This Ain’t Your Parents Recovery

And it’s because this recession is different. This recession was not caused by inflation like the recession in the early 80s, and not part of the business cycle. For our purposes, we need to stop using Friedman’s logic and go back to Keynes, because it’s where the evidence takes us.

In the previous recoveries, state and local governments added jobs. In this recovery, we are in the hole.

States and local governments are cutting because revenue bases have been decimated. Nobody has the money to spend except the federal government. And that’s why bond rates are at record lows. The bond market is screaming for the federal government to spend money.

Our approach so far has been weak, compared to the last recession that Keynesian ideas should have been applied: the Great Depression. We should be hiring the unemployed to do work, and we certainly shouldn’t be cutting government jobs (read: middle class jobs like law enforcement and teaching). It’s against the entire recovery process for all past modern recessions.

However, this isn’t the fault of the state governments. Their capacity to take in revenue is greatly diminished due to high unemployment, a terrible housing market, and a requirement to balance state budgets. Only the federal government can spend money to hire more workers and spend more money. This is the fault of austerity promoters (Republicans) and enablers (Obama). (Yes, Obama believes in deficit reduction, and there’s really no reason to do it now, and the budget balances itself out in 10 years if we just implement existing law.)

Where is the modern Civilian Conservation Corps? Where are the job programs targeted at the unemployed? There’s still a demand to have police officers, park rangers, and teachers at pre-Great Recession levels. Can we at least do that?

Though, you know, many government employees at the state and local level talk like their Galtian Republican venture capitalists so maybe the failure by policymakers to see what’s right in front of them is part of some larger cosmic justice.

 

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