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The Jehoshua Novels


Conservatism Blew Up The Economy

So what do you do when financial analysts are warning that housing prices are headed for a “triple dip”, the second largest Swiss Bank (Credit Suisse) announces it’s piling 1,500 additional job cuts – many from the US – on top of its previously announced 2,000 (after a 12 per cent increase in profits this past quarter) and the federal government just sued one of the nation’s largest privately held mortgage brokers (Allied Home Mortgage) for a decade of “fraudulent lending practices that forced thousands of Americans to lose their homes”.

Seriously, could the economic Big Brains who think it’s a good idea to take money out of people’s pockets via spending cuts, while rejecting increased spending on our nation’s crashing infrastructure, try punching “Japan” and “lost decade” into the Google machine? Or perhaps just admit their relationship to understood economics is like Kim Kardashian’s marriage – shallow, somewhat entertaining, but ultimately embarrassing.

These right-wing members of Congress and inhabitants of the “pro-market”, think-tank-welfare world, with their flip reaction the ongoing economic crisis, have begun to remind me of an exchange between John Travolta (trying to steal and sell nuclear weapons) and Christian Slater (trying to stop him) in the movie Broken Arrow. Slater’s character says to Travolta’s: “You’re out of your mind,” to which Travolta replies – while wearing a spooky Herman Cain-esque, I-just-gave-a-massage-to-my-secretary smile – “Yeah, ain’t it cool.”

Apparently, the only stimulant conservatives favour is whatever Rick Perry was mainlining during his speech in New Hampshire the other night.

Infrastructure work creates jobs

What’s so maddening, however, is that the answer is quite clear to sane people and non-shills-long-term infrastructure projects that, in the near term, provide jobs, and further out will provide … jobs. And increased productivity. Ever hear of those train things or the internet? Yeah, well, people are more productive when they’re faster and stuff.

Part of what’s so frustrating is that not only was President Obama’s stimulus bill too small by half, which top economists predicted before it passed (but yay, Susan Collins liked it!). But the administration didn’t even defend it, which took something the Congressional Budget Office says saved up to 3.6 million jobs – and allowed it to be demonised by politically expedient grifters playing games.

These very same economists who were right about the stimulus are now clamouring for more infrastructure spending. Paul Krugman, who has been banging this drum for a while, pointed out in a recent piece how the very same crowd that flips out over any government spending on, for lack of a better phrase, people who can’t afford his and hers dancing water fountains from Neiman Marcus as a stocking-stuffer, continually push for spending for defence contractors without a worry in the world about the budget. Why? Because these hypocritical dunderheads say “such cuts would destroy jobs”.

So obviously the deficit hysteria is simply that, a pretend crisis to hide an ideology gunning for its greatest achievement to be reintroducing the elderly to the joys of the appetising and eminently satisfying Purina dinner.

In addition to economists, some in the business world who care about being good citizens and wellbeing beyond their four walls, understand the importance of infrastructure spending for our economy and people. Stan Litow, the head of IBM’s corporate citizen program, with whom I work on some of these projects, answered a question I asked him concerning the role of government in infrastructure development and improvements by affirming that “states and the US government can be major players”. Last week Litow and IBM launched their second Smarter Cities Challenge, inviting urban centres across the globe to apply for a grant, technological assistance and consulting services to complete a variety of projects that improve cities while creating jobs. In the past, this has included creating a smart grid in Boulder, Colorado, and improving transportation planning and delivery of services in Austin, Texas.

If only the federal government would build upon efforts such as these, to fix our decaying streets while creating jobs for the so-desperately unemployed who inhabit them.

Recently, a study was released [PDF] by the Organization for Co-operation and Economic Development (OECD), and, as with so many measures of our country’s health, the conservative vice-grip on our culture has taken us straight into the toilet in our rankings on social justice. At 27th, the US is far behind countries such as Hungary (17th) and Poland (20th), and quickly approaching Mexico (30th). Which perhaps is the conservative plan – to make the US so uninhabitable that nobody wants to immigrate here anymore – legally or illegally.

Charles Blow of the Times summed up the study perfectly, as “America’s Exploding Pipe Dream.” If only our infrastructure were instead a pipe bomb, as Krugman pointed out, we’d rush to fund it without end.

Follow Cliff on Twitter @cliffschecter

This piece was first published at Al Jazeera English

8 comments to Conservatism Blew Up The Economy

  • someofparts

    would that be “vise-grip”?

