"The New York Times columnist Paul Krugman, who fears a lost decade, said in a lecture at the London School of Economics last summer that he has “no idea” how the economy could quickly return to strong, sustainable growth."
FDR's was the
Great Depression. We are calling ours the Great Recession.
FDR
gave us
Social Security,
Obama
is going to give
Universal Health Care. The recession is over. The recession is not over. You love me, you love me not.
I think there are obvious parallels between the
Great Depression
and what we are going through right now, but it is also important to realize we are treading new territory.
(1) The Bailout
That was necessary. It is interesting that many of the banks have already paid back most of the money. I am on record at this blog saying that is what will happen, although I did not see it happening this fast. But they have not paid back all the money, so.
The bailout was putting the fire out. Without the bailout it would not have been a
Great Recession
but Great Depression
II.
(2) The Stimulus
It was necessary but insufficient. When it was put together, I was not shocked by the size of it. What did bother me was it focused too much on the past and too little on the future. I was surprised how little was allocated to broadband, for example.
(3) Banking Regulation
Work here has not gone as well as needed.
Wall Street
needs a new set of pants. Take off the boxer shorts. Put on some pants.
(4) Public Works Programs
Basically I am arguing for a second
stimulus package
that might be similar in size to the first one. This would be one pig push to create a truly
post-industrial
America. The first big wave of job creation will have to be the government's work, otherwise the 10%
unemployment
figure is feeling pretty comfortable where it is. You did not rely on the
market
for the bailout, or the stimulus, you sure do not expect the
market to do the regulation work. That same courtesy has to be extended to job creation.
Most of the
job creation
will happen in the
education
and
health sectors. Instead of creating a
Tennessee Valley Authority, you would create a program to hire a ton of mentors to kick-start the inner cities, for example.
Universal and faster
broadband
is fundamental to this very idea. That is the centerpiece. That basic physical infrastructure is what will take both
education
and
health
to their next levels.
Obama
has to build that universal, faster broadband infrastructure like
Eisenhower
built the interstate highway system. Without that America is not going to become a
post-industrial society. People will have to be plugged in.
The idea has to be for the government to hire five million people. If you are going to do it anyway, it makes no sense to do it later, or do it in small steps. Creating new jobs has to be the centerpiece of the second
stimulus bill.
Education and
health will have to be reimagined. That is why getting
health care right is so key. It can't just be about adding entitlement programs for people who are known will not pay in, although everyone has to be covered. It also has to be about bringing the costs down across the board. You inject
technology
and the
market forces
into the sector.
On Deficits And Debts
The time to reign in the
deficit
and the
debt
will come, but that time is not now. Once the recovery is full, the political wind will blow in that direction.
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