As Ed points out -- or makes a good case for -- governments don't really
know how to spend their money (or, rather, borrowed money) on worthwhile
training or long-term jobs, the private sector is also finding the same
difficulty. In a recession -- even this one -- if most firms are finding it
grim (and some are technically bankrupt, if not revealed yet) some will
still be highly profitable.
Hundreds of billions of cash are piling up in companies in Europe and
America. Apple, Google, Cisco and Microsoft alone have approaching $150
billion. The total figure is probably four or five times more. They and
others don't know where to invest it. They're not spending it on euro bonds
or US bonds because interest paid is far too low and, besides they're
being seen as increasingly fragile. Part of it is spent in buying up
smaller companies in other countries which are engaged in their own line of
work -- there's quite a rash of this at present. But this won't increase
employment one little bit. In fact, foreign subsidiaries gives them the
option of firing workers more easily if the present recession double-dips
to something worse.
Otherwise these firms are sitting on cash. But why isn't it being invested
in the major motive force of economic growth -- namely consumer goods
(about 70-80% of the whole)? Could it be that there isn't a long chain of
potential products any longer. We have a plethora of new consumer goods but
they're mostly improvements or embellishments of things we've had for
decades. There's nothing uniquely new in the pipeline as there was during
the whole course of the industrial revolution frolm, say 1780-1980.
Everybody, from the poorest to the richest had something specific that they
worked and saved for all through that era.
By far the largest proportion of orthodox economists cannot accept this,
and certainly no politician dares to. If they did, they'd have nothing to
say to the punters. But this doesn't mean to say that a new economic era,
even though only "seen through a glass darkly", is not already taking place.
Keith
At 08:34 04/07/2010 -0400, you wrote:
I commented on what Krugman advocates a couple of weeks ago, agreeing that
governments must continue to 'spend, spend, spend' but questioning what
they may be spending it on. In Canada, a primary focus of stimulative
spending has been on "shovel-ready" jobs. Via <?xml:namespace prefix =
st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Canada's Economic
Action Plan, roads are widened, swimming pools and sidewalks are built,
and community buildings are repaired. While the plan is useful in
providing some work in communities, I question whether the Action Plan
will result in the kind of change needed to help people move into a future
of permanent employment. More long-lasting places need to be provided in
the economy and people need to be trained to move into them if ever a
permanent solution is to be found.
In that posting, I also pointed out that the real unemployment rate, which
includes people that have dropped out of the labour market as well as
those who are actively seeking work, is far higher, perhaps twice as high
as the official rate. One has to wonder what these "inactive" people are
doing. Perhaps some of them are working, though not working as work is
officially defined. For example, in large cities some of them could be
selling drugs or doing petty-crime stuff that provides them with a
living. Others would 'unofficially' mow lawns, shovel snow, paint houses
or do whatever else would earn them some money. I suppose that some of
the money government spends on "shovel ready" jobs would filter over to
the dropouts doing these kinds of things, but because they don't report on
what they do, one can't know how much.
Ed
----- Original Message -----
From: "Michael Gurstein" <<mailto:[email protected]>[email protected]>
To: "'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION'"
<<mailto:[email protected]>[email protected]>
Sent: Sunday, July 04, 2010 6:42 AM
Subject: [Futurework] Krugman: Myths of Austerity
>
> Krugman: Myths of Austerity
>
> Paul Krugman: Somehow it has become conventional wisdom that now is the
time
> to slash spending, despite the fact that the world's major economies remain
> deeply depressed. And current examples of austerity are anything but
> encouraging. So the next time you hear serious-sounding people explaining
> the need for fiscal austerity, try to parse their argument. Almost surely,
> you'll discover that what sounds like hardheaded realism actually rests
on a
> foundation of fantasy, on the belief that invisible vigilantes will punish
> us if we're bad and the confidence fairy will reward us if we're good. And
> real-world policy -- policy that will blight the lives of millions of
> working families -- is being built on that foundation.
>
>
> _______________________________________________
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> <mailto:[email protected]>[email protected]
> https://lists.uwaterloo.ca/mailman/listinfo/futurework
>
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Keith Hudson, Saltford, England
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