As he pointed out, you need to look at other places in our position. Europe, Japan, South Korea . . . they are generally doing worse.
Europe is performing worse because it is a currency block without a mechanism for coordinating fiscal policy. Worse, the fiscal policy that is being enacted in the Eurozone by individual countries is contractionary, when it should be expansionary. Also, the European central bank was not as aggressive as the Fed in trying to alleviate various debt burdens. What is happening in Europe is what would have happened in the U.S. had the Republicans controlled all three branches of government or Obama actually been serious about his "pivot" to deficit reduction in the short term.
I'm not sure how you can say Japan or South Korea are any better or worse off than we are. Japan actually presaged our economic experience by 20 years with their own real-estate bubble burst and lost decade or decades. Terms like "zombie banks" and "zombie corporations" actually were first used as criticisms of the Japanese response.
In any case, I'm not sure why any of that matters. There were certainly worse places to be on Earth than the U.S. in the 30's, 40's, and 50's. That fact had absolutely nothing to do with the merits of U.S. economic policy then and it does not now.
It is a tough time due to oil depletion, low-wage foreign competition, and an aging population. People can complain all they want but I don't see anyone with any magic solutions. The standard GOP line of 'cut taxes and then magic happens' just doesn't work. Ask Brownback about that
.
I hear these explanations all the time, but they simply don't stand up to scrutiny. If oil depletion were the cause of our economic difficulties, then economic growth would have an inverse relationship to oil prices. The opposite has been the case in the past decade and a half. In fact, the U.S. has never been more energy self-sufficient in recent memory than it is at the present because of new technologies, unpopular things like fracking, and more fuel efficient cars.
The aging population explanation is bogus for a similar reason: It relies on the assumption that the productive capacity of the U.S. economy is somehow less than it was in the past, and that a loss of productivity is what it causing the present slow economic growth. In fact, the opposite is the case. If productivity loss were the true cause of the recession, the utilization of American factories would not have gone down during the recession.
The "foreign competition" explanation is wrong for similar reasons, and it also ties into what I was saying about the system failing on its own terms. According to the economics of trade, free trade should should enhance the overall productivity of all countries involved, thereby leading to greater prosperity for all. The standard liberal response to an inequitable distribution of the benefits of trade is for a strong state to redistribute wealth in the form of public goods. Nothing like that is happening.
The theme running through the reasons why all of these explanations are wrong is that, contrary to the unstated assumption behind the explanations, the root cause of the current economic problems is a lack of
demand, not of supply. Models positing a lack of supply as being at the root of our current economic problems simply don't match reality in the predictions they make and are, at best, intellectually incoherent.
All that being said, judging by your response, I think I might come off as right wing in my previous post, when that could not be further from the truth. I'm definitely in the "didn't go far enough" camp. Moreover, the way the Obama administration did not go far enough is particularly insidious, especially for young people.
By coordinating with the Fed to bail out banks and prop up asset prices (housing and stocks), the Obama administration did indeed rescue the economy from a complete collapse such as was experienced in the early 1930's. The alternative would have been worse.
However, those measures primarily benefited older homeowners. If you are a boomer with who owns their own home, has a job, and has a pension or a 401k, the actions taken by the Obama administration benefited you. If you are a young person, unless your parents are able to contribute financially to "starting you out" in a career through paying for a college education (assuming you "chose wisely), none of the economic policies (e. g. generously subsidized higher ed, unions, well funded public schools, economic policies intended to ensure full employment) that were available to your parents and grandparents (with a few notable and unfortunate exceptions) are there to ensure that you are able to share in the wealth generated by the economy. Nevertheless, housing and other assets are still priced as if such measures still existed in large amounts. Worse, the very financial institutions that were saved now lobby against measures to actually extend the "rescue" to those left out.
That is what I mean when I say that a zombified shell of the system was saved. Arguably, it is better to be a young person with no future prospects in a barely functioning society than it is to be a young person in a society where everyone is equally fucked. That is small comfort, however. I think the above bears repeating because the damage done to future generations by the collective policy failures basically from 1996 onward will haunt future Americans for a long time.
