Putting It In Overdrive (A reprint of Vol. XXXI, Art. 35)
On June 13th, Professor Robert Reich had some advice for us. “Why The Economy Can’t Get Out of First Gear”, is how he began his article.
“Rarely in history has the cause of a major economic problem been so clear yet have so few been willing to see it. The major reason this recovery (?) has been so anemic is not Europe’s debt crisis. It’s not Japan’s tsunami. It’s not Wall Street’s continuing excesses. It’s not, as right-wing economists tell us, because taxes are too high on corporations and the rich, and safety nets are too generous to the needy. It’s not even, as some liberals contend, because the Obama administration hasn’t spent enough on a temporary Keynesian stimulus.
“The answer is in front of our faces. It’s because American consumers whose spending is 70 percent of economic activity, don’t have the dough to buy enough to boost the economy – and they can no longer borrow like they could before the crash of 2008 …”
Sounds a lot like what we’ve been trying to say – since ‘way before 2008. Thank you, Professor. Please continue.
“Can I say this any more simply?”, Professor Reich asks. “The earnings of the great American middle class fueled the great American expansion for three decades after World War II. The relative lack of earnings in more recent years set us up for the great American bust …
“Bottom line: The American economy is still struggling because the vast American middle class can’t spend more to get us out of first gear. What to do? There’s no simple answer in the short term except to hope we stay in first gear and not slide backwards. Over the long term the answer is to make sure the middle class gets far more of the gains from economic growth.
“How? We might learn something from history. In 1941 America went to war – a vast mobilization that employed every able-bodied adult American, and put money in their pockets … Get it?” –
Three years ago yesterday, in our Vol. XIX, Art. 34 commentary, we quoted what Lawrence Mishel, the president of the Economic Policy Institute said about American middle class unemployment:
“Joblessness is like a cancer in the society. The last thing in the world that you want is for it to metastasize. And that’s what’s happening now. Don’t tell me about the stock market. Don’t tell me about the banks and their perpetual flimflammery. Tell me whether the poor and middle-income families can find work. If they can’t, the country’s in trouble.”-
Joblessness? Let’s learn from history. American manufacturing facilities still exist. They exist as remnants of the WWII Emergency Shipbuilding Programs that provided jobs for millions and ended the Great Depression. Let’s revitalize those shipyards. Our patented container ships, Title XI’s financing and the Jones Act will create the jobs so that “our economy can get out of first gear.”