Former Secretary of Labor Robert Reich answering questions on Reddit

Starting about an hour ago, former Secretary of Labor Robert Reich is answering pretty much whatever questions people pose him on Reddit. Among the gems:

evasilev: What is the top priority policy change you would like to see outlined in Obama's upcoming policy speech to Congress?

Robert Reich: It will be a hard sell, but when consumers (whose spending is 70 percent of the economy) won't spend, and businesses (who are facing lackluster sales) won't hire, government has to be the spender of last resort. The President should ask for a trillion dollars to boost the economy. Not just on the WPA and CCC I mentioned, also infrastructure investment, also loans to cash-starved states and localities. With 25 million Americans looking for full-time work, and the cost of borrowing so incredibly low (T-bills at 2 percent), this is the only responsible thing to do.

patefacio: How is Clinton on a personal level? He looks like he'd be a great guy to have a beer with.

Robert Reich: I've known him since he was 22. At Oxford, as grad students, we didn't inhale together.

I thought about asking him if he'd like to join me for dinner this weekend, but I chickened out.

I'm Robert Reich, former Secretary of Labor, author, and professor of public policy at Berkeley. AMA.


  1. “[R]ead the NYT every day, and read the Wall Street Journal’s editorial and oped pages so you learn the opposite of what’s truthful.”  -RR

    LOL! It’s true!

    1. That’s a terrible way to get the news. No news outlet is totally accurate or reliable; every one has a bias. Often the WSJ says things that are truthful and useful, often the NYT says things that are untrue. This is true of any news organization.

      If you followed that advice, you would have been all rah-rah for the Iraq War, which the NYT supported.

      More to the point, you would see no problem with running 20,000 bombing runs over Libya – something else the NYT unabashedly supported.

      Just because one side of the political spectrum is often wrong, does not mean the other is always right.

        1. Best way to educate yourselves is to read my books (my books are the kind of books that once you put them down you can’t pick them up), read the NYT every day, and read the Wall Street Journal’s editorial and oped pages so you learn the opposite of what’s truthful.

          No, he was saying that one is unimpeachably true and the other always false.

          That, or he was implying that his own book is the opposite of the truth.

          Sadly both the liberal and conservative media in this country broadly support the status quo. The liberal media has a different slant, caters to a different audience, and are less blatantly offensive. But neither ever questions the foundations of either our system of corporatist state capitalism or the empire.

          If you want to know the truth, there is no alternative to the independent, non-corporate media that has blossomed in the last decade. Either you become a savvy, skeptical, diversified media consumer; or you accept being blatantly lied to on a daily basis.

          1. Why not go there and just ask the man directly?

            EDIT: from the overall self-deprecating tone, he probably meant all 3 (including his own stuff) is the opposite of the truth.

          2. Well, good’s possible, it’s an ambiguous statement. If that’s what he meant, well, three cheers to him :)

        2. Either that, or that on the NYT the reporting was bad while the Op-eds are truthful, and in the WSJ it’s the other way around.

        3. Yeah, he didn’t say which was which. Eitorial and oped pages, are just that, opinions. Journalism, which both rags have, is a presentation of facts. Read the news, cross reference with the past, and form your own opinions.
          And always be open to an opposing point of view. The world isn’t black and white. Or shades of grey for that matter. It’s a whole spectrum of flavors.

  2. My strong advice: Try to avoid cynicism about politics, government, and all the major institutions of our democracy.

    Translated: Please don’t stop shoveling money to us, suckers.

    Ignore the fact that our federal establishment is geared mostly towards blowing shit up and propping up large corporations.

    Don’t trust yourself and your direct community to fix problems. Put your trust in distant, detached institutions that pretend to look out for you once in awhile. Don’t worry, we’ll fix everything.

    1. “Put your trust in distant, detached institutions that pretend to look out for you once in awhile. Don’t worry, we’ll fix everything.”

      I agree, we need to return to the days of alms houses and street children. That’s when the middle class had REAL power.

      That was sarcasm.

