Hullabaloo

Wednesday, October 21, 2009

 
What Do We Make?

by digby

Campaign For America's Future is looking beyond the next quarter and asking the big questions that need to be asked: how can this country thrive if it doesn't make anything anymore?

Bob Borosage lays out the whole problem in this important piece and offers some thoughts on where we need to start looking for answers:

Where will the jobs come from? Wall Street can produce another bubble, but that won't put the 15 million without jobs to work, one-third of which have been out of work for at least six months.

Recovery requires fundamental reform of America's economic strategy. The old shibboleths of the conservative era—shrink government, cut top-end taxes, free multinationals to move jobs abroad, deregulate finance, wage war on labor unions, declare that trade deficits don't matter —have failed ignominiously. They must be discarded, like yesterday's rotted fruit.

Fundamental changes are needed. Trickle-down should be supplanted by public investment-led growth—large-scale public investments in areas vital to our future such as infrastructure, research and development, education and training. These investments should be deficit-funded until the economy actually starts putting people back to work, and then sustained and paid for through progressive tax reform. Tax speculative security transactions, generating $100 billion a year in revenue to invest in a 21st-century infrastructure that would put people to work and make the economy more productive. Raise top-end taxes, reduce inequality, and invest in making college affordable and exploring the green technologies of the future.

We've pursued tax cuts, promising private investments would flourish. But much of the productive investment and lavish consumption went abroad. In reality, public investment would be far more effective. We have a staggering public investment deficit that must be met for a world-efficient economy. Public investment is more likely to be invested, more likely to be spent here, more likely to create good jobs here, and far more likely to generate new technologies and productive private investments.

Read on for thoughts on where we need to focus in the immediate future if this country is going to maintain what we have, much less grow again.

I have long thought that one of the main reasons we see politicians and policy makers scrambling madly to prop up the greedheads is sheer, unadulterated panic that if they regulate this "magical" segment of the economy (financial services) that accounted for 40% of business profits before the crash, they will have nothing left. And it's a serious worry. When you have a mature economy like ours that's so heavily concentrated in paper pushing, gambling and middle man transactions that ridiculous risk is required to keep standing still, you have a big problem.

But the answer isn't to stick your head in the sand and frantically keep the party going until a miracle happens. The answer is to stop depending on this risky sector and concentrate on making things that people need. (Or else start concentrating on taking over the world --- which unfortunately seems to be Plan B.)

Campaign For America's future is hosting an important conference next week in DC called "Making It In America" to discuss this very problem. (You can click the ad over in the upper left to read all about it and sign up if you can make it.) I don't know anyone else who is devoting time and money to talking about this, but it's a vital and important topic and policy makers need to pay attention.



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digby 10/21/2009 05:30:00 PM |