  • chalo

    do vice better than anybody.

  • yogi-one

    A little bit over-screedy, but that’s Cliff. But the points are all dead-on and clear.

    Also spread this around to your friends:
    How the GOP Became the Party of the Rich
    http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109#ixzz1dd7XbQlm

    It’s a very good overview, starting with the Reagan Administration, of how this all happened.
    There’s a great graphic showing how the current total of tax cuts that the 1% get is greater that the sum total of ALL US Tax revenues.
    It’s an eye opener to realize we are giving the country’s wealthiest elite more than the country is even taking in from taxes, period. That’s how insane it has gotten.

  • Scotjen61

    Watch stock prices close in on 12500 on the Dow, and watch oil close in on $100 per barrel. Watch Dow drop back, watch oil drop back.

    There is no longer a stimulus fix. Oil price will take the gain, and send demand back down. Energy has been in a flatline since 2005. The ‘bubble’ was an attempt to grow the economy through economic fiat, and it can’t be done if energy does not grow. If dollars are added to an economy they only take flight if there is a growing energy base to support their circulation.

    Stimulus, whether it passes or not is eaten up by a flat energy supply which does not allow for expansion in the present environment. The alternatives sound great but do they scale??

    Europe has been gripped by an oil price that will well above $100 per barrel, and on top of energy flat lining they have population flatlining, on top of the fact the countries themselves all do not have an independent supply of their own energy or food. The EU is utterly dependent on imports.

    We could see some perfect storms in 2012:

    - The default of one or more European Sovereign debts
    - An oil spike of the same magnitude of 2008 due to Chinese demand
    - A global warming contributed flood/drought in a few key areas that empty grain reserves (now dangerously low). We are already looking at a wipe out for winter wheat in south united states.
    - Declining growth in China that sends the economy into a tailspin – China cannot support its debt if growth there falls below 7% GDP.
    - Expanding drought which places over 100 million at risk of starvation

    And we can throw in one or two global black swans on the order of an earthquake, tsunami or typhoon.

    The interrelatedness of everything is making it all quite unstable in ways no accountant can fix.

  • grassroot

    I agree with your analysis, Scotjen61.

    I part company with most of my compadres on the left in that I believe Keynsian economic solutions proposed by Krugman et al (grow out of recession through deficit spending) are just as doomed as the right-wing solutions (use austerity to reduce debt and magically return to growth).

    The reason both approaches are doomed is because both assume we can return to economic growth, which is impossible in a world of decreasing and higher-cost energy.

    We need to turn our attention to futures which don’t rely on growth. Steady-state economics is one place to start (although, as you suggest, we’ll have a tough challenge even maintaining a steady state…)

  • Bernard

    if Oil goes up, the economy dies. how can Oil not rise in the long run, anyway? as long as our economic “growth” is stymied by high Oil prices, how can we “outgrow” and restart the economy?

    the refusal to find other energy sources is why we can’t get out of the “depression” we are in.
    the Corporations want to squeeze more money out, before allowing competition from Solar, Wind or Water or anything else. The American “Economic” house of cards is built with Cheap Oil or was.

    Growth dependent upon Cheap Oil is contrary to reality, nowadays. Yet all the “measures” of economic recovery still factor in cheap Oil, which doesn’t exist anymore!

    we will be here or worse until we diversify the use of Energy Sources.

    Alternatives be Damned! Full Speed ahead with Oil is where we are bound to stay.
    this is the era of Less Oil, past Peak Oil. we are now seeing what Peak Oil looks like.

    with the competition from China for Oil, how can anyone expect a different scenario.
    how much “new” Oil can possible be found/is out there, just to keep up in some way. i just gather there’s more demand than supply. and America’s economy grows only when we have Cheaper Oil.

    we are screwed if this is true!

  • Romberry

    The push for austerity is Obama policy every bit as much. This is bi-partisan folly. Recognizing that (and much more besides where the very worst of “conservatism” has been adopted and even expanded by this administration) is why I call myself a liberal and not a Democrat.

    Shorter me: Stop pretending that this is them and they doing these things. This is them and they and us and ours.

  • creativelcro

    Really, who needs the grain reserves? They just make stupid corn syrup and feed stupid cows with them. Corn syrup, beef and cow milk are not necessary, and instead they are pretty nasty stuff for adults’ health, when you look at the evidence…

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