    2. From the wiki on what he did:

      During his tenure, he implemented the Family and Medical Leave Act (FMLA), successfully promoted increasing the minimum wage, successfully lobbied to pass the School-to-Work Jobs Act, and launched a number of job training programs. At the same time, he lobbied Clinton to address bigger societal issues, countered Robert Rubin and others in the administration who wanted Clinton to pare his investment agenda, and pushed for improvement of conditions for those in poverty.[citation needed]
      In addition, Reich used the office as a platform for focusing the nation’s attention on the need for American workers to adapt to the new economy. He advocated that the country provide more opportunities for workers to learn more technology, and predicted the shrinkage of the middle class due to a gap between unskilled and highly skilled workers.

      And your cynicism has accomplished…

      1. To me, he came to the fork in the road sometime in life and chose the correct path.
        This is just my opinion, but we’re given a lot of choices in life.  And when presented for whom one should carry water, there are the plutocrats, and there are my fellow Americans.  Whether they like it or not, I choose the latter.  I think Mr. Reich did as well. 

      2. A few things: 

        1) What has your personal belief in government accomplished? Helped get Obama elected, or what? Can you name a single person your belief in the state has helped? Generally, time spent mucking around in government is time better spent helping actual people (my time spent commenting on boards like this, I suppose, included). Anyhow,It’s a bit unfair to compare me to Robert Reich. I’m 30, he’s maybe 60.

        What helps people live well are technology, compassion, and right understanding. If you want to improve the world, focus on these areas. The combined efforts of the governments of the world would not help humanity as much as a small team of people finding a clean and infinite energy source.

        2) Many of these achievements have had negative side effects. For instance, the first two (well intentioned as they might be) have been shown to discourage hiring of the people they are intended to help, and increase unemployment.

        3) I’m only cynicism about government and top-down, centralized solutions to problems. I’m basically very optimistic about people and about life; and I can proudly say that my life has positively touched many people, brought many people together, improved the health and happiness of many people, and generally made the small sliver of the world that I have had influence over a better place.

        There are actual people in this world I can point to and say ‘my actions helped this person.’

        This is generally not true of people involved in politics, unless their involvement is to protect them from state violence.

        1. You seem to imply Reich’s achievements have resulted in a net negative social result. I sum up your second statement like that because you use the word “many,” which implies a majority… which in turn implies a net negative overall, if all contributions can be weighted equally. Your quick critique of Reich’s accomplishments and work elsewhere seems to indicate thus. 

          I would like to know what you’re citing that shows his achievements have had negative side effects. It would help your point, if nothing else.

          Regarding your cynicism of government, you _do_ realize that all governments are made up of people, right? You can’t be optimistic about people and cynical about government. If you think of government as a faceless behemoth, then it becomes simply a foil for your grievances. Governance of society happens both inside and out of institutional environments, as your claim surrounding your own life work implies. Institutions, however, will exist as long as there is society. The questions you should ask, before you desire to chuck the current solutions, should center on what life was like _before_ the top-down, centralized approach was considered.

          Life in America, pre-unions, pre-regulation, was far from idyllic. Federal roads, rules regarding basic education of all children, public law enforcement, food safety… all of these concepts were new at one point, and each represented a need that the private sector could not or would not fulfill. And each had their detractors, as well.

          Heck, life in America pre-civil-rights wasn’t all peaches and cream, either. We agree to create broad sweeping changes and enforce them at a federal level because people in power _and_ people supporting that power (i.e. your middle managers, your shift leaders, and so on) cannot be trusted to look out for the best interests of others. In fact, people, when observing an injustice, are more likely to act as bystanders than as champions of social justice or ethical behavior. Institutionalized solutions provide, in part, a voice of authority that people can follow, helping them to make better decisions in uncomfortable situations. (For example, I may not want to step in to resolve a nearby domestic squabble gone violent, but I can call 911.)

          Governmental, top-down approaches to resolve these issues both improve the general quality of life for all citizens and require the citizens to pay to support them. Removal of or reducing these systems by cutting funding will, while aiding the budget to some degree, result in a reduced quality of life for all citizens.

          1. First, I won’t say that Reich’s actions have had a net negative effect, because I simply don’t know. What I am saying is that it is possible, and in the end no can know for sure.

            I remember a quote from Alan Greenspan (paraphrasing): “When I was young, I realized I could help hundreds of people by taking a profession. Or I could help millions of people by going into government.” And yet, by mismanaging the Federal Reserve, his actions instead HURT millions if not billions of people.

            you _do_ realize that all governments are made up of people, right?

