Commentary: Romney is wrong on what drives a recovery … Our economy faces two urgent needs: Jump-starting growth and job creation now, and boosting the U.S. economy's potential to generate growth, jobs and rising living standards in the years to come. But the economic proposals advanced by former Gov. Mitt Romney would do nothing to advance the recovery. They could actually slow its pace. For almost 200 years economists have understood that there are two sources of high unemployment. The first is structural unemployment, when the salaries that workers expect are greater than the salaries businesses expect to pay. The second is cyclical unemployment, when the households, businesses and governments in the economy collectively plan to spend less than they take in. – Detroit News/J. Bradford DeLong, professor of economics at the University of California
Dominant Social Theme: John Maynard Keynes had this all figured out long ago.
Free-Market Analysis: It makes one want to throw up his hands and cradle his aching head. Here is Professor DeLong, who once served as a Clinton-era deputy assistant secretary of the treasury for economic policy, writing an entirely nonsensical editorial.
The only hopeful sign is that the many feedback entries accompanying the editorial seem more informed than DeLong himself. This is a significant development indicating economics is not the preserve of academia anymore but, thanks to the Internet, information sharing has become a freely available intellectual discipline with modern relevance and immediate impact.
This no doubt worries elitists like DeLong, who writes articles that must be calculated to confuse. In this article, he is conforming to the weary left-right paradigm so beloved by the top elites. By allowing the electorate only choices within the paradigm of state activism, the powers-that-be have attempted to marginalize the freedom dialogue. One's choices are to be restricted electorally to various forms of statist manipulations.
DeLong obviously comes down on the leftist side of the fence, given his political experience and the language of this article. Here's some more:
Romney, the presumptive Republican candidate for president, has a plan for dealing with structural unemployment. We need to make progress on this problem in the coming years, and economists could debate whether Romney's plans would help or hurt. (I am skeptical.)
But he does not have any plan at all to deal with the immediate problem: cyclical unemployment.
This is a big problem for the rest of us, because it's the kind we're suffering from. The cure for that disease requires rearranging matters so that total spending of households, businesses and government is once again equal to the total of what they take in.
As the Washington Post's Greg Sargent pointed out, when CNBC asked Romney what he would do to boost employment in the short run, he replied with zero proposals for dealing with cyclical unemployment. Each of Romney's answers — regarding trade, balancing the budget in eight to 10 years, more drilling for oil and gas, union rights, business taxes and repealing health reform — deals with structural unemployment, not the jobs crisis we face now.
We have made progress, but we are still nowhere near where we need to be in terms of recovering from the depth of the recession and the cyclical employment crisis. One of our major political parties is about to nominate a candidate for president who has no plans at all for even attempting to solve it.
What is the plan that the "other major party" has to "create jobs"? Well … it is President Obama's American Jobs Act.
According to DeLong, it offers payroll tax holidays "to encourage businesses to hire and invest" along with stemming the layoffs of "cops, firefighters and teachers." DeLong also writes it addresses mortgage refinancing and would reform the unemployment insurance system to help people gain new skills and find work faster.
As for Romney, "He has no plan. You need more than a year to climb out of the deep hole we are in."
The president's plan was built on ideas that moderate Republicans had supported in the past. If Republicans hadn't blocked President Obama's plans last year, they would have filled the glass half full — and this year there would be a second jobs bill to fill the glass to the top. But Romney pretends that there is no glass at all.
In fact, there ISN'T a glass. Grant DeLong's solutions and one is stuck with a revivifying of what has gone before. Does that make any sense? The current system is in the process of crashing around the world – as it has before, most notably in the 1930s and 1970s. People live and work under the shadow of worldwide depression.
One thing what we call the Internet Reformation has shown us clearly above all others is that the current economic system provides those who toil within its coils with a kind of Dreamtime. The stimulation of monopoly fiat money gives people false confidence that is then shattered when the vast sums of money injected into the system cause inevitable imbalances leading to severe downturns.
People think it is "normal" that capitalism can reshape a billion-plus person society like China in a single generation. In fact, it cannot. The imbalances built into the BRICs are vast and deadly and eventually will spell their downfall.
The stimulation of fiat – monopoly money printing – does provide enormous industrial expansion but the expansion is bound to be unbalanced and evanescent. It does not stem from human action but from a kind of command-and-control (price fixing) that will inevitably founder and collapse, as we have seen it do regularly.
Economies have to grow in an integral way. It takes … well, centuries for a prosperous economy to expand within the context of a normal money structure. Try to do things within the context of the modern money economy and you end up with the kind of empty cities that China is now building.
This is the system that DeLong wants to salvage and resurrect. What's especially ironic is that not only has it been emplaced by the power elite that he evidently and obviously works for, but it is also has been brought down by those same elites.
The idea, from what we can tell, is to continue to aggravate the current downturn in order to prepare for some kind of world government. If this is the case then any recovery will be a long time coming indeed.
DeLong deals with none of these issues. He is merely concerned with creating more government programs to recreate the faux-prosperity of what has come before. Central banking monopoly fiat money is a bit like crack cocaine. It provides us with euphoric stimulations that eventually collapse, leaving us worse off than before.
This is the kind of system that has left Japan in a 20-year slump and has caused almost half of Detroit to be razed by bulldozers. Even were DeLong's suggestions to be seen as feasible, is the current monetary and economic system – as it is – worth salvaging? Or are there REAL alternatives … ?