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October 21, 2013


There still are many of us who purport to have some understanding of spending, deficits, long term debt and other such fiscal points of contemporary political friction, and our understanding has little to do with what the press and people from both parties are telling us the issues are. They are shooting at today’s and tomorrow’s problems with yesterday’s old economic muskets, insisting that cuts in spending and entitlements are necessary if the republic is to be saved.

We don’t agree; we have come to the apparently astounding and unconventional conclusion that such a program in austerity (see Greece, Spain, Italy et al.) is exactly the wrong way to go, and that we must have more spending for desperately needed federal initiatives and investments in infrastructure and people, not less. We are Keynesians, aka New Deal expansionists, who know from experience that both our Congress and our president are favoring the wrong policies (Merkel-type austerity) with their emphasis on saving money instead of an emphasis on employment that brings in more money.

With an economy in the doldrums, unemployment and under-employment robbing this economy of trillions in lost productive capacity and enormous increases in revenues to our treasury, we by our  emphasis on austerity rather than Keynesian tactics ignore such an obvious means of finding and enjoying an economic recovery and solution to both our current budget deficit and long term debt problems (if they are problems) at the same time.

It’s as though the president and the Congress as doctors are bleeding the patient (our economy) in order to restore the patient’s health, as was done by yesteryear’s medical profession, a practice long since discarded by the medical profession and if practiced now, would be grounds for malpractice suit. Not to take this metaphor too far, but bleeding and old economic muskets represented by austerity are synonymous for purposes of this essay, and their intermixture amounts to economic malpractice.

Hoover was an austerity apostle. When the “Roaring Twenties” turned into the Great Depression of the 30s, he tried austerity and laissez faire policies (if one may call arithmetic policy). Result?  There was a deepening of the Depression and its resulting impoverishment of millions more Americans. Roosevelt reversed our trajectory into Third World status with federally-inspired reduction of unemployment, and though there were a few bumps down the road, we had either full employment or attempts to have full employment from then until 1974, when corporate America decided to stop sharing productivity gains with the people who worked for them (but that is another story beyond the scope of this essay).

There is another giant problem that goes hand in hand with austerity policies (which severely reduces the gross amount of money in the economy available for spending). When 70% of the economy is based upon consumer spending and austerity policies dictate far less money in the hands of consumers, what happens to aggregate demand? It plummets. Result? Shops and factories close for want of business, unemployment increases, social spending (SNAP, unemployment compensation etc.) increases, revenues to government plunge while cuts are made in education, desperately needed infrastructure repairs, research and development, disease control, and perhaps even the budget of that holy of holies, the Defense Department.

How can we persist in substituting arithmetic for policy? We have millions of unemployed Americans who could be gainfully employed in doing America’s much needed work and paying revenues into our treasury in the process of rejuvenating our economy. We need not just sit here steeped in pessimism for America’s future; with a dose of Keynesianism and the prosperity sure to result both in our marketplace and our treasury, there is every reason to be optimistic for our country’s economic future. New problems demand new approaches to solution. Austerity is neither a new approach nor a solution to the chronic and subsisting unemployment with which our economy is plagued today. We need to put aside our addiction to balanced budgets and long term debt concerns and instead adopt policies leading to full employment which, coincidentally, will solve both such concerns over time.

I was inspired to write this essay after reading about a study done by the American Society of Civil Engineers, who found that our nation’s recovery is being held back by crumbling infrastructure, that one out of nine of the 607,380 bridges in the U.S. is structurally deficient, and that 42 percent of the nation’s roads are congested. Two heavily traveled bridges have collapsed to date, one in the state of Washington (where, thankfully, there were no deaths), and one in Minnesota (where there were many deaths), and yet the politicians (in an outrageous show of uncaring, even with Americans dying) refuse to fund repairs of the nation’s “crumbling infrastructure.” Who are these people? Shouldn’t they be removed from office?

If you are affected by the congestion of the 42 percent of American roads, think of the wasted gas, time and other inconvenience you must suffer due to lack of road lanes and/or inept traffic engineering. That is a cost to both you and the economy that is difficult to measure, but it has to be in the billions, so in the name of NOT spending we are nonetheless spending in a classic choice of arithmetic over people. (Some of my Long Island relatives refer to the Long Island Expressway as the world’s biggest parking lot, and my few experiences on that expressway would confirm that experience in humor by denial.)

We need a hero such as Horatio at America’s bridges today. Where is he or she? With more bridges scheduled to fall and more Americans die as a result, with the proven failure of austerity policies to cure what ails our economy, and with the proven solution of Keynesianism standing before us as a matter of historical fact, why are we sitting here talking arithmetic when we only owe ourselves? We need first and foremost to put America to work. A rising tide lifts all boats, as President Kennedy famously remarked, and while that does not describe our present economic picture where the rich are prospering and the poor are increasingly poor, it can be descriptive of a newly humming economy with the adoption of Keynesian policies that call for full employment, which would in time end the debt and budget problems we are concerned with today. We know it will work, so let’s get on with it.  GERALD  E


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  1. billy1926 permalink

    Actually, Horatio was trying to get fellow Romans to come out and defend the city or, if not that, at least cut the ropes to drop the bridge and stop the advance of the Etruscans.
    Perhaps the Horatio(s) we need now will volunteer, as he did, to defend our shores against the influx of Chinese, European steel while we again manufacture our own to repair and replace our crumbling infrastructure. How many millions of tons of Chinese steel were used to revamp the San Francisco Bay Bridge recently? The problem is, however, you have to follow the money. US corporations don’t want to pay decent wages for either steel production or bridge building and we “good Americans” don’t want to pay the repair and replacement costs just to save a few lives or make it easier get to work and back. Anyway, we’d rather subsidize a new stadium in our home town than a bridge.

    • Stadiums are important. One can historically see lions eat Christians all the way to a Colts-Denver football game. The purpose of such events is, of course, to make money, but from the establishment’s point of view, it is equally important to divert the attention of the hoi polloi from the establishment’s continuing plunder of both our resources and our treasury. It works out well – for some – the rest of us down our Bud, fornicate, and put down those liberals who are trying to take our guns. What a world! Hot here, and no gator sighting today. I only saw that 8-footer once, and he has not visited my lakeshore since. He must have seen that mean mongrel I harbor here. Duh. . . GES P.S. I just blogged a shorty on Cruz Control you may find of interest. GES

      On Tue, Oct 22, 2013 at 7:43 PM, elderblogger

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