            But aren’t all corporations made up of people? And all armies? And all secret police services? What’s important is the structure of the organization. The modern democratic state is an organization that allows its members to avoid responsiblity for their actions, and take actions that many of the effected people don’t voluntarily go along with. That is the problem.

            The question is, should we allow institutions to make decisions for people that they don’t want to make for themselves? Do we treat humanity as a group of children, incapable of intelligently analyzing the world and acting in it?

            It might be that private enterprise wasn’t able to do things; it may be that they WERE doing them, or they were simply unwanted. The quality of the food supply, for instance, was better without regulation (you want to see a public health crisis, walk into a Wal-mart and look at the people). Functional literacy was better before public education. ‘Public’ law enforcement is a joke. And the federal highways acted as a subsidy for suburban developers, auto manufacturers, and truck based logistics.

            Life 100 years ago might have not been perfect, but
            A) it was much more free (you could cross most borders without papers!)
            B) It was much less dominated by corporations
            C) People were more economically independent, and many less people relied on wage labor at a large company to survive.

            Your second to last paragraph gets to the nut of the problem. Institutions provide people an excuse to not take part in the world. It allows them to think there is a higher body that will solve everything.

            What will 911 do if you call the neighbors? Arrest them, give them criminal records, economically hobble them for is that better than acting like a human being and trying to resolve the situation between them on a personal level? 

            Humans are social creatures. Humans naturally DO look out for the interests of one another. Not every person, but a majority. It is ingrained in the human species. This is why liberal political parties enjoy widespread support around the world. I might disagree with their tactics, but I totally agree with the sentiment that causes people to support them.

            Top down solutions are not just immoral, anti-experimental, and dangerous, but they are simply much less effective than collaborative bottom-up approaches.

            There are millions of children whose thirst for learning has been stomped out by rote education, millions in prison for federally imposed laws (drug laws were first conceived federally), millions whose health has been destroyed because they believed that whatever was FDA approved was healthy, millions who chose not to start independent businesses because the regulation was too burdensome. Don’t tell them about how much their quality of life has been improved by top down strategies…

          2. You’re arguing that people were more free 100 years ago? Are you working with a definition that resticts the argument to white, Christian, able-bodied males of at least lower-middle class status? That’s not even a majority of the population, and it’s one of the reasons I’m highly suspicious of any institution that relies solely on the altruism of individuals and small groups.

            Humans are social creatures. We’re also selfish, highly emotional creatures with strong in-group biases and very particular logical blind spots. Sometimes dealing with things on an individual level is the most effective way, but there are other times we need to get around those very human flaws to ensure that long-term, dull problems are taken care of and that even unpopular people have a safety net.

            I think your 911 example actually plays into that well. Most people, left to their own devices, will not intervene in a case of suspected domestic abuse because they fear being injured themselves. The handful who do intervene might very well do so by violent means themselves, or would focus the intervention on the noise level involved. That might be a fine enough world to live in if you will always be the person in your household with the most physical strength, or if you’re certain you will always have enough assets and social power (even as a child) to relocate if you are in a dangerous home. It’s not so functional for people who don’t have those assurances.

          3. Yes, I will make the argument that people are less free than 100 years ago, even blacks. We live in a world where every action is surveilled and recorded; where we are required to report every dime of income we make, where we are forced to direct our life energy supporting horrific crimes in order to simply survive (the income tax paying for war).

            Even minorities are not really more free. A vastly higher percentage are put in prison, a denial of every kind of freedom. Unemployment among young black men in many cities (chicago, detroit, milwakee, etc.) is ~ 50%. Government policies have been crucial in warehousing blacks in housing projects and inner cities. The level of direct opression from whites that blacks experience is less; but the amount of state oppression they suffer from is more or less the same. Much better in some areas, much worse in others. The Drug War is the modern Jim Crow.

            To the extent that we are more free, it is mostly due to A) empowering technology and B) the breaking down of bullshit Christian morality in mainstream society, and the grip of religion on society in general, an apolitical process. 

            You’re right, dealing with things socially is much more effective than individually. The question is, do we force people who want no part in our solution to join?

