Tuesday, June 05, 2012

mercy, mercy me

It's the EEK Conah Me.

Things are still looking bad, out there, sports fans. The problem is too many people have no jobs and no money.

Dean Baker, economist and writer, says we can't get anything like full employment again until something replaces demand that was lost when the housing bubble popped. "This is simple arithmetic," he says, and adds:

Unfortunately, both parties in the United States refuse to talk about filling the hole created by the collapse of the housing bubble in a serious way. The Republicans talk about giving everything to "job creators", with the idea that if we are generous enough to the rich (with tax cuts), they will show their gratitude by creating jobs. There is zero evidence to support this view. Are we supposed to believe that investment will somehow increase by 50% as a share of GDP just because we are nice to rich people?

The world doesn't work that way. Firms create jobs when they have more demand, not because we are nice to their rich owners.

Other than arguing that rich people should pay more taxes, Obama and his administration haven't done much to deal with the current depression, other than laying on a half-hearted and inadequate stimulus some years ago. They use the word "recovery" as if it was an incantation, and Baker says they appear to believe that the economy will eventually right itself through some magical healing process, then concludes, "There is no magic that will allow the economy to override basic arithmetic. In the short term, only the government can provide the boost necessary to support the economy. Over the longer term, we will need to get the trade deficit down through a more competitive dollar."

I'm unsure what good it does us to know this, since the chances of anyone with real power taking Dean Baker's advice are about as great as the other thing he puts out that's too much to ask: "a serious discussion of the underlying state of the economy.'

Illustration: from the Roman bas-relief showing a Processional display of trophies captured by Rome in the sack of Jerusalem, 70 A.D., at the Triumph of the commanding general, Titus.

Click on the image for a larger view.

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