FacebookTwitterGoogle+RedditEmail

‘Obama Recession’ or Full Employment?

by Dr. MARGARET FLOWERS AND KEVIN ZEESE

There are lots of interesting economic stories in the last week, but we want to focus your attention on two topics.  One shows the only path out of the economic collapse. The other shows the direction that will most assuredly take us into deeper collapse.  So far, the bi-partisans in Washington, DC are on the path to an ‘Obama Recession.’

First, the wrong path: austerity. Great Britain has shown the world what austerity will bring – deeper recession.  Britain may be going into its third economic collapse in four years with a 0.3% decline in its GDP in the last quarter and its worst year for manufacturing on record. David Cameron was elected on the promise of austerity and he delivered. The result is Britain has the worst economy on record dating back to 1830.  That’s right, since the before the reign of Queen Victoria!

Our policy makers could learn the same thing from U.S. history.  When FDR came to power, he put in place stimulus programs that directly created jobs. He built a lot of infrastructure that is still with us today employing people in useful work as government employees.  In 1936, FDR and Congress thought they had gotten the economy going and started worrying about deficit spending.  They decided to cut the funding of the New Deal to decrease the deficit. The result: the Roosevelt Recession of 1937 and 1938.  Roosevelt realized his error and started stimulating the economy again and quickly the recession ended and growth returned.  Even before the attack on Pearl Harbor the U.S. economy was on the mend.

us_gdp

Lesson to President Obama: Pursue the path of cutting the deficit with cuts to human needs and you are risking an “Obama Recession.” You will have squandered an immense opportunity to get the country on track.

Second, what is the solution to end the economic collapse?  There is one thing that has paralleled deficit spending for decades.  When deficit spending goes up, this is always is going up; and when deficit spending goes down, this has reversed.  As the chart below shows that one thing is unemployment.  If unemployment is high, deficit as a percent of GDP is high. If we reduce unemployment, the deficit shrinks.

jobs_chart

Chart from the St. Louis Federal Reserve shows the deficit as a percentage of GDP (red line) vs. the unemployment rate (blue line); for 60 years the pattern has held. When unemployment drops, the deficit as a percentage of GDP drops. When unemployment rises, the deficit rises.

JobsJob creation is the one solution that has not been tried by government. Jobs are the solution to so many economic problems. The deficit, which the bi-partisans in Washington are fixated on, is directly related and the only path to reducing the deficit is moving toward full employment.  Full employment solves so many other problems: poverty and hunger, eviction and foreclosure, personal debt, retirement savings – all are ameliorated by full employment. But, when was the last time you heard any elected official utter the phrase “full employment”?

Other News

There is a lot of news for you to review in our news section which is updated daily: how Geithner left the banking system more concentrated with already too big to fail banks growing bigger and how the solution is public banks or turning banks into utilities; Obama’s appointment to the SEC brings Morgan Stanley’s lawyer through the DC revolving door; reports from Davos show complacency and denial; the continued, precipitous decline of unions while non-union workers organize; the energy mess of tar sands, fracking and worse signs for climate change while billionaires continue to mislead on climate; how single payer is becoming more essential than ever; details on how tax havens operate and how a resignation of a top DOJ official shows there never was any serious effort to investigate or prosecute bankers who collapsed the economy.

Finally, don’t miss two other articles we’ve written: Margaret Flowers wrote in Al Jazeera how top CEOs are planning to loot the economy; and Margaret and Kevin Zeese wrote a must read hidden history of cooperatives and community work and how they relate to social change for Truthout. This history provides lots of clues as to how we can be more effective today.

Margaret Flowers, a pediatrician, and Kevin Zeese, an attorney, are both are advocates for single payer health care and the co-direct, ItsOurEconomy.US which filed an amicus brief along with Single Payer Action and 50 doctors urging the court to find the mandate unconstitutional. This article is based on the weekly newsletter of It’s Our Economy. You can sign up for this free newsletter at www.ItsOurEconomy.US.

