Have We Really Seen This Recession Before?
People keep comparing this recession to past recessions here and in other countries. Other debates argue about what policies worked or failed. But how valid are the statistics and assumptions of the past, when applied to today?
After WWII, we were still a creditor nation. THE creditor nation. Our debt was held domestically. We are now THE debtor nation. Interest payments on the debt now leave our economy, not reinvest in it.
We had the largest undamaged industrial capacity, countries in need of rebuilding, and a trade surplus. Now those countries have been rebuilt, regained their economic independence from us. We are shipping manufacturing capacity off-shore, further weakening our economy. China has replaced us as the economic Titan of the world. The trade surplus has turned into a deficit that undermines the economy even more than budget deficits.
We benefited from the “Brain Drain” of German scientists and engineers, to achieve technological supremacy. The new brain drain has worked against us. We have educated the rest of the world to our level. We have exported our tech base along with our jobs. We have driven some of our best and brightest overseas through lack of research funding. Companies are calling for more H-1B visas with the claim that we no longer have the experts their companies need. Our education system has fallen far behind much of the rest of the industrialized world.
All the economic advantages we held during the Cold War have been erased by globalization and excessive conservatism.
- The national debt liability has been dramatically increasing for nearly ten years.
- We are facing significant military and veteran spending in the foreseeable future.
- We have begun a dramatic shift from social security/welfare contributors to recipients.
- The economy has been sustained in recent years in part by massive deficit spending and a year-over-year low or negative savings rate, neither of which are sustainable.
- Supply side economics has shifted enormous wealth out of the non-financial economy without significantly nurturing it.
- We are facing rapidly increasing costs due to disrupted weather patterns such as increased incidents of drought, flooding, forest fires, tornadoes and hurricanes. This includes not just recovery costs, but insurance increases as well.
- The cost of energy will be increasing annually for the foreseeable future.
- Baby-boomers have not, on average, set aside as much as they should have for retirement. What they have saved has been decimated.
- Home equity has been wiped out.
- Many college graduates are entering the workforce with substantial college loan debt even before facing the major financial expenses of transportation and housing, as well as other spending that the economy depends on.
- Off-shoring has killed many middle-class jobs.
- Mega-mergers have killed many middle-class jobs.
- Middle-class wages have stagnated or declined.
- Excessive importing of cheap products has exported huge amounts of wealth, weakened domestic industries, and depressed working-class wages.
Some of this has happened before, but not all of it. And not all at the same time. In 2008, people talked about the “perfect storm” of economic problems we faced. Since then, things have improved enough for people to forget the full depth and breadth of the problem. They have been led to expect instant recovery, and to consider anything less as complete failure. Such is the power of propaganda over the casual observer.
American corporations do not support the American economy the way they used to. Through globalization, they now straddle the border and break the model of a national economy. Until this is repaired, there can be no stable and prosperous economy beyond the financial markets.
We have fallen into ideological feuding while the world has passed us by. Conservatives are fiddling while the economy burns to the ground.
We can succeed only by concert. It is not “can any of us imagine better?” but, “can we all do better?” The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.
Fellow-citizens, we cannot escape history. We of this Congress and this administration, will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the latest generation. We say we are for the Union. The world will not forget that we say this. We know how to save the Union. The world knows we do know how to save it. We — even we here — hold the power, and bear the responsibility. … We shall nobly save, or meanly lose, the last best hope of earth.
Annual Message to Congress — Abraham Lincoln
December 1, 1862
- Robert Reich: The Real Lesson of Labor Day (huffingtonpost.com)
- The Great Jobs Depression (salon.com)
- Republican deficit cutting rhetoric | Sahil Kapur (guardian.co.uk)
No comments yet.