Levellers

Faith & Social Justice: In the spirit of Richard Overton and the 17th C. Levellers

Robert Reich: It’s Not Great, But It Is Now a Depression

And the only way out is massive spending–not for Wall Street (which we should now ignore), but for job creating on main street.  Wow.

April 3, 2009 - Posted by | economic justice

3 Comments

  1. I agree. Of course I’m not an economist and usually refrain from even commenting on economic issues. I believe this country has been in a depression for some time. I also believe that government spending is the only way out. I like his comment about using GM and the other car companies’ manufacturing capacities to build other necessary machinery such as wind turbines, etc. Heck, Singer Sewing Machine Company made .45 semi-automatics during WW II. It puts people back to work.

    Comment by Ralph Reed | April 3, 2009

  2. Hi Michael. How do you (or other Keynesians) believe that massive government spending will stimulate the economy? The reason I think private sector jobs are better than public sector ones is that they put money into the tax system rather than taking it out. Do you think that the public sector jobs will lead to the creation of more private sector ones–since public sector workers can still spend money, or creating clean energy will require buying things from the private sector, or another reason? I remember you saying a while back that having a rail makes certain jobs more accessible–but I wonder how much of a large-scale effect that would have.

    Comment by James Pate | April 4, 2009

  3. James, private sector jobs ARE better. Look, a recession is too much supply and not enough demand, coupled by a lack of liquidity. So, no one has money to spend, which leads to layoffs, etc. in a vicious cycle. In such a situation, the government must become the spender of last resort in order to CREATE DEMAND. If, say, the government orders all new cars for the FBI, the DEA, ATF, local police, etc. this moves cars off lots, and helps restart the auto industry. If govt. builds infrastructure (roads, bridges, levees, trains, etc.) they employ private companies who hire people, etc. They also have to order supplies, employing other people. The people with jobs buy groceries, pay rent, etc. This creates a virtuous circle which, since they all include taxpayers, also puts money back into the tax system–though not as fast. We know that private corporations never create infrastructure, but free enterprise needs infrastructure to work well. It’s a ripple effect.

    We’ve seen this before, during the Great Depression. So, we know this works. When the govt. stopped spending in 1937, the nation slipped back again. WWII finished the route out of Depression because it created a full employment economy. Factories that had been shut down, but with massive government need for tanks, planes, submarines, etc., these private corporations had a customer and employed thousands. Because most of the men were in the military, it employed the women. (This could have led to a massive post-War recession if the Marshall Plan and the Cold War had not intervened.)

    In NORMAL times, you want the government to balance its budget. The private sector, especially small business, is the engine of wealth. But not in a recession–or the recession wouldn’t exist.

    Comment by Michael Westmoreland-White | April 4, 2009


Sorry, the comment form is closed at this time.

%d bloggers like this: