Posted on 09/06/2010 9:47:30 PM PDT by TigerLikesRooster
Why America Isn’t Working
Kenneth Rogoff
CAMBRIDGE – As the US economy limps toward the second anniversary of the Lehman Brothers bankruptcy, anemic growth has left unemployment mired near 10%, with little prospect of significant improvement anytime soon. Little wonder that, with mid-term congressional elections coming in November, Americans are angrily asking why the government’s hyper-aggressive stimulus policies have not turned things around. What more, if anything, can be done?
The honest answer – but one that few voters want to hear – is that there is no magic bullet. It took more than a decade to dig today’s hole, and climbing out of it will take a while, too. As Carmen Reinhart and I warned in our 2009 book on the 800-year history of financial crises (with the ironic title “This Time is Different”), slow, protracted recovery with sustained high unemployment is the norm in the aftermath of a deep financial crisis.
Why is it so tough to boost employment rapidly after a financial crisis? One reason, of course, is that the financial system takes time to heal – and thus for credit to begin flowing properly again. Pumping vast taxpayer funds into financial behemoths does not solve the deeper problem of deflating an overleveraged society. Americans borrowed and shopped until they were blue in the face, thinking that an ever-rising housing price market would wash away all financial sins. The rest of the world poured money into the US, making it seem as if life was one big free lunch.
(Excerpt) Read more at project-syndicate.org ...
P!
Could it be that paying the unemployed for 99 weeks might serve as a disincentive for them to stop loafing while watching cartoons and do something proactive about finding a job?
Unemployment payments are made by the States, subsidized somewhat by the Feds. Maximum term used to be 26 weeks and now it’s almost 4X as long. The rapid increase of “entitlements” in the past two decades, along with the progressives’ desire to ‘redistribute the wealth’ does nothing to cause recipients of such benefits to want to get off their duffs and seek work.
Corruption has zapped the life out of the economic engine.
Any time people apply for public assistance, among the forms they fill out is a page-long list of their rights as an applicant. These rights include the right to not be discriminated against, the right to be treated with respect, the right to a hearing if they are denied benefits (the term used to describe assistance payments,) and many other rights.
Unfortunately, there is no equally long list of obligations. This arrangement leads people to believe that they somehow deserve the benefits they receive by virtue of being a voter or a taxpayer or a citizen or whatever. This condition is called being entitled, as in they think they are entitled to the benefits. Actually, they feel that they are entitled.
They cannot be denied benefits for a whole bunch of reasons, and they feel like they deserve them. Almost all public payments to the poor are like this, and thus the poor expect to recieve them, so they have become a category of spending which goes to the entitled class, and it is called entitlement spending.
It is nothing more than wealth redistribution. The rich must have gotten their money by unfair advantage, and the poor don't have any money. The rich pay taxes to take care of the poor, who are entitled to be taken care of, because they would be richer if the rich were poorer. This is all according to socialist reasoning.
Why should one earn more for working with his brain than one working with his hands?
yitbos
This died in the wool Keynesian is actually beginning to sound a twitch like an Austrian. Only a twitch mind you. If the Austrians had been running things the debt would not have been run up, the overhang of unproductive activities that folks are paid for out of the public trough would have been cut way back, and the massive creation of worthless assets in the real-estate industry through the explosion of debt financing would not have occurred.
Indeed. Krugman has become a parody of himself. Won’t be long his name will become a verb.
Either Krugman's ego has deranged what was once a great mind (vanity), or greed and willingness to serve the great paymaster, those who attest to the collectivist spirit, have thoroughly corrupted his sorry soul.
It is great classic Greek theater to watch, a show that those who think that Krugman is just another liberal idiot, will never appreciate. How the fatal flaw in this great economist's soul lead to his downfall is one of the great tragic stories of human history. Is it just a pity, or is it God's warning to us all.
Not only that, but it disincentivizes those that are productive. Why buy and care for the cow when you are forced, by the government, to share the milk with the lazy bums that make up the base of the democRAT party? People are going Galt for a reason.
It has been apparent to me that the policy of attempting controlled inflation was the goal all along. Like it or not, it is the only solution to eliminating the deficit.
The lowering of taxes should be accompanied by the implementation of taxes on those who now pay no tax. That will never happen so inflation is ll that is left.
Inflation has historical precedent over and over.
......Why should one earn more for working with his brain than one working with his hands?......
Because the brain work produces a higher profit for the company than the hand work.
I think political activism totally consumed him in recent years. He cannot bear the thought that the foundation of his deeply held beliefs breaking up. They defined what he is and inseparable from him. He had to do something. However, he is against the momentum so huge that he could not make a dent on it. This made him even more desperate, and now he is gone insane.
We are witnessing the end of an era.
That's a tough sell to the UAW at GM.
yitbos
Generally speaking, yes. But the shop floor has identified more than one mistake delivered from on high and has saved the company millions.
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