inclination to fix.
If Obama had the People and Constitution in his interest he would declare a National Emergency, raise the ceiling by emergency order and order the Fed to make an Infrastructure Bank to rebuild the country and hire millions of workers to fix America first, and end the war. He can let the Bush tax cuts expire by doing nothing.
The troops coming home would find work fixing America.
That would be a proud legacy for him not the failed one he is riding.
In my opinion, this is the real reason "Why Washington is About to Make the Jobs Crisis Worse" and more.
Pursuant to Paul Jay (RealNews) interview with Yves Smith re: Debt Ceiling Extortion ~If o's plan was not to dismantle our social safety net programs, then Geitner and extortionist o could come up with a few alternative plans to threaten the repugs: use of 14th Amendment to contest viability of debt ceiling (in that Congress has already approved appropriations), cancel treasury debt held be fed through exhange of QE coupons, or (radically) US Mint has authority to issue platinum coins in any denomination (ie $1Trillion) which could be sold to the fed with the credit going to the treasury. She also stated that there are some hedge funds willing to swoop in and buy any treasury bonds (if there are seller & if enough)
"One universe is the one in which most Americans live. In it, almost 15 million people are unemployed,..."
In my universe, more like 30 million Americans are unemployed. The official unemployment rate doesn't count people whose benefits have expired. Many other millions are forcibly retired because no one will hire a health insurance risk. Others are teenagers and their faces are the wrong color. Millions of people have disabilities and millions of employers squirm to find reasons not to hire them. Now in addition, let's throw out the meaningless jobs that pretty much kill people's souls. Oh wait a minute, that's most of the remaining McJobs.