I am an admirer of Dean Baker's work and insights, but the following
paragraph copied from "The Bailout Round II: Adult Version?" gives
advice that keeps us on the same treadmill path to oblivion that we
have been on for the past half-millenium and more.
The main problem in recovering from the recession will be finding ways
to boost demand other than household consumption. In the longer run,
this will mean reducing imports and increasing exports. In the
short-run, we will have to rely on government stimulus to help spur
growth and reduce unemployment. The Democratic demands for stimulus
were not extraneous to the legitimate goal of a bank bailout bill.
Fiscal stimulus must be central to any serious effort to boost the
economy.
There are two problems. For both long and short runs he seeks ways to
boost demand, Right there he embraces the treadmill to nowhere that
we have to get off.
We have to break with the deeply held belief that growth is somehow
going to save us, that growth will benefit us. Without breaking with
that belief we will commit to endless, as in without end, attempts at
fiscal and monetary stimulus and then fight over the margins.
When he says that reducing imports and increasing exports is the
longer run way to boost demand, he fails to note that this surely
shifts the burden even further onto the lower deciles of the income
distribution. Reducing imports will raise prices for consumers, while
financial benefits of increasing exports will flow to the higher
income segments of the population, though there will be job gains.
Why do we need growing demand? On the left we see -- or have seen --
it was the way to provide jobs. More jobs needed to employ additions
to the labor force, jobs to replace those eliminated by productivity
(i.e. 1 or 2 or 3 percent of jobs a year) and jobs outsourced abroad.
But it never provides enough jobs, even when times are good. A third
policy tool, to add to the fiscal and monetary policy we enshrine as
job sources, is cutting working hours while maintaining income at the
pre-cut level. This is a confrontation between labor and capital.
Let's get on with it rather than continuing on the treadmill that can
only end in environmental destruction.
Gene Coyle
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