We're #1 ..........in low wage jobs!

The United States used to pride itself on having the world's largest middle class.

Following World War II inequality declined and the blue collar middle class grew. Economists call this period the Great Compression. It was a product of the New Deal,  labor and financial regulations, widespread unionization, and social investments in education, science, research and development and the infrastructure.

More than forty years of attacks on unions, deregulation, financial liberalization and privatization have undermined  the middle class and the nation's shared prosperity. Inequality has soared to heights not seen since the Gilded Age. Upward mobility, once a hallmark of the America promise, is less likely than in other industrial democracies.  The United States increasingly resembles a banana republic.

The nation's business class has waged a one sided class war against the unions, wages and benefits of private sector workers since the 1970's. Now they and their political spokeman like Scott Walker have turned their fire on firefighters, teachers and other public servants. Business Week put it bluntly in 1974 when it declared: "Some people will obviously have to do with less...it will be a bitter pill for many to swallow the idea of doing with less so that big business can have more."

But are we are still number one ................in low wage jobs. Is this the America we want to leave our children and grandchildren?

Senator Ted Kennedy 1932-2009

Senator Edward Kennedy, an unwavering champion of economic security, universal health care, and full employment, has died.

For almost half a century Senator Kennedy was an articulate voice for working people, immigrants and racial minorities. His devotion to the ideals of equality and social solidarity shaped his life and work. Senator Kennedy believed in the values that gave rise to the New Deal and programs like the Social Security, Unemployment Compensation and Fair Labor Standards Acts that reflected those values.

His eulogy for his brother Robert, felled by an assassin's bullet 41 years ago, speaks to his legacy as well. It is excerpted below:

I want to express what we feel to those who mourn with us today in this Cathedral and around the world.

We loved him as a brother, and as a father, and as a son. From his parents, and from his older brothers and sisters -- Joe and Kathleen and Jack -- he received an inspiration which he passed on to all of us. He gave us strength in time of trouble, wisdom in time of uncertainty, and sharing in time of happiness. He will always be by our side.

Love is not an easy feeling to put into words. Nor is loyalty, or trust, or joy. But he was all of these. He loved life completely and he lived it intensely....

My brother need not be idealized, or enlarged in death beyond what he was in life; to be remembered simply as a good and decent man, who saw wrong and tried to right it, saw suffering and tried to heal it, saw war and tried to stop it.

Those of us who loved him and who take him to his rest today, pray that what he was to us and what he wished for others will some day come to pass for all the world.

As he said many times, in many parts of this nation, to those he touched and who sought to touch him:

"Some men see things as they are and say why.
I dream things that never were and say why not."

The Japanese experience with economic stimulus

In a front page Milwaukee Journal Sentinel Crossroads' column, Amity Shlaes cites the failure of Japan's "huge" fiscal stimulus program in the 1990s as a cautionary tale for President-elect Obama.

Shlaes who has become the darling of free market conservatives for her repudiation of the New Deal and all things Keynesian misrepresents the Japanese experience as a case of large public expenditures in infrastructure that failed to ignite the economy, arguing that infrastructure investments are better left to the private sector.

Leaving aside the obvious problem that a fiscal stimulus is needed precisely because private investment has collapsed, it's apparent that Shlaes is misinformed about Japan's experience. Perhaps she has not read Adam Posner's definitive work, Restoring Japan's Economic Growth, which is a detailed refutation of her arguments.

Japan's 1990s fiscal stimulus, changes in government spending and taxes, was disappointingly modest, not huge, as Shlaes contends. It amounted to only about a third of the announced stimulus and according to Posner: "This limited quantity of total fiscal stimulus was disbursed in insufficiently sized and inefficiently administered doses, with the exception of the 1995 stimulus package."

In 1995 Japan implemented an aggressive fiscal stimulus that led to strong economic growth in 1996. But its impact was undermined in 1996 and 1997 by fiscal contraction. Posner concludes: "On net, the Japanese fiscal stance in the 1990s was barely expansionary...."

The problem in Japan was not a huge stimulus package, as Shlaes contends, but an overly timid one.

This is similar to the U.S. experience in the 1930s. The economy began to grow in 1934 in response to increased deficit spending. But President Franklin Roosevelt, under pressure from his era's balanced budget hawks, was forced to cut federal spending in 1937 and the economy began to contract, only to be rescued by World War II and dramatic increases in federal spending.

So what are the real lessons President-elect Obama and his advisers should learn from Japan and the New Deal? First the stimulus package must be large enough ($700 billion to $1 trillion) to ignite the economy. And second, once the stimulus begins to work and the economy begins to grow, the Obama administration should reject any pressure from the Shlaes' crowd to prematurely cutback on the stimulus.

New Deal stimulus & the Great Depression

An entire revisionist cottage industry has emerged attributing the Great Depression to intrusive government.

Curt's letter to mid coast views earlier this week parroted this analysis.

Noble Prize winning economist Paul Krugman corrected the record when he responded to a similar suggestion by conservative commentator George Will.

Krugman calls for bold New Deal

Paul Krugman writes that the nation needs a New Deal:

...right now happens to be one of those times when ...good morals are good economics. Helping the neediest in a time of crisis, through expanded health and unemployment benefits, is the morally right thing to do; it’s also a far more effective form of economic stimulus than cutting the capital gains tax. Providing aid to beleaguered state and local governments, so that they can sustain essential public services, is important for those who depend on those services; it’s also a way to avoid job losses and limit the depth of the economy’s slump.

So a serious progressive agenda — call it a new New Deal — isn’t just economically possible, it’s exactly what the economy needs.

The bottom line, then, is that Barack Obama shouldn't’t listen to the people trying to scare him into being a do-nothing president. He has the political mandate; he has good economics on his side. You might say that the only thing he has to fear is fear itself.

Here's the article.