            As for the 911 example, what fighting couples need is healing. They need someone who cares about them to step in, talk to them, listen to them, and help resolve the root of the issue. Maybe a few valiant police officers will actually take the time to do this, but their numbers are slim. Quite the contrary, police officers are more inclined to deal with a situation violently than the public at large. The solution is for people to know each other and care about each other on a personal level.

          4. “What I am saying is that it is possible, and in the end no can know for sure.”

            And at exactly that point, I saw through you.

            Why argue, when nobody can prove anything?


            Regarding your cynicism of government, you _do_ realize that all governments are made up of people, right?

            Ever hear of Milgram and his famous experiment? Those subjects weren’t bad.

        2. You are still young, I hope you learn more about the world. I honestly think that’s nice that you help people directly, I feel that’s a great way to contribute to the world.  It’s not an either/or contribute to government so you can help people.  There are gradations of charity, the best is when you don’t know who you helped, and they don’t know who helped them. Read Maimonides on this.  Many people in the Western world are not aware of how many people are being propped up by the state, and are receiving aid.  Believing it does no damn good because of instances that you know of when it’s done wrong shows some naivety.

          “The combined efforts of the governments of the world would not help humanity as much as a small team of people finding a clean and infinite energy source.”

          A small team of people does not do science in a vacuum.  They stand on the shoulders of the scientists/engineers/teachers before them.  All of whom were educated by the state.  Who stood on the broader pyramid of the same.  Ad infinitum.  How much science would be done in the US without NIH/NSF/University/big evil corporate support?  Miraculous Independent Science only occurs inside Ayn Rand novels. 

          Please, stick around more on the internet, born from a government think tank, which can communicate all around the nation due to the rural electrification project, and tell us more how wonderful technology is and top down solutions can’t do anything.  The personal beliefs in government of the Americans of the time allow us to chat. 

           I was once like you are now, and I know that it’s not easy, to be calm when you’ve found something going on.
          But take your time.  Think a lot.

          1. I appreciate your heartfelt reply on this post. A couple points.

            First, I do not deny that people need to help each other. What I dispute is the necessity of doing this in a centralized, coercive manner. I think we can do things better.

            Seconds, your claim that all people are educated by the state. First, this is nonsense – people learn in many ways. Second, there is nothing inherent in the structure of the state that only it can organize large large endeavors like this. There are many large successful private colleges that produce important research, and have basically nothing to do with the state.

            To your second to last paragraph, I reply that surely all the monstrous costs of the state can’t be worth the technological gains it has enabled, and I dispute that we as a species could not figure out a way to progress any other way. Is it impossible to conduct science, unless the funding comes at the barrel of a gun? Is it worth the cost of war, domestic gulags, corporatism, and imperialism, which seem endemic to state democracy, in order that rural areas might be electrified a few years sooner?

            As you can tell, I do think a lot read a lot, write a lot. I’ve followed the news closely since before I was ten years old. I used to be left-liberal to the point of being socialist. I make a point of reading opinions from across the political spectrum. 

            And everything I have read and though indicates that the best path to at truly peaceful and just society is decentralization and voluntary cooperation.

          2. Thanks for replying back. While I do believe in never letting your education get in the way of your learning, the countries that devote more time and resources to educating their youths are the one’s that progress in science. If you dispute, please list a country with prominent scientists who has not done this.  Spent 16 years of my life studying or working at four different colleges, none of them state schools.   All the researchers there required outside funding.  The exception to state or corporate funding was people who took money from the tobacco lobby. I’ve known hundreds of researchers.
            There have been countless attempts to reboot society into something peaceful and just.  If it could have worked in a stable fashion, why has it never done so?  What is different now that has never worked before?  People have been smart, and we’ve had our thugs amongst us too, for as long as we’ve had people.

          3. Pardon my intrusion. And as a ‘libertarian’ I can’t believe I am going to be arguing for gov. spending. Here we go:

            re: “Seconds, your claim that all people are educated by the state”

            A VAST majority of people are educated by the state. Most people can not afford or are not smart enough to attend private school. Education is an investment, not just in the individual, but the community and the country as a whole. It is the one thing I would increase spending on, and why people with out kids should STFU about property taxes.