Kevin Zeese and Margaret Flowers co-direct Popular Resistance. This article first appeared as the weekly newsletter of the organization.@MFlowers8.

Weekend Edition
February 12-14, 2016
Andrew Levine
What Next in the War on Clintonism?
Jeffrey St. Clair
A Comedy of Terrors: When in Doubt, Bomb Syria
Ismael Hossein-Zadeh – Anthony A. Gabb
Financial Oligarchy vs. Feudal Aristocracy
Paul Street
When Plan A Meets Plan B: Talking Politics and Revolution with the Green Party’s Jill Stein
Rob Urie
The (Political) Season of Our Discontent
Pepe Escobar
It Takes a Greek to Save Europa
Gerald Sussman
Why Hillary Clinton Spells Democratic Party Defeat
Carol Norris
What Do Hillary’s Women Want? A Psychologist on the Clinton Campaign’s Women’s Club Strategy
Robert Fantina
The U.S. Election: Any Good News for Palestine?
Linda Pentz Gunter
Radioactive Handouts: the Nuclear Subsidies Buried Inside Obama’s “Clean” Energy Budget
Michael Welton
Lenin, Putin and Me
Manuel García, Jr.
Fire in the Hole: Bernie and the Cracks in the Neo-Liberal Lid
Thomas Stephens
The Flint River Lead Poisoning Catastrophe in Historical Perspective
David Rosen
When Trump Confronted a Transgender Beauty
Will Parrish
Cap and Clear-Cut
Victor Grossman
Coming Cutthroats and Parting Pirates
Ben Terrall
Raw Deals: Challenging the Sharing Economy
David Yearsley
Beyoncé’s Super Bowl Formation: Form-Fitting Uniforms of Revolution and Commerce
David Mattson
Divvying Up the Dead: Grizzly Bears in a Post-ESA World
Matthew Stevenson
Confessions of a Primary Insider
Jeff Mackler
Friedrichs v. U.S. Public Employee Unions
Franklin Lamb
Notes From Tehran: Trump, the Iranian Elections and the End of Sanctions
Pete Dolack
More Unemployment and Less Security
Christopher Brauchli
The Cruzifiction of Michael Wayne Haley
Bill Quigley
Law on the Margins: a Profile of Social Justice Lawyer Chaumtoli Huq
Uri Avnery
A Lady With a Smile
Katja Kipping
The Opposite of Transparency: What I Didn’t Read in the TIPP Reading Room
B. R. Gowani
Hellish Woman: ISIS’s Granny Endorses Hillary
Kent Paterson
The Futures of Whales and Humans in Mexico
James Heddle
Why the Current Nuclear Showdown in California Should Matter to You
Michael Howard
Hollywood’s Grotesque Animal Abuse
Steven Gorelick
Branding Tradition: a Bittersweet Tale of Capitalism at Work
Nozomi Hayase
Assange’s UN Victory and Redemption of the West
Patrick Bond
World Bank Punches South Africa’s Poor, by Ignoring the Rich
Mel Gurtov
Is US-Russia Engagement Still Possible?
Dan Bacher
Governor Jerry Brown Receives Cold, Dead Fish Award Four Years In A Row
Wolfgang Lieberknecht
Fighting and Protecting Refugees
Jennifer Matsui
Doglegs, An Unforgettable Film
Soud Sharabani
Israeli Myths: An Interview with Ramzy Baroud
Terry Simons
Bernie? Why Not?
Missy Comley Beattie
When Thoughtful People Think Illogically
Christy Rodgers
Everywhere is War: Luke Mogelson’s These Heroic, Happy Dead: Stories
Ron Jacobs
Springsteen: Rockin’ the House in Albany, NY
Barbara Nimri Aziz
“The Martian”: This Heroism is for Chinese Viewers Too
Charles R. Larson
No Brainers: When Hitler Took Cocaine and Lenin Lost His Brain
FacebookTwitterGoogle+RedditEmail