There's a big issue with today's economy that Conventional Wisdom imply doesn't address. Conservatives especially want to put it all on the individual to prepare for the "right job." The problem with that, of course, is that the lower 4 quintiles of the economy have income that peaked 15 years ago. Yeah, any of us can manage to do a little better than we did earlier in our lives, but the economy itself is simply a game of musical chairs when approached in that manner. People with more and better qualifications constantly compete for fewer jobs as income continues to fall.
At some point we need to stop playing musical chairs and start building a stronger economy. The urgency of that can't be overstated as the economy has been progressively slowing for 35 years. We're losing our edge compared to the economies of Australia and Europe in important measures and if it continues we'll lose our edge as the world's richest. Fortunately ideas are plentiful.
In a new report, A Bold Approach to the Jobs Emergency, the Bernard L. Schwartz Rediscovering Government Initiative offers fifteen ideas that could get us back to true full employment and at the same time build a foundation for rapid economic growth in the future. We are demanding a full-court press to recreate the economic opportunity that America once offered. We emphasize some ideas that have been heard before, but many that are forced to the back seat or are hardly talked about at all.
There are taboos among policymakers that are holding us back. Above all, we must take fiscal stimulus seriously again. Today’s economy operates far below its growth potential. The fiscal stimulus we need should not only make the social safety net whole but also be tied to aggressive investment in transportation, communications, and clean technologies that have been badly neglected.
The federal government can itself create useful, good-paying jobs in transportation, teaching, and health care. A carefully crafted federal job creation program, as was successfully enacted under FDR, can work today. Fifty billion dollars worth of new jobs could go a long way toward helping Americans.
The repressive effect on jobs and wages that results from aggressive Wall Street practices is all but invisible in Washington. Academic economists are almost as bad as the Washington think tanks in paying too little attention to how big finance can undermine both jobs and wages. Our report highlights the findings of researchers such as Eileen Appelbaum, formerly of Rutgers, and Rosemary Batt of Cornell, who show that the leveraged buyout and privatization crazes have on average led to many lost jobs and significantly less spending on R&D. It also showcases the work of William Lazonick of the University of Massachusetts, Amherst, who has long called attention to how massive corporate stock buybacks may help shareholders in the short run but hurt the American economy by diverting investment.
Now is the time to take action. Yes, the American economy has lost its way thanks to 35 years of Trickle Down, deregulation, and privatization but we're still close to the top and can quickly regain our edge. All it takes is the will to act.