            The one thing I would like to see are vouchers to give people more options of private schools. Kansas City’s schools are so bad that the super attendant just bailed and went to Detroit. DETROIT!!

            re: “To your second to last paragraph, I reply that surely all the monstrous
            costs of the state can’t be worth the technological gains it has

            You are way off base here. With out gov. funding, this land would still be full of Native Americans, you would have to use a map to get around,  and we wouldn’t be communicating with one another. This isn’t to say private industry can’t come up with things on their own, but gov. funding historically has lead to a lot of innovations, and not just from defense research. They have the resources to do things that have huge costs with little return. This leads to a lot of medical research that private industry has little interest in.  And again – this is an investment.

            And probably the largest heresy a ‘libertarian’ could suggest is gov. funding of the arts. But I disagree with that too. Past cultures are remembered mainly for three things: 1) The wars they fought, 2) the technology the used, 3) and the art they produced.

            And finally from an earlier comment, you are completely romanticizing the past.
            re: “A) it was much more free (you could cross most borders without papers!) ”

            While true – this was mainly because of logistics. They would still actively and aggessivly get rid of you if they didn’t want your kind, i.e. the Jews. And even today, with checkpoints, 12 million illegal immigrants in this country shows you it isn’t that hard to get around.

            re: “B) It was much less dominated by corporations”

            Wha? This may be true for rural areas and much of the South. But in cities I would disagree. Factories were the main employers and why one would leave Tennessee to find work. It was dirt, dangerous and – see below…

            re: “C) People were more economically independent, and many less people relied on wage labor at a large company to survive.”

            Depends on where you were and who were. Working on a farm, vs owning it, meant a pretty meager wage for most people. Maybe not indentured servitude wages, but poor wages all the same. Tons of people lived had to mouth. In the cities it was just as bad or worse. Long hours, dangerous conditions, for little pay.

            If you lived on your 40 arcres in the middle of nowhere, then yeah, I guess you were “freer than today”.

            There is one point you have about a decentralized gov. When it comes to gov. spending, the closer to the problem, the great good it can do.

          4. I only have a few minutes, so I will respond briefly.

            The central logical flaw of your arguments is the belief that, if government didn’t provide the services, they wouldn’t get done at all.

            I mean, you are basically implying that art would not be produced if government didn’t pay for it. WTF?

            And you are implying that people were not voraciously expanding west regardless of government policy. I guess government helped them by stealing the Indians’ land and committing genocide on them, but that’s hardly something to be proud of.

            Likewise, Alexander Graham Bell wasn’t working for the state.

            And finally, the state doesn’t really educate children – it schools them. It indoctrinates them. It conditions them. But does it teach them how to think, inculcate a love for learning? Just the opposite. A few worthy teachers might do so, but they are swimming against the current.

            Do you really think that, if every public school shut down tomorrow, the parents would just shrug their shoulders and let their kids play video games 12 hours a day? Think about it, it’s an interesting thought experiment. 

            Yes, you can live free if you live as an outlaw (which is, in a way, how illegal immigrants live). But that’s always been the case. And it doesn’t mean it’s pleasant. Illegal immigrants, removed from any sort of legal protection, are often abused and live in states of near slavery.

            And, by the numbers, corporations were a much, much smaller share of GDP 100 years ago than today. 

            You call yourself a libertarian, but what is your definition of a libertarian? Someone who opposes welfare but supports the legalization of pot?

          5. Boy – you are really connecting a lot of dots that I never talked about.

            re: ” if government didn’t provide the services, they wouldn’t get done at all.”

            I didn’t say that. But there are some services the gov. is well suited for and wouldn’t get done uniformly and in every area that needs it.

            re: “art would not be produced if government didn’t pay for it. WTF?”

            Not at all. I am saying that art is an important part of a culture and one that I think should be supported by the gov., though in a minor way.  Historically, until ~200ish years ago, most art was commissioned by the state, church, or rich people. If you wanted to make a living at it, those would be the three main entities to make it possible. You will find just about all art older than 200 years ago in a museum can be traced back to one of those three.

            re: “people were not voraciously expanding west regardless of government policy.”

