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martes, agosto 02, 2011

Look, Ma, No Spending!

Please excuse my brevity. Please riddle me this, if you can: if the US Government cannot raise taxes and has no additional money to spend for an economic stimulus program and/or job programs, how exactly can the government address the current chronic joblessness?

Maybe you have an answer. My tentative answer: it cannot. The unemployed and those who will soon be unemployed are screwed. The Government has made it impossible to spend its way to job creation. And there is no other job creation device.

I omit the stats that show how dire unemployment is in the US. That just makes this problem a quantitative one. It doesn’t address the lack of a program, the lack of a plan, the lack of an idea. Let’s focus, if we can stand to do so, on the concepts. This is really nothing more than Economics 101. The Government is cutting spending and is now committed to decreasing its spending. It is not raising taxes. Where, if anywhere, can it get the funds to spend to get people employed? Answer: sadly, it cannot.

John Maynard Keynes is rolling over in his grave. If the Government cannot spend funds to create a stimulus program, or a WPA or a CCC, or even to sustain unemployment insurance benefits to those who are chronically unemployed and will exhaust their benefits, and if interest rates are already really, really low so that monetary policy provides no solution whatsoever, exactly how does the US Government address unemployment? My answer: it cannot. It has emasculated itself.

You may disagree. You may think that somehow, remarkably, Democrats or economists in general have a silver bullet that will turn the unemployment statistic around. And create jobs. And end the suffering. I don’t believe that. What am I missing? My answer: not very much.

I hate to get ahead of myself. What’s the answer to the question I’m posing. And why aren’t unemployed people and their allies (namely, me) marching on Washington?

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