Sunday Sermon: Your Moment of Duh! (Of Course, Government Is the Spender of Last Resort)

It is still astonishing the extent to which radical deficit reductionism still rules our political discourse, even as there are six people looking for work for every job opening. Robert Reich describes how you fix this:

So why is unemployment and underemployment so high, and why is it likely to remain high for some time? Because, as noted, people who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going do a lot of shopping. And businesses that don’t have customers aren’t going do a lot of new investing. And foreign nations also suffering high unemployment aren’t going to buy a lot of our goods and services.
And without customers, companies won’t hire. They’ll cut payrolls instead.
Which brings us to the obvious question: Who’s going to buy the stuff we make or the services we provide, and therefore bring jobs back? There’s only one buyer left: The government.
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt…
People who now obsess about government debt have it backwards. The problem isn’t the debt. The problem is just the opposite. It’s that at a time like this, when consumers and businesses and exports can’t do it, government has to spend more to get Americans back to work and recharge the economy. Then – after people are working and the economy is growing – we can pay down that debt.

Stupid history facts. Clearly, they have a liberal bias.
Reich’s argument would be a lot easier if the Party of Fiscal Irresponsibility (the Republicans) hadn’t blown $5 trillion on stupid wars and needless tax cuts for the wealthy, not to mention ramping up defense spending (because stealth bombers are really good at catching terrorists). But right now, people need jobs.

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5 Responses to Sunday Sermon: Your Moment of Duh! (Of Course, Government Is the Spender of Last Resort)

  1. D. C. Sessions says:

    The “debt reduction above all” peeps are hung up on the numbers, as though they were a multiple of their personal debt.
    How many of them would consider the USA much better off if the total national debt were a mere $100 billion? Bunches, right? Even if the US GDP were $1 billion? Hmmm…
    The only metric that matters, whether for personal or national debt, is the debt/income ratio. In national terms, that’s debt/GDP. That number changes somewhat with the numerator, but it changes enormously with the denominator, and that’s where we are right now: the denominator shrunk. We can either try to pay down the numerator out of a smaller denominator or we can try to increase the denominator.
    This is not rocket science.
    If you want a good idea of which strategies work best, have a look at the debt/GDP over the last 50 years. The raw numbers are a simple matter of record, you can Google them easily. I won’t drop any more hints than that.

  2. NewEnglandBob says:

    Yes, Reich’s is the right strategy. The Republican bullshit has gone on far too long.

  3. MartinDH says:

    Isn’t this basic Keynes (who should be coming back into favour now that the Monetarists have been shown to be full of shit): During hard times the government deficit spends to create jobs. However, the flip side is that the Treasury has to run surpluses during good times.

  4. jay says:

    Let’s start by banning the phrase ‘jump start the economy’.
    That entire implication is that by a relatively small input signal, somehow a great amplification will result. This is fairy tale nonesense. Other than a few extremely rare and limited scenarios, such an amplification factor is just of dream of hopeful politicians.
    There is no way that the government can come close to spending enough to change the economy and certainly without building so much more debt as to strangle future generations.
    The government can help people out of work, and do what it can to get out of the way of growth and recovery, but attempting to spend it’s way out, on the backs of our children is the height of irresponsibility

  5. D. C. Sessions says:

    The government can help people out of work, and do what it can to get out of the way of growth and recovery, but attempting to spend it’s way out, on the backs of our children is the height of irresponsibility

    And you say this based on … what? Besides ideology, I mean.
    We have something like a century worth of detailed macroeconomic data. The suggestion I made above might be a good place to start, assuming that the “science” part of the URL here offers some sort of guide to reality checking our positions.

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