Paul Krugman has an interesting and kinda scary article in this morning’s Times. He points out that the biggest threat to our economy right now is not the deficit but the fact that not enough is being done to fight unemployment. Says he, the recent hiring gains have, to date, “brought back fewer than 500,000 of the 8 million jobs lost in the wake of the financial crisis.” In that department, he notes, the Administration is doing way too little.
Eight million jobs gone. Heaven help us!
Krugman says the fairest comparison between our economy and another country’s is not with Greece’s debt-ridden economy but with Japan’s, which has never fully recovered from the deflationary cycle of the 1990s. He lays the blame for Europe’s unrest over national debt issues on the establishment of the euro, whose creation, he observes, “imposed a single currency on economies that weren’t ready for such a move.”
Though you’d never know it by the grocery bills I racked up today, inflation is at a 44-year low, and that is not a good thing. Smart money, fearing deflation will extend the economic slump, is moving out of the stock market and into treasury bonds, perceived as safer than equities.
Come to think of it, this morning my financial manager e-mailed to say they’re moving my investments to a cash position. Let’s hope this time they manage to salvage some of that fund. It hadn’t regained all it lost during the crash, but it had recovered to the point that it might reasonably be expected to support me through old age.
Krugman calls for more aggressive recovery measures, but observes rightly that a new stimulus plan “would have no chance of getting through a Congress that has been spooked by the deficit hawks.”
IMHO, something far more basic is at work here.
America is not going to recover economically as long as we continue on our track toward political schism. That way is the road to ruin. The polarization of our thinking between the extreme right and the extreme left is spinning this country around in circles. Ultimately, it will destroy us. Indeed, I fear that if it continues, within a generation it will lead to uprisings, possibly even civil war.
David Brooks observes, in a column also appearing in today’s Times, that our political center presently “is a feckless shell. It has no governing philosophy. Its paragons seem from the outside opportunistic, like Arlen Specter, or caught in some wishy-washy middle, like Blanche Lincoln. The right and left have organized, but the center hasn’t bothered to. The right and left have media outlets and think tanks, but the centrists are content to complain about polarization and go home. By their genteel passivity, moderates have ceded power to the extremes.”
In a little parable meant to elucidate the thinking of people who subscribe to the Tea Party, Brooks predicts that just throwing the rascals out and replacing them with new demagogues won’t get us far. “[Brooks’s fictional angry voter] is going to be disappointed again. He’s going to find that the outsiders he sent to Washington just screamed at each other at ever higher decibels. He’s going to find that he and voters like him unwittingly created a political culture in which compromise is impermissible, in which institutions are decimated by lone-wolf narcissists who have no interest in or talent for crafting legislation. Nothing will get done.”
Just so. The motto on our currency and on the Great Seal of the United States, E Pluribus Unum—”out of many, one”—resonates with the last great words of Patrick Henry:
“United we stand, divided we fall. Let us not split into factions which must destroy that union upon which our existence hangs.”
We’ve forgotten those words. It behooves us to remember them, before it’s too late.
Interesting article. I’m not American, but I can see what you’re talking about in terms of the disorganized centre. I disagree with Krugman on quite a few things, but I do worry about the prospect of a Japanese style deflation coming to North America.
Twice this week I’ve referenced a chart of the Nikkei 225 in order to raise awareness of the fact that markets can and do remain down to stagnant for periods in excess of 20 years. If that happens, buy and holders over 40 may have a tough time saving for retirement.
It’s an interesting perspective. Here in France, you see people/media arguing that the US economy hasn’t taken such a bad hit. But to me people in the US actually appear to be struggling more–possibly due to recent job loss. Here there is worry, in the US there is something much more urgent. I don’t know if there is a way to diffuse partisan politics, but I can say that I’m fully disgusted with the whole thing. Maybe the centrists should get their acts together. But our system seems practically designed to make sure that doesn’t happen. . .
@ Simple in France: IMHO Americans are only just beginning to realize that our comfortable lifestyle is going away, and that realization is still inchoate. Doctrinaire ideology gets in the way of understanding what’s really going on.
The result is that as the middle class disappears, people blame the drop in their standard of living on various scapegoats. In my part of the country it’s immigrants, as though any of the people screaming in the streets would take jobs mowing lawns and shoveling gravel in 115-degree heat or are likely to get hired cleaning rich folks’ toilets. Raw, open bigotry now is not only commonplace, it’s acceptable and has even been institutionalized into my state’s law. The low standard of education and a simmering sense of desperation contribute to this.
An ill-educated, often superstitious electorate is easily fooled. It also is unpredictable and potentially violent. Mark my words: in a generation our children and grandchildren will be at the barricades. A whole new way of life is coming our way.