FacebookTwitterGoogle+RedditEmail

The Lights are Out in Washington

by DEAN BAKER

I was late with my column this morning. It was the first time that I missed a deadline since I started college. This made me angry, not just because I hated to see a 34-year-streak end, but more importantly because of the reason I was late.

Sunday afternoon a storm hit Washington. It knocked out the power not only in my house, approximately three miles from the White House, but also in large chunks of the city and suburbs. Fifteen hours later we still don’t have power. Since the temperatures are predicted to get into the 90s today, we can expect that people will die. Sick and elderly people who cannot get into an air-conditioned facility will have great difficulty surviving in such heat.

This should make everyone very angry. There is no excuse for the nation’s capital not to have sufficient spare capacity and repair crews to ensure that prolonged blackouts do not occur in the middle of a summer heat wave.

Yes, this would cost money and that is why the whole story is damn painful. We have the money. We have the money.

We are sitting here with close to 10 percent of our workforce unemployed. This is because of a lack of demand. If there were more demand from any source, this would employ many of these workers. These are workers who have the necessary skills and desire to work. Remember, the vast majority of them were working before the housing bubble collapsed.

Back then the $8 trillion in illusory housing bubble wealth was creating the demand needed to keep our workforce near full employment. Now that this wealth has vanished, only the government can generate the demand to employ these people. It is only because of the painful ignorance or willful economic sabotage of members of Congress (mostly Republicans) that the government will not spend the money needed to bring the economy back to more normal levels of employment.

This is where D.C.’s power failure comes in. What would be the problem if Congress dispensed $400-500 billion to the states to be spent on upgrading infrastructure such as electric power lines, mass transit systems, and water and sewage treatment facilities? The stimulus passed by Congress last year started on this path, but did not go nearly far enough.

This spending could be financed by requiring the Federal Reserve Board to buy and hold the bonds used to pay for the projects. If the Fed held the bonds, then the interest would be paid to the Fed, which in turn would then be rebated to the Treasury. That means that there is no additional interest burden on our children for the deficit hawks to whine about. Instead our children will get a modern infrastructure that doesn’t jeopardize the country’s economic and physical health.

The new infrastructure could also be far more energy efficient, making important strides towards reducing greenhouse gas emissions. Perhaps future summer heat waves won’t be quite so hot.

A jobs and growth project along these lines should be a no-brainer. The huge number of unemployed workers is actually a source of wealth. It means that the country is currently meeting its consumption and investment needs while still having 10 percent of its workforce on the sidelines. If we can find useful work for many of the currently unemployed workers it makes the country richer, not poorer.

At this point, the budget deficit crew will invariably start yelling that governments will be wasteful in their spending. There is some truth to this, but so what? Imagine that we spend 20 percent, 30 percent or even 40 percent too much for rebuilding our infrastructure. Five or ten years out we still have a modernized infrastructure. Would be better off if we just did nothing so that our children are left with an infrastructure that is 10 years more out of date in 2020?

We also hear the complaints that this plan would generate inflation. This objection is hard to understand. We have massive excess capacity in almost every sector of the economy. Which business is going to start raising its prices because the government is supporting a major infrastructure program? Furthermore, if inflation did start to get out of hand, the Fed has all the tools necessary to keep inflation under control.

What’s the worst possible scenario, we get a recession like the 1981-82 downturn? That was a much more mild recession than the one we are currently experiencing, so it’s hard to see the basis for fear.

DEAN BAKER is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This column was originally published by The Guardian.

 

WORDS THAT STICK

?

 

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

March 28, 2017
Mike Whitney
Ending Syria’s Nightmare will Take Pressure From Below 
Mark Kernan
Memory Against Forgetting: the Resonance of Bloody Sunday
John McMurtry
Fake News: the Unravelling of US Empire From Within
Ron Jacobs
Mad Dog, Meet Eris, Queen of Strife
Michael J. Sainato
State Dept. Condemns Attacks on Russian Peaceful Protests, Ignores Those in America
Ted Rall
Five Things the Democrats Could Do to Save Their Party (But Probably Won’t)
Linn Washington Jr.
Judge Neil Gorsuch’s Hiring Practices: Privilege or Prejudice?
Philippe Marlière
Benoît Hamon, the Socialist Presidential Hopeful, is Good News for the French Left
Norman Pollack
Political Cannibalism: Eating America’s Vitals
Bruce Mastron
Obamacare? Trumpcare? Why Not Cubacare?
David Macaray
Hollywood Screen and TV Writers Call for Strike Vote
Christian Sorensen
We’ve Let Capitalism Kill the Planet
Rodolfo Acuna
What We Don’t Want to Know
Binoy Kampmark
The Futility of the Electronics Ban
Andrew Moss
Why ICE Raids Imperil Us All
March 27, 2017
Robert Hunziker
A Record-Setting Climate Going Bonkers
Frank Stricker
Why $15 an Hour Should be the Absolute Minimum Minimum Wage
Melvin Goodman
The Disappearance of Bipartisanship on the Intelligence Committees
Patrick Cockburn
ISIS’s Losses in Syria and Iraq Will Make It Difficult to Recruit
Russell Mokhiber
Single-Payer Bernie Morphs Into Public Option Dean
Gregory Barrett
Can Democracy Save Us?
Dave Lindorff
Budget Goes Military
John Heid
Disappeared on the Border: “Chase and Scatter” — to Death
Mark Weisbrot
The Troubling Financial Activities of an Ecuadorian Presidential Candidate
Robert Fisk
As ISIS’s Caliphate Shrinks, Syrian Anger Grows
Michael J. Sainato
Democratic Party Continues Shunning Popular Sanders Surrogates
Paul Bentley
Nazi Heritage: the Strange Saga of Chrystia Freeland’s Ukrainian Grandfather
Christopher Ketcham
Buddhism in the Storm
Thomas Barker
Platitudes in the Wake of London’s Terror Attack
Mike Hastie
Insane Truths: a Vietnam Vet on “Apocalypse Now, Redux”
Binoy Kampmark
Cyclone Watch in Australia
Weekend Edition
March 24, 2017
Friday - Sunday
Michael Hudson
Trump is Obama’s Legacy: Will this Break up the Democratic Party?
Eric Draitser
Donald Trump and the Triumph of White Identity Politics
Jeffrey St. Clair
Roaming Charges: Nothing Was Delivered
Andrew Levine
Ryan’s Choice
Joshua Frank
Global Coal in Freefall, Tar Sands Development Drying Up (Bad News for Keystone XL)
Anthony DiMaggio
Ditching the “Deep State”: The Rise of a New Conspiracy Theory in American Politics
Rob Urie
Boris and Natasha Visit Fantasy Island
John Wight
London and the Dreary Ritual of Terrorist Attacks
Paul Buhle
The CIA and the Intellectuals…Again
David Rosen
Why Did Trump Target Transgender Youth?
Vijay Prashad
Inventing Enemies
Ben Debney
Outrage From the Imperial Playbook
M. Shadee Malaklou
An Open Letter to Duke University’s Class of 2007, About Your Open Letter to Stephen Miller
Michael J. Sainato
Bernie Sanders’ Economic Advisor Shreds Trumponomics
FacebookTwitterGoogle+RedditEmail