Sunday, June 27, 2010

Another New Deal

Over at Watching America there are still some articles on BP's Gulf spill and the fallout from that. The G20 meetings are still going on, so there isn't too much reported at this point. There is, however, an interesting article from Rumania's Curierul National written by Marcel Răduţ Seliste, which compares the last depression and this one and comes to the conclusion that apparently the world has learned nothing from that historical period.

The effects of the current crisis are much more serious not only in content, but especially in their reproduction by state institutions that would normally have been required to correctly identify and counteract them. The U.S. and the capitalist countries of the European Union responded to the first wave of bankruptcies and financial bottlenecks by allocating immense sums from national reserves for the recovery of the economic entities guilty of triggering the crisis in the first place, i.e., banks, insurance agents, mortgage companies and major corporations. In a damaging and futile gesture, pearls were cast before swine. The outrage and indignation provoked in American public opinion made history when in November 2008, executives from General Motors, Ford and Chrysler went to Washington in private luxury planes to ask the government for billions of dollars of aid to refinance the companies they run. [Emphasis added]

It is at this point that Mr. Seliste zeroes in on what the world, particularly the US should be doing but isn't. He reminds us that FDR pulled the US out of the Great Depression by implementing programs that put a choke chain on Wall Street and other financial entities and that put Americans back to work:

The New Deal represents a set of socio-economic measures adopted by the American legislature and implemented by the government at the initiative of President Roosevelt. Among the most important we find the establishment of the Reconstruction Finance Corporation, an entity through which liquidity was provided to the financial system; the adoption of the Securities Exchange Act, through which stock market transactions were drastically regulated and which established a legal framework for loans that banks could provide for such transactions; and the adoption of the Glass-Steagal Act, which separated investment banks from commercial ones, disciplining the capital market. Faced with terrifying rates of unemployment, the U.S. government established the Civilian Conservation Corps, which employed young people between 18 and 25 years of age in community work (land improvement, construction of roads and highways, etc.). Approximately 2 million Americans were enrolled in this program, and hundreds of national development sites were established. [Emphasis added]

And it worked.

What we got, on the other hand, was a half-vast stimulus package, much of the money for which is still being held onto by the states as their leaders squabble on how to spend it. We found trillions to bail out the banksters, but we couldn't find any money to stop foreclosures. Now, we can't even extend the unemployment benefits of those out of work since the start of the economic disaster because Republicans and Blue Dog Democrats are wringing their hands over deficits.

None of this is, of course, "new" news: such luminaries as Nobel Prize winner Paul Krugman have been ranting about this for 18 months at least (see here for one example).

No one in Washington or in Toronto are listening, however, nor are they apt to until things get so bad that the mood of the commoners shifts from depressed to furious and the mob-mentality takes over. I figure that just might happen long about the first Tuesday in November, if we're lucky.

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Blogger PurpleGirl said...

In my most pessimistic moments I don't believe they will listen. And I don't believe they are looking at the structural changes that have changed employment categories. These changes go beyond the loss of manufacturing jobs. The merges of companies for several decades and the changes by computerization of the office workplace have decreased the shear numbers of all types of jobs. We need to develop jobs that people can fulfill.

10:57 AM  

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