            No, I am saying that Columbus’ voyage was funded by the gov. I am sure eventually someone would have found America, but the fact remains it was with the govs. help he got here.

            re; ” the state doesn’t really educate children – it schools them. It indoctrinates them.”

            That is a broad brush to paint all schools with. Sure, you are probably right about some districts, but there are a lot of cases of really good schools. At any rate, that is an issue with curriculum and technique. Some private schools have the same issues.

            re: “Do you really think that, if every public school shut down tomorrow, the
            parents would just shrug their shoulders and let their kids play video
            games 12 hours a day?”

            That is exactly what would happen. ESPECIALLY with the poor, who arguably need education the most. First off, do you have any idea how expensive private school is? Especially at the high school level? I attended a junior college for  less.

            But if you are a single parent – there is no way you will be able to afford schooling, nor have the time and/or ability to do it yourself. If you are a household where both people work, when are they going to find the time to teach? Most likely they still can’t afford private school, and they couldn’t afford ‘life’ with out the second income.

            Even now with public and private schools, how hands on a parent is and involved with their child’s education will have a dramatic effect on how well they do at school. Too many parents NOW can’t be bothered with their kids, and leave it all in the laps of the educators. And these people are suddenly going to step up?

            You only have to go back ~50 years and look at Appalachia to see what happens when poor people don’t have access to schools. Go back a little farther and you can see how poor education was for people in rural environments, with kids rarely getting to the High School level.

            Again – education is an INVESTMENT, in people and the community as a whole. It benefits all of us in several ways.

            re: ” Illegal immigrants, removed from any sort of legal protection, are often abused and live in states of near slavery.”

            Someone has watched Lethal Weapon 4 one too many times. The vast majority do not live “near slavery”. That is ridiculous. They come from areas where their life is “near slavery”. There is a reason they come here. AND they are afforded the same protection under the law as any of us. Many areas even offer the same services to them. Some things may be hard with out a current, valid ID, but their rights aren’t forfeit.

            re: “And, by the numbers, corporations were a much, much smaller share of GDP 100 years ago than today. ”

            I’d love to see the graph on that. But anyway, that may be true – but if you lived in the CITY since the industrial revolution started, you were likely working in a factory for a corporation or similar entity.

            re: “You call yourself a libertarian, but what is your definition of a libertarian? Someone who opposes welfare but supports the legalization of pot? ”

            Welfare is fine as a hand up. Chronic use and abuse is something I don’t support. I would legalize all drugs. It would dramatically reduce  violence in the US. But yeah, in general I want a smaller gov. I am just not for radically cutting off everything but defense and what ever else the Constitution says it should govern. I am for less laws, less gov involvement in every day life, a simpler tax code, more general freedom as long as you are not encroaching on someone else. Of course that means people have to step up and be responsible, that that is in short supply these days.

  3. Agree with him about cynicism. The greatest barrier to reforming society and government is that our cynicism causes too many of us to give up.

    And on the rare occasions when we are inspired to suppress our cynicism and hope for a change, we get something like … Obama.  Still haven’t figured out if he was a cynical sell-out or if his instinctive response to compromise is causing him to give up to easily. But whatever he is now, he’s not going to change the world.

    1. Obama was never going to change the world. Just nudge it. That is all any of us can do.

      If you expected revolution, who forgot to pack your rifle?

      1. Not revolution, but I’ll just say Obama would be a great Senator where his style of negotiation is essential. As President, he woulda, shoulda, coulda played hardball on health-care from the beginning of the debate during the first half of his term. Starting a proposal, waiting for the debate to frame itself and then nudging it in the direction you want to go is not presidential leadership. Start the nudging from day one.

        Also, he could have done more about Guantanamo, surveillance and Iraq without involving congress and chose to not do so without giving a good explanation.

        Who knows, if he’d played his mandate right in the first half of the term, he might not be dealing with a Republican house now. That in term would give him more flexibility to manage the deficit and economic stimulus in a more sane manner than just “no new taxes/cut all spending”.

  4. Reich seems like a nice guy on a personal level… but putting $1T into the economy has been tried already… twice… and it hasn’t worked.

    When people won’t spend and businesses won’t spend — giving banks more money not to spend isn’s answer.  Nice guy — wrong solution.

