The Public Eye: The Job Crisis: Hard Times and Tough Choices

By Bob Burnett
Friday October 08, 2010 - 03:46:00 PM

Here in California, I’ve been calling voters, asking them to vote no on Proposition 23 – the Texas Oil attempt to roll back our enlightened environmental law (AB32). I’ve been impressed both by voters’ determination to defeat Proposition 23 and their reports of hard times. Many voters say they are hurting financially. 

It doesn’t come as a surprise. The Bureau of Labor Statistics reports that the US unemployment rate is holding at 9.6 percent. But when you add the number of “discouraged” workers, who’ve quit looking for employment, and the number of who are working part time because they can’t find full time work, the total number of unemployed and underemployed rises to 16 percent. And that’s probably low considering the number of people who are stuck in jobs they hate but are afraid to leave – not to mention the number of folks who put in long hours but don’t earn a living wage. 

Last month the National Bureau of Economic Research declared that “the great recession” ended in June of 2009. Most Americans find that hard to believe when hard times continue. Indeed, financial guru Warren Buffett observed: “We're still in a recession… We're not gonna be out of it for a while…” Buffett defines a recession differently from the National Bureau of Economic Research, saying it ends “when real per capita gross domestic product returns to its pre-downturn level.” 

What Buffet didn’t say is that no one can predict when real per capital gross domestic product will rebound. Berkeley economist Robert Reich believes that during the Bush Administration ordinary consumers lost such a high percentage of their buying power that they no longer have the capacity to pull the US out of the recession. (Columbia economist Joseph Stiglitz agrees.) 

This long-lasting recession has had four consequences: high unemployment and a steady loss of decent jobs; low-interest rates; savage restriction of credit; and rising income inequality . The gap between rich and poor Americans is increasing and the middle class is wasting away. As a consequence, ordinary consumers have less discretionary income. 

The US economy depends upon steady consumption by working-class Americans. Conservative economic theory incorrectly assumes that rich folks buying yachts and vacation homes catalyze the consumer economy. That’s not happening; wealthy Americans have as much income as they have ever had but their purchases of Ferraris or diamonds aren’t boosting the economy. Average Americans aren’t consuming because they either don’t have the money or are saving it because they are fearful. 

Working folks aren’t consuming so businesses aren’t hiring. It’s an understandable but deadly cycle. There’s a fundamental loss of trust. That’s why Americans are depressed. 

Once upon a time, Americans prided themselves on their “can do” attitude. We shared the belief that no matter how difficult the problem we could solve it by banding together. That’s the spirit that prevailed during World War II when America united to defeat the Axis powers. And that same spirit is still seen in communities wherever there’s a hurricane or earthquake or horrific fire; we still have the capacity to form the “benevolent community” that works for the common good. 

Unfortunately, as regards the jobs crisis, America has lost its “can do” attitude. Economists Paul Krugman and Robin Wells address this in their NEW YORK REVIEW article The Way Out of the Slump: “ In the months immediately following the failure of Lehman Brothers, policymakers seemed to understand that we had entered a world in which the usual rules no longer applied—a world in which running huge budget deficits was an act of prudence, not folly... But that understanding faded fast. Unconventional policies are as badly needed as ever; but policymakers have lost their nerve.” (Their assessment is shared by financier George Soros.) 

Even before the results of the November 2nd elections are in, the US is in gridlock. Politicians know we’re facing hard times but they’re unwilling to make the tough choices required to jumpstart the economy. 

It’s time for liberals to roll up their sleeves and get back to first principles. We must be clear about our values and what’s required to solve the jobs crisis: 

1. Every American has the right to a decent job paying a living wage. 

2. If the marketplace won’t supply these jobs, then government has to be the employer of last resort. 

3. There must be a jobs-oriented stimulus package that not only supports America’s teachers and public safety workers but also strengthens the US infrastructure, in general. (Bring back the WPA!) 

4. We can pay for the new stimulus package by increasing taxes on both the wealthy and financial institutions. 

5. The Federal government has to be involved in economic policy. It has to intervene and create the jobs that the greedy, shortsighted private sector hasn’t provided. (Even if this means restricting trade with countries like China.) 

Hard times require tough choices. We have to have folks in Washington who are willing to turn the US in a new direction, where everyone who wants to work has a decent job. We need congress people with liberal values. 

Bob Burnett is a Berkeley writer. He can be reached at