A great novel idea: “The economy without government”
By Daniel at 15 November, 2009, 2:35 pm
Unfortunately, the finance industry is still reaping the benefits of government subsidies and unprecedented low federal funds rates. Furthermore, government subsidies have been paid out to politically favored firms. Firms who should have failed (Citi, Goldman, Wachovia, AIG) have been kept alive by the bailouts and guarantees of government. Even worse, the current Christopher Dodd (who is a hypocrite) bill does nothing to significantly alter the incentive for the ‘too big to fail’ to take excessive risk and gambles. As finance still continues to toy with the administration and the overall economy suffers.
We are still not out of the woods and the recession is not over. The deleveraging process is a necessary part of the adjustment the economy must make. Furthermore, in order for consumers to deleverage without adversely affecting consumption the future will need to be driven by increases in wages and incomes. That likely won’t happen because wages and family incomes have been stagnant for the past +10 years. Many job losses due to insufficient business demand for services will likely never be rehired as many of the traumatized sectors (construction, manufacturing, finance, and real estate) have witnessed.
The actual unemployment figures are much more severe than is reflected in official government reports. The majority of the unemployed are concentrated in industries and sectors that must grow (manufacturing) in order to replace America’s debt-financed consumption. Even worse, employment levels will likely remain lower than they were during the previous business cycle for quite sometime. The reality is far worse than even the grimmest of reports from government and what industry experts suggest. Any such speculative boom is inherently unstable and we MUST invest in jobs that can be maintained over the course of a decade.
The primary objective of any stabilization and jobs creation policy should be to move those unemployed as quickly as possible into jobs that can benefit local communities. Finance industry must be cut 50%, power concentrated at the top broken up, and banks reined in. Our manufacturing sector must be completely overhauled. Industrial production must be ratcheted up and items we export must compete well on global markets. It’s going to be a long haul but it can be done even if that means implementing temporary workers programs. Although that is not the ideal situation, having people unemployed for long periods of time (losing job skills), using food stamps does nothing for the economy. The point is, we need to start doing something more than what we’re already doing. We cannot afford an “Jobless recovery.”
- ImpendingDoom
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