Echoing fellow traveller Paul Krugman, former Clinton cabinet official Robert Reich is banging the drum on spending:
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.
When I was a small boy my father told me that I and my kids and my grand-kids would be paying down the debt created by Franklin D. Roosevelt during the Depression and World War II. I didn’t even know what a debt was, but it kept me up at night.
My father was right about a lot of things, but he was wrong about this. America paid down FDR’s debt in the 1950s, when Americans went back to work, when the economy was growing again, and when our incomes grew, too. We paid taxes, and in a few years that FDR debt had shrunk to almost nothing.
The question is: how realistic is it that we’ll have another golden age of growth like we did back then? One obvious problem is demographics. Then they were excellent, and the country was full of young families starting out, buying cars, and moving to the suburbs, creating enormous, taxable economic activity. These days it’s clearly different, and though there are always black swans, it’s clear that the demographics will be much less favourable for some time to come.
Besides, you know who else has warned against the odds of an easy comeback for the economy? Robert Reich himself, back in August, who said the economy could never “recover” to where it was back for.
That contradiction aside, we wonder who Reich is really arguing with. He says we shouldn’t worry about the debt, but then, nobody really is? Does any action we’ve taken suggest that fear over too much debt has guided our policy decisions?
Reich also warns about the effect of unemployment on the body politic
Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues weilding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews, and other easy targets. It’s already started. Next year is a mid-term election. Be prepared for worse.
(via commenter David)