"Structural Unemployment" Is an Excuse for Inaction

Paul Krugman: the claim that current high levels of U.S. unemployment is "structural" is a fake excuse for not pursuing real solutions.* In this column, Krugman offers no solutions (though he does elsewhere), so ...

... The Constant Weader proposes a solution! --

The problem, then, is that demand is low. Americans aren't buying widgets & washing machines because they can't afford them, or think they can't afford them.

There are a couple of ways to increase demand.

Plan A is the George Bush way: tell everybody to go shopping. The trouble is, too many people took his advice (true, they were shopping till they dropped way before Bush suggested it). Americans ran up huge debts, often ballooning under the weight of absurd interest rates. Especially when the recession hit, they (1) either found themselves out of work or underemployed & really could not afford to pay off their debts, or (2) they still had jobs but realized they had better start paying off their usurious debts rather than buying a new car on credit. People who are fortunate enough to be in Category 2 are doing the right thing for their families by beginning to live within their means, even if they are constricting the economy.

So, let's go to Plan B. I call it redistributing the wealth. (And you may label me a socialist if you like.) If we want more money in circulation, let's tax the you-know-what out of the super-rich. That's the best way the government can increase demand: put the tax dollars of the rich to work employing the not-rich (that would be 97% of us).

High taxes for the rich aren't a "punishment" as Republicans &, last week, Ben Stein, complained. They're a privilege & an honor -- a badge of recognition that a taxpayer has done mighty well for himself. Congratulations are in order. Send the payers of high taxes fancy certificates. Send super-high payers engraved plaques. Let's spring for fancy silver loving cups for billionaires like Bill Gates & Warren Buffett. They deserve it for the great contributions they'll be making to the American economy.

Or, there's Plan C, advocated by Herbert Hoover & the Fed guy from Minnesota -- Kocherlakota. Plan C, of course, will bring on a full-blown 1930s-style depression, wherein we become officially a third-rate country, a hopeless debtor nation, unable to sustain our own people or to keep up with more robust economies.

The correct answer is "B."

If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.
-- Winston Churchill

* On the One Hand. Krugman presents evidence there are no major labor shortages anywhere in the U.S., & there are no "major industries that are trying to expand but are having trouble hiring, [no] major classes of workers who find their skills in great demand, [and no] major parts of the country with low unemployment even as the rest of the nation suffers." ...

... On the Other Hand. Rana Foroohar of Newsweek says just the opposite. She says that "three fields — construction, manufacturing (particularly in the automotive sector), and finance — have been hit much harder than others." She says the housing crisis has also cost the labor force flexibility: "...with so many homeowners underwater on their mortgages, their ability to relocate has diminished."

Matt Lauer at NBC News interviews President Obama about the state of education in the U.S.:

     ... AP story here.

The Commentariat -- September 27

Glenn Thrush of Politico: Vice President Biden tells the Democratic base to "stop whining"; base yells back, "'Stop whining" is a hell of a rallying cry."

Bob Woodward talks to Diane Sawyer of ABC News about his book Obama's Wars. Updated report, with audio of the President:

The first of three articles adapted from Obama's Wars by Bob Woodward. AND Steve Luxenberg of the Washington Post outlines the major points in the book.

** "The revolution Will Not Be Tweeted." Malcolm Gladwell in The New Yorker: Gladwell contrasts the organization of the civil rights movement with the networking facilitated by Twitter, Facebook, etc., & concludes that major social movements require strong, usually hierarchical organization, whereas "Social networks are effective at increasing participation—by lessening the level of motivation that participation requires."

Mama Grizzlies. Lisa Miller of Newsweek: Sarah Palin dubbed "mama grizzlies" women who "rise up" & protect their young. BUT. "With few exceptions, [Palin's designated] grizzlies have been disinterested in the issues and policies that their political opponents say are good for children — despite new numbers from the census showing that rising numbers of America’s children are poor. Most of these candidates have vowed to fight to repeal President Obama’s health-care plan, for instance, and [Michele] Bachmann and Nikki Haley have taken special aim at CHIP, a federal program aimed at helping low-income kids get health insurance."

Republican "Pledge" = Survival of the Fittest. Robert Reich links the current Republican agenda to that of President Herbert Hoover & industrialist Andrew Mellon, proponents of Social Darwinism. "The basic idea is force people to live with the consequences of whatever happens to them." ...

... Neil King & Janet Hook of the Wall Street Journal: both political parties think they can campaign on -- or against -- the Republican "Pledge." ...

... Shane D'Aprile of The Hill: "Vulnerable House Democrats are working hard to create distance between themselves and their party’s leadership in Washington on the airwaves." CW: they're making a big mistake.

Michael Crowley of Time feels Obama's pain as the President imposes far-reaching restrictions on civil liberties.

Lincoln Caplan of the New York Times: "The message of Justice [Stephen] Breyer’s book [Making Our Democracy Work] is that the court jeopardizes its legitimacy when it makes such radical rulings and that, in doing so, it threatens our democracy. That message is powerful, ominous, and very useful."

Eric Lichtblau of the New York Times: "Nearly 600 mayors nationwide, led by Mayor Michael R. Bloomberg of New York..., are mounting a new campaign to single out states with lax gun laws and push for tighter restrictions to prevent the trafficking of guns used in crimes. A study due to be released this week ... concludes that the 10 worst offenders per capita, led by Mississippi, West Virginia and Kentucky, supplied nearly half the 43,000 guns traced to crime scenes in other states last year." Here's a draft of the study (pdf).

NEW. Damien Paletta of the Wall Street Journal: "Former Federal Research Chairman Paul Volcker scrapped a prepared speech he had planned to deliver at the Federal Researve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system. Standing at a lectern with his hands in his pockets, Volcker moved unsparingly from banks to regulators to business schools to the Fed to money-market funds during his luncheon speech."

Shahien Nasiripour of the Huffington Post: presented with evidence that mortgages didn't meet basic underwriting standards, Wall Street firms sold them to unsuspecting investors anyway. AND here's Gretchen Morgenson's New York Times story.

Steven Greenhouse of the New York Times: "Hoping to overshadow last month’s rally led by Glenn Beck that drew thousands of Tea Party advocates and other conservatives, a coalition of liberal groups plan to descend on Washington on Saturday to make the case that they, and not the ascendant right, speak for America’s embattled middle class.

David Streitfeld of the New York Times: Library Systems & Services, "a private company in Maryland, has taken over public libraries in ailing cities in California, Oregon, Tennessee and Texas, growing into the country’s fifth-largest library system. Now the company ... has been hired for the first time to run a system in [Santa Clarita, California,] a relatively healthy city, setting off an intense and often acrimonious debate about the role of outsourcing in a ravaged economy." CW: a friend of mine asks, "How far a leap will it be from for-profit libraries to ones that decide not to stock certain books?"

No Good Deed Goes Unpunished. Marc Lacey of the New York Times: U.S. Fish & Wildlife officers are ticketing Americans who leave water bottles for illegal immigrants on desert routes. The U.S. Court of Appeals has overturned one conviction, but the issue remains unsettled, & some hardliners are destroying the bottles.