    1. Threedonia “Reich seems like a nice guy on a personal level… but putting $1T into the economy has been tried already… twice… and it hasn’t worked. When people won’t spend and businesses won’t spend — giving banks more money not to spend isn’s answer. Nice guy — wrong solution.”
      Where’d he say that we’d give it to the banks?

      1. Yeah, the money given to the states for stimulus prevented even more massive layoff of teachers, policemen and firefighters across the country, repaired infrastructure and provided construction jobs during a really crazy recession. Sure the banks just pocketed TARP and the Fed Reserve loans, but the real stimulus bill kept things from being worse than they were. Now we’re going into a double-dip because the stimulus money is drying up.

    2. Twice? The American Recovery and Reinvestment Act (aka ARRA) was 800 Billion worth of stimulus, over 35% of tax cuts (non-stimulative), a patch to the alternate minimum tax, aid to the states, and extending unemployment benefits.

      Reich was talking about propping up consumer spending, not saving the banks, which thanks to the Fed and TARP are doing fine today.  

  5. Not that I like a lot of gov. spending, but I wondered why not more Federal aid doesn’t go to fed  and state infrastructure. Our infrastructure is crumbling. Construction is one of the hardest hit job markets, but it generally pays well. It makes since to spend money to directly employ people AND get our bridges and roads up to spec.

    1. Because infrastructure spending, while almost guaranteed to improve the economy in the long term, is slow-acting.

      Infrastructure spending is like complex carbohydrates.  If you think you’re in a short battle you’re better served loading up on simple carbs and sugars with the hope that a quick victory will allow you to afford a better meal later.  By the time those long-chain carbs kick in the fight has already been decided.

      1. David… that’s exactly right.  We have a lot of construction on government projects in my neck of Southern California… schools, community centers, etc.  All of that money was appropriated mostly pre-2008-09.  There was a freeze for a bit and now that money is flowing.  There will be a dearth of construction on gov’t projects in the next 4-6 years I wager.

        The other problem with infrastructure spending.  Once the bridge/school, etc. is built the job is over so it’s a stopgap employment fix at best. 

      2. I agree – but shouldn’t we be looking at the long term? Had Obama put this in action when he first got in, he would probably have it as a feather in his cap.

        1. I agree – but shouldn’t we be looking at the long term? Had Obama put this in action when he first got in, he would probably have it as a feather in his cap

          There is only so much real (and political) capital one wields.  Obama and his advisers misjudged the situation and spent their limited resources on sugars instead of carbs.  As I mentioned previously, the solution differs depending on the problem.  The problem was (at best) misjudged and the wrong treatment was prescribed.  

          If what the economy had truly needed was a short term shot in the arm the slow burn of deep infrastructure investment would not have helped.They tried to have their cake and eat a slice of it too through their “shovel ready” infrastructure spending.

        2. Looking long term is clearly needed, but there is the right time and the wrong time.

          To put it another way and make the classic car analogy:When you’re spinning out of control on ice is not the time to pull out the map and plan your next exit.

  6. Here’s the issue I see with the “just take out a huge loan and spend it” proposal:

    That money has to be paid back. Either from future tax receipts that can’t be spent on anything useful, or through inflation; there’s no way to avoid it. The implicit claim is that investing the money will result in such a large return of economic growth that it will be easy to pay it back.

    So, the proposal is for the government to invest in projects that improve the general wealth and well-being of the nation. Does that sound like something your government is willing or able to do? If you gave them a trillion dollars, would they spend it on those projects, or would they funnel it into their own corporate empire and finish up with a voter tax bribe?

    People usually respond to this with a form of trickle-down argument: as long as the money is spent anywhere, it’s doing its job of boosting the economy. This proposal is simply that if you invest in the nation, good things will happen on their own. Take a moment and think about the people in your neighbourhood; what proportion of them are fat TV zombies? Now, since this is a trickle-down argument, that money is being evenly distributed to the whole population. Does that population sound like a good investment? Do you think they’re going to pay it back?

    Aside from the implausibility of the “investment” argument, the root problem here is a fundamental belief of some people in unrestrained, rapid economic growth as their birthright and natural state. They are looking at this situation and thinking: “something must be wrong here, and if I can only fix that problem, then we can go back to what I deserve”. They are not considering the possibility that this might be unsustainable.

