Since 2008 and the onset of the Great Bush Depression, we have seen some of the most remarkable and inane economic theories ever proposed and some of the greatest revisions in economic history ever put upon the American People.
For example, with 15 million people out of work and Europe on its back, many conservative economists were publicly worried about inflation. Inflation? They were worried….or said they were….(which brings up that other problem, loss of integrity)…about prices rising at a time when interest rates could not be raised with a crane.
No one….no one…wanted to borrow money. There was no demand. There was no reason to borrow money and everyone on the planet wanted cash in the bank. But the brilliant economists were crying inflation.
Next came the hue and cry about the great international debts. Of course, during the previous decade when every semblance of regulation was being stripped from the financial community and men who should have gone to jail, including Bernie Madoff who finally did, were selling worthless stock to pension funds and sovereign state funds no one was doing anything about the national debt.
And why were we having current deficits of over a trillion dollars a year? Because we were (and are) paying huge amounts for welfare, at the height of unemployment and closed businesses of about $700 billion a year more than we took in.
The national debt is a problem of course. But it isn’t going to go away. It will not go away because we have 15 to 20 million people out of work and we are doing nothing to restore an economy that can support jobs for those people.
If you have a business that makes one million widgets, 20,000 widgets per person and 50 people making them, then cutting your workforce by 10 people and buying fewer materials will not increase your revenues. If it would, then every company would contract when they want to grow and add more people when they want to reduce their income. It is a silly syllogism because it is silly, or more appropriately…illogical.
George W. Bush and Dick Cheney, two crooks in the opinion of many millions of people, cut taxes, started wars, gave huge subsidies to highly profitable drug companies, enriched military contractors and looted the treasury of American taxpayers by $12 trillion. But no one was talking about reducing the debt in the early 2000s.
The Bush-Cheney Administration and their Republican-controlled Congress rammed through two wars and two tax cuts. The Republican Congress spent money as if there were a bottomless supply. And each year, as the bills mounted (plus even more expensive bills that were hidden) the deficits piled up.
We were giving our country’s treasure to individual millionaires and billionaires in huge amounts, even shrink wrapping American dollars, attaching them to pallets like cartons of toilet paper and shipping them to Iraq where they were basically tossed out onto the desert floor, never to be seen again.
This is what Bush and Cheney did. It is not conjecture. There are photographs. They were so brazenly secure in their political power that they simply did not care. And why should they? They are still alive and not in jail to this day. Perhaps the two greatest criminals in this country’s history are still walking around…and they have Secret Service protection!
So we are in the Bush Second Great Depression. Economists say that they don’t know what to do about it. But they do. It is merely their pride that keeps them from admitting that what we need to do is the opposite of everything that they have been taught. In 1935, John Maynard Keynes gave us the solution. When private investors keep their money, pull investment from the economics equation, when savings overwhelm investment and aggregate demand slows to a halt…government becomes the investor of last resort.
Presidential economists have sent numerous bills to Congress for job creation. But they are unencumbered by the carrots and sticks of multi-millionaires and billionaires who control Congress. The Republicans work, not for the People, but for the very rich who now see, at least for a time, a solid market in the 90% of Americans still working and a cheap labor market for everyone else.
The goal of the rich, led by their weak-eyed but Gestapo-like pilot fish, Grover Norquist, is to indenture American workers. Once you are desperate, they feel, you will work for any wage. Perhaps they are merely trying to make an economic equivalence between all American workers, not merely the minorities and Native Americans. But why not raise all wages rather than lower all wages?
Senator Mitch McConnell and his Neo-Fascist Senate storm troopers voted over 280 times to filibuster jobs bills and thus kept us and keep us in Depression. And as they do so, they create even large deficits than they created under Bush. Now 12 million Americans are unemployed month-after-month, and with another 8 million working at jobs for which they were not educated, which pay far less than their normal occupations and others working in what are called non-contract jobs, meaning that they can be hired or fired at any time like part-time workers.
And so, do economists suggest that we get the economy moving again? Do they have any valuable ideas? Not really. They decide that, as McConnell and his Brown Shirts are restraining the economy and thereby reducing government revenues on the one hand, that they should recommend cutting government on the other hand. It is called “austerity.” It is the latest hobgoblin of tiny minds.
