Post Labor Day Pieces

Labor Day is gone again. Another year into our economic malaise and little to show for it. The feeling I sense most is one of frustration, mixed with a growing skepticism that anyone knows what to do to get the country rolling again. The most popular narrative in the media is that we need to tackle our debt crisis, and that this needs to be balanced with some short term tinkering in order to spur job creation.

Tinkering?

Phooey.

We need surgery.

But we won’t get it. Another part of the common narrative explains why: the thought is that Keynesian policy failed us – exhibit A being the rotten outcome from the 2009 stimulus – and that any further such effort is throwing good money after bad. Besides, the same thought goes, we are up to our eyeballs in debt because of all that government intervention, and have no more room to add to debt levels without tipping the economy into a state of bankruptcy.

Add in all the usual homilies about government borrowing sucking all the credit from the market so that the private sector cannot borrow, invest, and thus propel us all forward, and the sanctimonious commentators sit back as if they have discovered some deep truth. Some inescapable truth about economics that only the foolhardy try to avoid.

That truth being that we ought to let the market – whatever that is – correct itself. Which it can only do once the government is firmly constrained, reduced, and otherwise neutralized.

This narrative is, of course, straight from the right wing playbook supported by right wing economic theories. It endures and manages to influence policy makers despite the total lack of credible evidence to suggest that it is correct.

For instance I find it odd that those who argue we should let the market solve our problems seem willing to ignore market based evidence. Were they to tune in to actual market signals they would find it emitting a primal scream. Interest rates are at near all-time lows. Cash is flooding into the US. Far from saying pay down debt, the market is urging, vociferously, that we borrow more. In other words we have a once in a lifetime opportunity to borrow vast amounts of money and invest it in our future. With rates at 2% practically any sensible long term investment would turn a neat profit for society. We could rebuild our infrastructure, refurbish our electrical grid, rebuild our bridges, invest in non-carbon energy sources to cut our dependency on oil, and we could even, and I realize this is a stretch, rebuild our rotting inner city schools.

This would be a great gift to our children. Yes it would burden them with debt repayment costs. But those costs would be much smaller than the ones they would incur for the same amount of activity. We would, in effect, being giving them a cut-priced, but refurbished, infrastructure. Anyone flying into or out of New York City confronts the antiquated and failing physical assets we currently make do with. At 2%, all that could be improved. Or at least some of it.

But no.

Notwithstanding the urging of the free market and its message to borrow and invest, we are being led by policy makers intent on paying back debt. So lacking in imagination, energy, and substance are they that they ignore the very market they laud. So ideologically hidebound are they that they fail to see the opportunity we have. They don’t want to see it. They don’t want to muddy their ideological purity by acknowledging that the market, that paragon of economically efficient allocation of resources is begging, just begging, to allocate resources to US government debt.

This blind and willful disregard for evidence will cost our children dearly.

Not only will they inherit a diminished economy, but they will still be faced with having to refurbish our shabby and shamefully neglected infrastructure. An infrastructure that will represent a constraint on the growth they can squeeze from the economy.

Meanwhile in another supreme example of ineptitude, Standard and Poors continues to give a higher rating – AAA – to mortgage backed securities that include elements of sub-prime debt, than it does to US government debt. The absurdity of this is indescribable. The enormity of the stupidity boggles the mind. It is, naturally, easily explained. The mortgage debt issuers pay to make sure their debt retains that coveted AAA rating. The US government clearly doesn’t. Never has there been a more clear and distasteful example of corruption on Wall Street. Yet it continues. Mercifully the credit markets seem to ignore S&P – as current interest rates suggest. Which begs the question: how does S&P continue in business? It is clearly irrelevant, corrupt, and incompetent. I can only assume inertia is the key factor keeping them afloat. All those money managers who rely on S&P ratings are too lazy or too ignorant to change their ways. Perhaps they are too stupid to undertake their own credit analysis. Or, perhaps, they are just as corrupt, and don’t want to be exposed as being part of the same game.

Oh.

And one last thing this post-Labor Day week.

Today’s report on new claims for unemployment assistance showed an increase. Small, admittedly, but an increase nonetheless. Claims rose from 409,000 to 411,000. It is not worth my while to tell you what I think of this. One word will suffice: awful. What we need, clearly, is a major speech outlining a series of bold, but still small-enough-to-get-voted-through steps to attack this problem that blights our great nation. We need more political grandstanding. More rhetoric. More inspiring words. More faux emotional moments when the camera can pick out an unemployed worker beaming with pride at the imminent action promised by those words.

More nothing.

As today’s numbers clearly indicate, the recovery is in full swing and our labor force should be grateful for the stirling leadership from both the White House and Congress. I tip my hat to the policy makers. It takes courage, inventiveness, and a willingness to work together to produce such results this far into a recovery.

Courage to look the unemployed in the face, and blame them for their misfortune.

Inventiveness to avoid even the simple things that could be done to help the unemployed.

And a great willingness to work together to corrupt and stall our political process sufficiently that the purpose of government becomes simply to be re-elected rather than to govern.

With leadership attributes like these we can all rest assured that my report next Labor day will mirror, almost exactly, this one.

Only we will then be closer to an election that will resolve, yet again, absolutely nothing.

Labor Day? I think not.