Time for Bold Action

I am so fed up with hearing from Republicans and some Democrats that we have to stop spending so much, that the deficit is dragging us down, etc. etc. This is just so much balderdash, and so completely ignorant of the lessons of history. Look, folks: we’ve been down that road before. What we need is just the opposite: bold programs to engage the energy of our people to overcome the economic setbacks we’ve experienced, and solve the technological problems that face us as a civilization, all at the same time.

Here’s an example of the kind of nonsense that’s floating around out there, from a widely circulated right wing e-mail that depicts Obama as Norman Rockwell painting his self-portrait (except the image he’s painting is Jesus’):

“These are possibly the 5 best sentences you’ll ever read:
1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it.
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.”

As economic principles, these are just plain false (not to mention mind-numbingly stupid). Of course, they sound good, in the way that slick propaganda phrases always do, but it isn’t the way the world works. An economy in a deflationary phase can only recover by increasing the amount of money in the hands of working people and the unemployed, who will spend it. This increases commerce and employment, and brings about job growth and recovery. Incentivizing hoarding by the wealthy, combined with spending cuts by government during severe recession such as was tried in 1930-31 by Hoover, and again, against better advice, in 1936 by Roosevelt, are the surest way to turn recession into Depression (the Depression was much improved by 1935, but the 1936 fiscal tightening policies brought it roaring back). Republicans' favored economic policies would be like a volte face, just as we were clear of the cliff and inching away, they would have us turn around and leap right off of it.

These are tried and true principles, which have helped America prosper in good times and bad for eighty years, and which we seem to be forgetting right when we need them most.

The Obama administration doesn’t entirely get it either. You hear some of this same fiscal restraint mantra even from them. And Bernanke keeps worrying about inflation. He’s supposed to be the great student of the Depression, but his policies aren’t noticeably different from that eminent psychotic Alan Greenspan. What we need is stimulus, and jobs, jobs, jobs. Nothing else will bring about recovery. Inflation is not the problem right now; in fact, as Paul Krugman has pointed out, we are actually facing a significant risk of a deflationary spiral.

The only thing that really ended the Depression of the 1930s was World War II, during which the floodgates of national debt were opened wide and the survival of civilization was used as a justification for a level of debt not seen since that time (proportionally), and which lasted a good many years after the war ended. If we really wanted to pull the US economy out of deep recession and bring about real growth so that 10 years out we would have near full employment and have turned the balance of revenue vs. obligations around, we should undertake the “moral equivalent of war.” This is a phrase that got Jimmy Carter nothing but ridicule when he used it, but actually was a good idea then and is an even better idea now.

We need to make huge public investments, and yes, with borrowed money, to build a renewable energy infrastructure to move away from a fossil fuel based energy economy. We need to invest in solar thermal power plants, ocean thermal energy and materials production, crash fusion energy research programs, crash exotic biofuel and biomaterials research and development, nonfossil transportation energy systems research and development… using the national laboratories and Depression era jobs programs as models, including facilities with thousands of employees... plus pushing and developing to the hilt the already existing solar, wind, and biofuel technologies... all with borrowed money.... as soon as possible in a truly massive way, and make the government the employer of millions of people to do it. And none of this fraudulent “clean coal” nonsense, or conventional nuclear energy, which isn’t worth it, because it’s never paid for itself, when even a fraction of the costs of waste disposal are taken into account.

Equally essential, as well, we need to abandon the military adventures which have already cost us trillions of dollars since 2001, and which are simply not yielding any appreciable benefit to either our national security or our economy (apart from a select group of contractors; the program I’m outlining would far more than offset that, and give us far more bang for the buck both economically and in terms of America’s reputation in the world).

If we actually did these things, and really reformed our financial industry so it was no longer a parasite, and reformed the tax code to raise taxes substantially on the very rich and impose windfall profits taxes on financial and energy companies... and (and this is essential) abandoned the “globalization” paradigm that encourages corporate interests to export jobs and race to the bottom in terms of productive labor in America... we could be looking at 1954 all over again in 10 years’ time: the dawn of an era of prosperity, with, yes, a big national debt (then it was the residual war debt), but with the means to partly grow out of it, and, (to be honest), partly inflate it away. This is the way governments have always handled big residual debt.

I think this is actually possible, but it would require the kind of real, positive leadership that isn't just oriented towards greed and preserving the wealth of them that's already got it; the kind of leadership we haven’t seen in this country, since John F. Kennedy. Regrettably, I don’t see this kind of leadership on the horizon. Where are you, great leaders, in your country’s hour of need? Step forward!