Economist Dean Baker is featured on today’s July 4th Common Dreams. His message is simple: Follow Germany’s example – ask people to work less, not more. The average worker in Germany (and the Netherlands) works 20% less than the average U.S. worker, which means those countries generate more jobs. Germany also subsidizes companies that cut workers’ hours and hire other employees. As Baker notes, this model would never work in Washington today (I’m sure some conservative would read Baker’s article and call the German model “French.”). Something more than tax cuts needs to be done. Baker and his fellow economist Paul Krugman are clearly on the side of government intervention. Hopefully, the Democrats will be brave enough to follow their example as they campaign in the fall.
Have a safe, happy (and cool) 4th.
In Common Dreams, The economist Dean Baker argues that the political and media attention to budget deficits is misplaced and misguided. The people who caused budget deficits and have benefited most from those policies are asking those with the least to sacrifice. We won’t hear voices like Baker’s on network news. That’s where we’ll hear the experts who want working people to sacrifice even more. The rich need our help.
England and Germany are making large budget cuts, many of which will target government employees and programs. Should we follow a similar path in the U.S., especially during a period of high unemployment?
Prominent economists Paul Krugman and Dean Baker say no. Krugman’s blog has been devoted to debates with other economists. While many of the subjects are technical (too technical for me, at least), Krugman, a recent winner of the Nobel Prize for Economics, argues that this is a time when government needs to invest in programs that will create and save jobs. Similarly, Baker has taken on the strategy of deficit reductions. Do we need to cut government debt? Yes. To do it now, and to do it in a drastic way as the English and Germans are, would likely to increase unemployment.
Writing in today’s Sun-Times, Jesse Jackson puts the problem in more human terms. People across the country have been suffering from job loss and foreclosures. Over the past 10 years, the federal government has taken on debt through tax cuts for the wealthy and two long, expensive wars. Jackson wants the government to invest in people. He writes: “We need bold vision now. We need an urban policy that will rebuild our cities and put people to work.” We invested trillions to save the banking system. Why can’t we do the same for working people and the almost invisible poor?
The decisions our government makes over the next few weeks will shape our economy for years to come, especially in the private sector’s ability to grow and create jobs. Let’s hope our leaders make good decisions.
Postscript: Writing in the Nation, William Greider puts this issue in a historical perspective.
The economist Dean Baker has issued a scary picture of our economic future. He identifies a trillion dollars that have been lost in our economy. Stimulus programs helped bring temporary relief to certain areas, like home purchases. However, as those programs end, the economy will get soft again. Housing prices will continue to go down. Unemployment will rise. Baker says politicians are taking the wrong path in cutting the deficit. The economy needs to have the pump primed, not turned off.
If Dean Baker thinks we’re headed for a downturn, it might be a good time to save some money and get ready for a rough ride. Hopefully, some of our “leaders” in Washington will listen to what Baker is saying.
Postscript: In a recent blog post, Paul Krugman adds to what Baker is saying. Cutting the deficit won't solve the immediate problems -- unemployment and a lack of wealth.
Writing in the Huffington Post, Dean Baker offers a different solution for the American debt problem: Let the Federal Reserve buy the debt. While I think this is a logical solution, the Fed is run by the same kind of thinkers that want to slash the deficit, the kind of people who put Wall Street before Main Street, bankers before working people.