    And finally, we’re currently in one of the bad times, economically, and we’re seeing regular, steady growth around 0.5% to 1%. Is that really so terrible? Slow, steady growth sounds like the ideal to me. If this is the low point of the world economy, then I’d say we’re doing okay.

    1. The other problem with Keynesianism, other than its demonstrated limited effectiveness, is this:

      The idea is, in bad times, for the state to borrow money and spend to boost GDP. In good times, the state should cut back and repay the money borrowed in lean times. That is the basic premise of Keynesian theory.

      Unfortunately, the political process doesn’t work like that. Politics does not act like a well oiled machine. There are many people who get a taste of easy, safe money – and won’t let go of it easily. They organize, the howl, the lobby..anything to keep the money flowing.

      So in bad times we borrow money to boost aggregate demand..and in good times, we keep borrowing money, borrow ever more money. We never cut back. Wages might be sticky, but what’s REALLY sticky is government expenditure.

      Keyensianism is based on the idea that government expenditures are not sticky at all, that they’re totally fluid and rational. This simply contradicts reality.

      You need a dictator to properly apply Keynesianism. And even then, it can’t be guaranteed to work – because there are a million disparate factors that effects the economy and how much people create it can’t be expressed in a few simple equations.

      In reality, Keynesian economics is simply an intellectual cover to borrow and spend boatloads of money, in good times and bad.

      Twisted minds even use it to promote war.

      1. The normal response in a recession or downturn is to apply monetary stimulus, i.e. lowering interest rates. That is enough to temper many recessions. This recession was different, however– we were already at near-zero interest rates. At that point monetary stimulus is rendered useless. Fiscal stimulus is the only arrow left in the quiver. You don’t like fiscal stimulus? Ok, but if you don’t spend (consumers are 70% of the economy) AND the government doesn’t spend, then the economy might well spiral into depression, or be stuck with 10+% unemployment for a decade (which seems to be our fate). It is the government’s job to takes steps to avoid this. These outcomes are all worse than taking on additional debt (at near-zero rates), because our deficit will only get worse with a depressed economy.

        1. You just parroted the standard Keynesian logic (and scaremongering), without actually discussing anything I wrote in my post.

  7. I’m glad to read someone else thinks a resurrection of the WPA and the CCC would be wise. They won’t fix the whole problem, but I think they may be wiser than trying to subsidize businesses from the top down in the hopes that it leads to more jobs. Aside from repairing infrastructure and easing human misery, they may also preserve some human capital. Unemployment rates are especially high among people in their late teens and early twenties, who are in just the period when they should be building job skills, meeting people, and figuring out which jobs suit them and which ones really, really don’t. Instead, a lot of them are living with their parents, working a handful of hours a week if they’re lucky, and essentially stagnating. Many of these young people don’t have children or own homes, making them mobile and flexible. Many of them are also recent high school or college graduates who don’t qualify for unemployment insurance, making them likely to participate even if the wages aren’t stellar.Of course, the odds of getting something like this passed in a political climate where people seem set on slashing and burning everything without regard to consequences…

    1. The difficulty with resurrecting the likes of the WPA and CCC is that over the last forty years, our regulatory and legal environment has raised NIMBY-ism to a position of almost unimaginable power.

      Can’t build that, because it would spoil our views and property values/a threatened species of amoeba lives only two miles away/our commercial strip will lose business due to the road being relocated!

      Half a dozen NIMBYs who can afford a couple of good lawyers can hamstring projects for as long as their dollars hold out.

      I suggest the advocates of big-scale, FDR style works projects read up on the building of Hoover Dam. Could it be built in 2011 America?  Not a chance.

      1. Damning a river, probably not, repairing bridges and highways, why not?  High speed rail projects along existing tracks? Implementation of solar on rooftops?  Improved water and sewage treatment systems? Better lunch programs? Nationwide Wifi? Renovating firehouses?
        All of these things happen routinely, but slowly ,the excuse on the hold up for these is nearly always money more than NIMBY.

        Yes, the TVA and Hoover happened, but a huge chunk of the FDR programs were much smaller scale.

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