This Great Depression doesn't have to be. This isn't "just the way it is". We don't have to "settle" for our government's response. There is a way out of it.
My regular readers know that something from Krugman is bound to be in this blog -- and there will be. But first, let's talk about the tragedy of us -- you and me -- settling for the way things are right now. First, it might be easiest to see how this hurts yourself. Take me for example. I'm weathering this recession way better than most. But one look at my investments and I realize I'm not making any money. My stock portfolio is up 3%. And that's good compared to most other things. Anything that is reasonably safe is earning less than that.
ATT is paying 5% dividends
Southern Company is paying 4%.
CDs are paying 1%.
And that brings to mind people that are living off their investments. Their income has been flat for four years now. You just know many are eating into their capital. For those that are, they are slowly but surely going broke.
But that's not the real tragedy. The real tragedy is what this is doing to young people. They are "broke" already. Many graduated college with debt. Debt that charges interest rates far higher than they could get on their savings -- savings that they don't have. Old people understand how money works over time. We know how far behind the 8 ball this puts young people, even if they don't. Krugman understands it even better than you and I.
Wasting Our Minds
"We’ve been hearing a lot about the war on women, which is real enough. But there’s also a war on the young, which is just as real even if it’s better disguised. And it’s doing immense harm, not just to the young, but to the nation’s future."
"Unemployment among recent graduates has soared; so has part-time work, presumably reflecting the inability of graduates to find full-time jobs. Perhaps most telling, earnings have plunged even among those graduates working full time — a sign that many have been forced to take jobs that make no use of their education. College graduates, then, are taking it on the chin thanks to the weak economy. And research tells us that the price isn’t temporary: students who graduate into a bad economy never recover the lost ground. Instead, their earnings are depressed for life."
All that is bad enough. Imagine how much worse it is for those without a college education. But the real tragedy is that it doesn't have to be this way. Our salvation is within our grasp. We have a road map. We have the history lesson of the Great Depression.
I remember when Wall Street crashed. I remember the debate about whether we should react as FDR did in the Great Depression. I remember the dire warnings that we only had a single model -- the Great Depression -- to base our actions on and how risky a strategy that was. I thought the people making the argument had a point. Times have changed. The situation was different. Just because Roosevelt's response in 1933 worked doesn't mean it would work today.
But the flip side of that is that it did work. As so far, nothing else has. I say we try it again. I don't know what Krugman has to say about it -- but I will.
Paul Krugman's Prescription For A 'Depression'
But while I'm waiting to read his book, here are my ideas -- because we've waited long enough already. Restart the CCC . As I said before, I don't care if they just rake leaves. It's better than sitting at home on unemployment. Of course, we can do so much more. And we should.
Hire back all the teachers, policemen and firefighters that have been laid off. That alone would drive the unemployment rate back down to about 7%.
Then I want the Federal Government to hire every kid that graduated from law school or with a degree in accounting in the last four years. Put them to work building a case against the banksters. When they're finished with that, put them to work writing the legislation to make sure it never happens again.
No, I'm not kidding. Nationalize the banks while we're at it. Clean them up, bust them up and sell them off. Forgive a few hundred thousand mortgages while we're at it. Hey, we can do a lot with $475 billion. That includes putting some people to work and forgiving (and/or refinancing) a few hundred thousand mortgages.
And if you can follow my way of thinking...I think it's time we treat the unemployment crisis in America like we treated the banking crisis of 2008 -- like the emergency it is. Seriously, we're willing to throw $700 billion at a few thousand banksters but we're not willing to do it for 12 million unemployed citizens? And if you think all this is a bunch populist pablum, you aren't paying attention. How do you think all this ends if we don't fix it?
By the way, if you're nodding in agreement that social unrest leads to people like Hitler rising to power but shaking your head that we shouldn't be borrowing the money to put people back to work...you might want to think a little harder. Not only is putting people back to work cheaper, it's the right thing to do.
April 30, 2012