Economy Not in Crisis?

Driving in to Asheville this morning listening to Morning Joe on Sirius/XM, I almost lost control of the car when one of the guests made the remark that the economy is not in crisis.  Apparently, there are those, like Mr. Scarborough himself, who are either satisfied with or oblivious to 8% unemployment in America.

Well, there is a different world view. Many watching at home or listening on the radio have a different world view - the teachers in NC who have not seen a raise in 5 years, or have lost their jobs to sweeping budget cuts; the autoworkers in Detroit who have made concession after concession in pay and benefits in order to just have a job; the construction worker just about anywhere who, because of slow demand for housing and commercial construction, may have worked only 30 weeks last year.  That world view may even be shared by those in the Morning Joe studio out of the view of the camera lens, working hard behind the scenes to make Joe and his panelists look good, even if they can't make those whose images we see on the screen make sense.

During this morning's discussion, there was lots of talk about "confidence," about "certainty" from Washington, about "spurring business investment," and more supply-side nonsense.  While the panel bemoaned the drop in wages for men since 1973, and the overall drop in household income over the last 3+ decades, they didn't seem to connect that with supply-side tax policies that are the obvious causes of wage stagnation among the working class.  They didn't relate stagnant working class wages with skyrocketing executive compensation, or a tax code that values wealth over work and which allows the ownership class to get away with classifying much of their compensation as "unearned," or union-busting policies that favor the wealthy and treat labor as just another cost line item to be minimized at all costs.

This morning's panel didn't seem to realize that wage stagnation and 8% unemployment stifle demand for goods and services, and that businesses hire workers to meet demand for goods and services.  They seem to think that businesses will somehow, out of the goodness of their hearts, start "investing" once there is some kind of "long-term" deal to "save" Social Security and Medicare.

We've had long-term "deals" before: does anyone remember Gramm-Rudman-Hollings?  That was done away with 5 years after it was enacted.  And remember PAYGO, which was gutted the minute Republicans decided that tax cuts didn't need to be paid for?  Both were "long-term" deals intended to put our country on a sound fiscal path.  The nature of Congressional long-term deals is that they are only binding until the next Congress or the one after that decides to break them.

But this morning's panel didn't seem to pay much mind to 8% unemployment, oblivious to the fact that as long as unemployment remains at depression levels, we are not going to solve the "fiscal crisis."  And they apparently don't understand that putting people to work means creating demand for goods and services.  Corporations, sitting on record profits, don't have any incentive to hire given slack demand.  They are perfectly happy to keep their money in their mattresses, since inflation is near zero and interest rates are as well.

So it is left to the Federal government to be the customer of last resort, buying and paying for roads, bridges, schools, broadband access, wind farms, solar water heating for schools, electric vehicle infrastructure, regional high speed rail, metropolitan mass transit, teachers, firefighters, police, first responders, universal electronic medical records, energy efficiency, and a host of other infrastructure projects.  A huge round of true stimulus spending is needed, not watered down with tax cuts as ARRA was.  That will jump-start the economy, putting people to work, creating more and more demand for other consumer goods and services.  Then the Federal Reserve OMC can perform its inflation control function normally, tax revenues will increase, and then we can start attacking deficit spending.

But please, anyone who says that the economy is not in crisis, with 8% unemployment, must be called out as myopic at best, and cruel at worst.