Here is how “austerity” works. You cut government spending because you have acquired large debts from the Bush Depression. Revenues have fallen by $350 billion and increased welfare costs have cost government another $350 billion. But, because you are not creating anything new, you simply continue to go into debt. You can’t cut fast enough to balance lost revenues.
So it is a downward spiral, cut government, take on more debt, cut some more and take on more debt. There is no way out. While you are dragging 15 million people along on a sagging economy, no investment will come into a market with no demand and there will be no demand because investors will not come in.
So, how do economists look at this? Let’s just take one little bit of econo-speak from a recent blog on which economists talk with other economists.
“large parts of macro-economics are insufficiently empirical; assumptions are not tested against facts. Otherwise, how could economists have gone on believing that central banks set H [the monetary base] and not i? In so far as the relevant empirical underpinnings of macro-economics are ignored, undervalued or relatively costly to study, it leaves theory too much at the grasp of fashion, with mathematical elegance and intellectual cleverness being prized above practical relevance.”
This is how economists speak to one another. They are so tangled in theory, much of which is totally untested…simply theory being tossed back and forth like a Frisbee…that they can’t deal with the reality of day-to-day economics. And they certainly have no idea how to treat the resolution of serious economic questions like Depression.
Even the best economists become trapped in discussions about things like monetary theory. Here is monetary theory, disentangled from econo-speak. When the economy falls into recession or Depression, there is no aggregate demand. In order to bring investors back into the economy, monetary theorists say, simply, make money cheaper.
When I offer you money at a certain very low rate, you need to make much less on it to make the interest payments. So you can sell a hamburger for a buck twenty-five instead of a buck fifty and still make a small profit and still pay back the interest.
But when investors will not budge at any rate…and current rates are basically at zero…then economists throw up their hands, begin blogging more unintelligible claptrap among themselves and have no idea what to do except…act like the Chief Financial Officer, the dreaded CFO, whose only idea is to cut wages, costs, bonuses, travel and reduce breathing if possible.
Cutting does not grow a company and cutting government does not grow a government. It may be necessary. That is not the issue. For the thinking executive, for the responsible government official…in fact…for anyone with a brain, the goal is to get back to where we were…to grow the economy again. To raise revenues, to restore profitability or in this case…government surpluses.
Who is the model? Certainly not George W. Bush. The model is William Jefferson Clinton. In a severe recession, left over from another Bush, Clinton said that we are going to raise taxes and trim government. The Republicans, only too eager to trim government under a Democratic President, helped.
First of all they gave Clinton credibility when Newt Gingrich humiliated the entire Republican Congress by shutting down government over petty issues. When Congress came back, they got down to business and, while they didn’t cut government drastically, they somewhat rationally trimmed it.
Many Democratic politicians who voted with some Republicans to get the economy back in balance lost their seats. But they were brave and they were right and the budget was balanced. Employment was at its highest in history and Clinton handed Bush a government that was in balance, with a future of surpluses and no debt at all within ten years, by 2011.
But the hero of the Conservative economists, the master of double talk, Alan Greenspan, was still head of the Federal Reserve. Clinton had made his job virtually irrelevant. There were no serious problems for Greenspan to address under Clinton. But under Bush…?
Greenspan used his genius at economics to not only create a huge economic real estate bubble, but to condone and encourage more debt. His policies led to speculation and his personal political beliefs, that government should keep its hands off the financial markets led to the great Stock Market Crash of 2008 and the Bush Depression.
So we were left with a Depression. And these economists, by and large, do not know how to handle a Depression because their economic theory says that we will simply come out of a Depression, “in the long run.” Well, as Keynes said, “In the long run, we are all dead.”
So it is time to leave off with the economists. It is time to simply do what makes sense. Create 5 million jobs. That will create another 5 million jobs from something called the employment multiplier. That means that a man working needs to get his suits cleaned, buy more gas for his car, get his hair cut more often, and may decide to paint his house.
We will spend $300 billion to do this the first year and another $300 billion the second year. But…and this is important…it will not cost us $300 billion a year. We have pent up demand for many things and we have a whole new crisis…we are running out of fossil fuel.
The oil and natural gas companies, who own our natural resources, the natural resources that should be owned by the People, tell us that is not happening. But it is. The rest of the world, including the Saudis with all their oil, is preparing for it. Germany will soon be self-sufficient in solar energy. The Chinese are already the largest manufacturers of solar panels in the world.