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Suffering is good for US.

1 December, 2009

Reuters is carrying a story here in which Lawrence Summers, director of the National Economic Council, discusses the high rate of unemployment and the need to create more jobs.  However, Summers warns that solving these problems will take a long time.

“Addressing 10.2 percent unemployment is a matter of very great urgency. It is not something that is going to be fixed in a week, or a month, or a year,”

(Perhaps Summers agrees with Rahm Emanuel that this is too good a crisis to let go to waste. After all, the transformation of this country is not going to happen in a week either. Three more years, maybe eight, might be needed to complete the job.) In any case the government does have a plan to help create more jobs – there will be a job forum this week at the White House during which firms would be encouraged to “boost hiring.”    (I so wish I had thought of that, but, alas, my degree was not in economics.)

The ideas just kept coming though from this man who advises Obama on economic policy.

Summers said policies to foster science in schools, as well as research and development in the private sector, would be crucial to aiding long-term U.S. productivity growth.

Now that is a great idea; it worked when we discovered that the Soviets could get Sputnik into space and we could not.   Suddenly, everyone learned science, math and research and years later we were able to send our own craft into space.  Of course, there wasn’t the high rate of unemployment during those years we had to wait. In fact, the economy just hummed along as the space industry grew.

But times have changed and our latest policy-maker thinks that we will all be better off if learn our lesson from this financial downturn.

“One of the most damaging ideas in economics is … the doctrine of the cathartic recession. … Somehow it’s for the best if everyone suffers for a long time … (it) teaches everybody a very valuable lesson,” Summers said.

Needless to say, when Summers says everyone, he doesn’t mean the party-givers and party-goers at the White House, Congress, Wall Street, General Electric, etc, etc.  He really just means the unemployed, the underemployed and the employed who are just barely getting by – which at this point in time is much larger than the minimum of 10% of the population (and more likely, closer to 17%) unemployed.

I have learned a lesson too – Wall Street, and the Global Corporations, with help from our government, have been sucking the life out of this country and now want to move on to do the same to the rest of the world. (Follow this link and see how far GE’s tentacles are reaching.)

The White House jobs forum will also focus on how to boost U.S. exports, and Summers reiterated the United States would no longer be the engine on which the rest of the world economy could fly.

Our consumer economy can not drive the global economy and another country will have to pick up the slack, according to Summers who suggests that China might be that country, because they import less.

Someone help me here.  If our major corporations had no left the country in search of cheaper labor in order to drive their profits, would we have to import as much as we do?  Did not the productivity of the U.S. provide more financial stability for the consumer in this country?  Was the advertising field not the driving force to push up consumption in this country?  Did we not export our products, technology, expertise and management staff to those very countries that are now being sought for their cheap labor and growing consumer market?  Do not the citizens of the U.S. still possess creativity, ingenuity, skills, and ambition?  Can this country not produce what others want and need if the government, the financiers, and the social engineers would only step out of the way?

The United States allowed my four grandparents to legally work and thrive in this country.  Their labour allowed their heirs to acquire skills, experience, education, and, through hard work, a life style my grandparents could never have imagined.  I don’t think Summers should be so easily writing the U.S. off.  (Of course, I don’t think he should ever have been allowed to participate in this government either.)   And I certainly don’t think he ought to be lecturing us about suffering.

Give up your wealth and influence, Mr. Summers; come down here and suffer with the rest of us and then tell me what the lesson is.

3 Comments leave one →
  1. 1 December, 2009 21:15

    And yet I recall when George Bush asked us to keep shopping after 9-11. It was strange to be going to war yet the american people were not asked to suffer. It all seems so backwards. Now we area asked to suffer yet bankers are supposed to be getting huge bonuses.

  2. 6 December, 2009 21:15

    While reading this post I too immediately harkened George Bush telling us that the “most patriotic” thing one could do in the aftermath of 9/11 was shop. And, according to our GDP-based economy, unfortunately he was right! Remember when Japan was deemed a bad economic performer because it has a culture of savings rather than consumption? I believe it was Wolfowitz who said that they needed to be taught how to be “pagans in the marketplace.”

    Shit trickles downstream, and aren’t today’s younger generations simply harming themselves individually via pagan fiscal recklessness what baby boomers have done to them via pagan fiscal recklessness collectively by mismanaging this country straight into the ground and allowing US to reach the point where everything that’s occurring today is occurring today, which is going to hinder the social advancement of generations to come? To add to the above, one thing that is incontrovertible is that the Bush tax cuts have weakened us in most every single measurable and immeasurable aspect both domestically and abroad, which is allowing what amounts to those who live beyond the business cycle further consolidating their wealth at the expense of the other 98%. And, to paraphrase Thomas Jefferson, via reckless tax cuts the baby boomer generation has contracted debts greater than may be paid during the course of its own existence. But hell even JFK facilitated massive tax cuts comparable to Reagan and both Bushs!

  3. 6 December, 2009 21:15

    Oh! And speaking of 9/11, boy did it have such a tremendous adverse impact on the economy, yes?


    Summary from the above link: “The tragedy of September 11, 2001 was so sudden and devastating that it may be difficult at this point in time to write dispassionately and objectively about its effects on the U.S. economy. This retrospective review will attempt such an undertaking. The loss of lives and property on 9/11 was not large enough to have had a measurable effect on the productive capacity of the United States even though it had a very significant localized effect on New York City and, to a lesser degree, on the greater Washington, D.C. area. Thus, for 9/11 to affect the economy it would have had to have affected the price of an important input, such as energy, or had an adverse effect on aggregate demand via such mechanisms as consumer and business confidence, a financial panic or liquidity crisis, or an international run on the dollar

    “It was initially thought that aggregate demand was seriously affected, for while the existing data showed that GDP growth was low in the first half of 2001, data published in October showed that GDP had contracted during the 3rd quarter. This led to the claim that “the terrorist attacks pushed a weak economy over the edge into an outright recession.” We now know, based on revised data, this is not so. At the time of 9/11 the economy was in its third consecutive quarter of contraction; positive growth resumed in the 4th quarter. This would suggest that any effects from 9/11 on demand were short lived. While this may be true, several events took place before, on, and shortly after 9/11, that made recovery either more rapid than it might have been or made it possible to take place. First, the Federal Reserve had eased credit during the first half of 2001 to stimulate aggregate demand. The economy responds to policy changes with a lag in time. Thus, the public response may have been felt in the 4th quarter giving the appearance that 9/11 had only a limited effect. Second, the Federal Reserve on and immediately after 9/11 took appropriate action to avert a financial panic and liquidity shortage. This was supplemented by support from foreign central banks to shore up the dollar in world markets and limited the contagion of 9/11 from spreading to other national economies. Nevertheless, U.S. trade with other countries, especially Canada, was disrupted. While oil prices spiked briefly, they quickly returned to their pre-9/11 levels

    “Thus, it can be argued, timely action contained the short run economic effects of 9/11 on the overall economy. Over the longer run 9/11 will adversely affect U.S. productivity growth because resources are being and will be used to ensure the security of production, distribution, finance, and communication.”

    And here we are today, up Shit’s Creek.

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