Sunday, June 5, 2011

The Mistake of 1937 in 2011?

So Paul Krugman points out, along with many other economists these days, that our nation is in a tight spot. We are suspended, as it were, on a sort of precarious ridge. On one side is a dangerous trough of unemployment into which millions of people are falling. On the other is chasm of fiscal irresponsibility because we're spending more $$ than we gather. Mr. Krugman is of the Keynsian school which says that if we don't put people to work we are in big trouble and will yet be in bigger trouble as more and more folks find themselves without a job.

On the other hand, say the fiscal conservatives, if we don't balance the budget, or at least move in that direction, we slide off into the irrecoverable condition of national default and larger levels of financial collapse than we've already inflicted upon ourselves.
Mr. Krugman, referencing Gauti Eggertsson, adroitly points out that this situation is similar to the dilemma we faced in an earlier era, 74 years ago, and he refers to that unfortunate chain of events as "the mistake of 1937."

And that mistake was, as nearly as I can surmise without taking sufficient time to research the subject (because I don't have the time and because I'm not an economist anyway but I am a citizen taxpayer so I'm qualified to have an opinion and this is it)-- the mistake was that Congress chose to address the fiscal problem instead of the unemployment problem and thereby plunged our national condition into deeper trouble. That's this layman's uninformed, oversimplified statement of an admittedly very complicated problem.

Anyway, as a result of Congress' fiscal budget-cutting back in '37, the dreaded "double-dip" recession followed, says Mr. Krugman, in '38 instead of recovery. The historical lesson is that the same unfortunate outcome will happen now if we don't learn from their 1937 bad decision and, instead, spend some money to get the unemployed working again.
As if that could happen.
As if we could really get this nation working again by passing federal reserve notes around. Yes, maybe we can keep the monthly numbers juggled in mid-air for awhile.
But there is the supposition of Keynsians-- the unsustainable "mistake" of pump-priming deficit-riding economics--that the government can get the people working again.

No, it aint gonna happen, because it is not the government that fundamentally will put people back to work doing things like what they used to do back in the day. And maybe even corporate America can't get the damn thing going again because they're too busy investing in overseas stocks and BRIC 'n mortar industries, and circulating credit default licenses among themselves.

So maybe the Dems are right about the self-absorbed condition of corporate America; and maybe the Repubs are right about gov being the problem. Maybe every contender in this national roller derby has a little chunk of truth somewhere.

But what are people doing?
Back in the day, our ancesters, our forefathers and foremothers, spent entire generations, entire decades, and yea, I say unto thee, entire centuries, extracting stuff from the ground and turning it into finished products and then selling those products to each other. And we did it here in the USA in an exceptional way, with an unprecedented rapidity, because those enterprising European ancestors of ours had embarked on an undeveloped continent just shortly before the industrial revolution was dawning on mama England and her civilized contintental neighbors .

Forthwith, all that industrializing force, enhanced exponentially with cutting-edge mechanical might and hence newfound productivity, was unleashed upon God's green earth, America, in a way that had never happened before and never will again.

There was an awful lot of work to be done, and a lot of folk did it and it was great while it lasted but then we figured out, and I believe correctly, that the extractive demands on our planet were unsustainable at those previous levels of depletion, and so now we're in a kind of shell shock and trying to figure out what direction to take. While meanwhile back at the ranch, and perched precariously on that previously-mentioned precipice, we find ourselves confounded the fallacious decision of with whether to put people to work or to balance the budget.
Remember this, Paul. In the really big picture, people make work, and governments make budgets. Sooner or later we've got to get back to that reality check--which is not an unemployment check , nor is it a paycheck-- or we'll make the mistake of 2011 and 2020.

And guess what. It is a mistake either way! No way around this problem. We've got to take a hit, bite the bullet, take the bull by the horns. Furthermor, Bubby, there will be sacrifices and belt-tightening and defeating of obesity and tossing out of rotten couch potatoes, and there will be folks out of work for a long time and there will be deficits, and one way or another there will be defaults somewhere or perhaps even everywhere.

Bottom line: People have got to find something to do. People, not their governments. Its up to us. Nanny State and Big Brother are hooked up to a federal I-Vee, presently incapacitated or headed toward that medicared condition, and folks will be required to once again, as has happened before in the history of the world, find some work to do to keep themselves alive and functioning.

What are people doing?
What are you doing, you citizen of the United States of America?
Look around your home, your community, and see what needs to be done. Then do it. The unemployment checks cannot roll into your mailbox with a 44-cent stamp forever. Moreover, those weekly/monthly numbers that the gov and the media churn out don't really solve anybody's problems; they just give us something to wring our hands about, and a few excuses every now and then to explain our mounting dysfunction.

People solve problems. Are you a people? Are you hungry? Grow some food, even if its just a tomato or two in your window. Learn what is means to grow something from a seed, or what it means to build something from scratch. Begin something. Get to work, y'all. We're not going to move off this precipice without some blood, sweat and many tears.

Glass half-Full

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