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.

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

May 23, 2017
John Wight
Manchester Attacks: What Price Hypocrisy?
Patrick Cockburn
A Gathering of Autocrats: Trump Puts US on Sunni Muslim Side of Bitter Sectarian War with Shias
Shamus Cooke
Can Trump Salvage His Presidency in Syria’s War?
Thomas S. Harrington
“Risk”: a Sad Comedown for Laura Poitras
Josh White
Towards the Corbyn Doctrine
Mike Whitney
Rosenstein and Mueller: the Regime Change Tag-Team
Jan Oberg
Trump in Riyadh: an Arab NATO Against Syria and Iran
Susan Babbitt
The Most Dangerous Spy You’ve Never Heard Of: Ana Belén Montes
Rannie Amiri
Al-Awamiya: City of Resistance
Dimitris Konstantakopoulos
The European Left and the Greek Tragedy
Laura Leigh
This Land is Your Land, Except If You’re a Wild Horse Advocate
Hervé Kempf
Macron, Old World President
Michael J. Sainato
Devos Takes Out Her Hatchet
L. Ali Khan
I’m a Human and I’m a Cartoon
May 22, 2017
Diana Johnstone
All Power to the Banks! The Winners-Take-All Regime of Emmanuel Macron
Robert Fisk
Hypocrisy and Condescension: Trump’s Speech to the Middle East
John Grant
Jeff Sessions, Jesus Christ and the Return of Reefer Madness
Nozomi Hayase
Trump and the Resurgence of Colonial Racism
Rev. William Alberts
The Normalizing of Authoritarianism in America
Frank Stricker
Getting Full Employment: the Fake Way and the Right Way 
Jamie Davidson
Red Terror: Anti-Corbynism and Double Standards
Binoy Kampmark
Julian Assange, Sweden, and Continuing Battles
Robert Jensen
Beyond Liberal Pieties: the Radical Challenge for Journalism
Patrick Cockburn
Trump’s Extravagant Saudi Trip Distracts from His Crisis at Home
Angie Beeman
Gig Economy or Odd Jobs: What May Seem Trendy to Privileged City Dwellers and Suburbanites is as Old as Poverty
Colin Todhunter
The Public Or The Agrochemical Industry: Who Does The European Chemicals Agency Serve?
Jerrod A. Laber
Somalia’s Worsening Drought: Blowback From US Policy
Michael J. Sainato
Police Claimed Black Man Who Died in Custody Was Faking It
Clancy Sigal
I’m a Trump Guy, So What?
Gerry Condon
In Defense of Tulsi Gabbard
Weekend Edition
May 19, 2017
Friday - Sunday
John Pilger
Getting Assange: the Untold Story
Jeffrey St. Clair
The Secret Sharer
Charles Pierson
Trump’s First Hundred Days of War Crimes
Paul Street
How Russia Became “Our Adversary” Again
Andrew Levine
Legitimation Crises
Mike Whitney
Seth Rich, Craig Murray and the Sinister Stewards of the National Security State 
Robert Hunziker
Early-Stage Antarctica Death Rattle Sparks NY Times Journalists Trip
Ken Levy
Why – How – Do They Still Love Trump?
Bruce E. Levine
“Hegemony How-To”: Rethinking Activism and Embracing Power
Robert Fisk
The Real Aim of Trump’s Trip to Saudi Arabia
Christiane Saliba
Slavery Now: Migrant Labor in the Persian Gulf and Saudi Arabia
Chris Gilbert
The Chávez Hypothesis: Vicissitudes of a Strategic Project
Howard Lisnoff
Pay No Attention to That Man Behind the Curtain
Brian Cloughley
Propaganda Feeds Fear and Loathing
Stephen Cooper
Is Alabama Hiding Evidence It Tortured Two of Its Citizens?
FacebookTwitterGoogle+RedditEmail