Guess what? The answer remains the same. Stimulate Demand!! And what to we see from the world's leaders? We see austerity. In today's New York Times Paul Krugman in his op-ed Myths of Austerity writes:
When I was young and naïve, I believed that important people took positions based on careful consideration of the options. Now I know better. Much of what Serious People believe rests on prejudices, not analysis. And these prejudices are subject to fads and fashions.
So well said. Unfortunate not just important people beliefs rest on prejudices, many would be voters beliefs also rest on prejudices. See Nyceve's diary The Democratic base is angry, demoralized, and fed up. As she says:
But bipartisanship doesn't make healthcare affordable or create jobs. And saying the PPACA is better than nothing does not win elections or arouse the fighting spirit of Democratic voters.
As Paul Krugman states:
. . . I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.
This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.
We need to stimulate the economy. Not with tax cuts (indeed the rich should pay more taxes) but with spending to improve education, improve infrastructure (my rich Montgomery County Maryland is having water pressure problems because of inadequate water pressure), spend on techniques to reduce global warming (transportation, cheap energy, carbon absorption microbes, batteries, and on and on), and providing food, shelter and medical care for all. There is so much work to do that we will become fully employed rapidly.
There is more that needs to be done of course. We need to regulate or trust bust oligarchies, we need world regulation of banking, we need world wide currency reform, we need high pay for all workers in the world (no more iPad/Dell computer production workers committing suicide due to poor pay) and on and on.
This brings me to education. We in the US need to pay people starting in high school, college, and graduate school. They should receive bonuses on graduation. All people should be able to attend an appropriate school for themselves. Yeah I would give more money for better grades. Yes the 3Rs are important, but for tomorrow's economy they need foreign languages, better world history, world culture, world religion, i.e. we need to be able to work with all the peoples of the world. Language education should start with birth so that children entering kinder garden are fluent in at least two languages.
In stead of shortening high school, I would lengthen the days and focus not just on academic subjects but subjects like eating right, exercise, and so on. We teach Shakespeare, why not show movies and talk about how the themes are related to themes in Shakespeare's plays. And on and on.
So let's get educated, let's create jobs, let's deal with global warming, and let's reduce energy costs. All this work and people worry about deficits. Have we learned nothing from Ireland where as Krugman points out
And current examples of austerity are anything but encouraging. Ireland has been a good soldier in this crisis, grimly implementing savage spending cuts. Its reward has been a Depression-level slump — and financial markets continue to treat it as a serious default risk. Other good soldiers, like Latvia and Estonia, have done even worse — and all three nations have, believe it or not, had worse slumps in output and employment than Iceland, which was forced by the sheer scale of its financial crisis to adopt less orthodox policies.
So let us get on with the program Jobs, Education, Jobs and make a better country and a better world!
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