To get out of this quagmire we'll have to face up to two fundamental facts:
1. We really are in the midst of a horrific jobs crisis. All the happy talk about the economy being on the road to recovery is just plain old denial. We'll never find jobs for all the people who desperately need them until we recognize that this employment crisis poses a clear and present danger to our republic. Modern capitalist societies require full employment. When we don't have it for long periods of time, chaos ensues. What's missing in Washington is a sense of urgency.
Denial is dangerous -- and an insult to the unemployed.
2. We must face up to the real causes of this mess. Unfortunately, a lot of Americans are succumbing to a wrong-headed narrative that has been pushed into our heads:
"We Americans sank ourselves in debt. We consumed more than we produced. We bought homes we couldn't afford and used them as ATMs. Of course Wall Street did its part by offering us mortgages they knew we couldn't really afford. The government also contributed mightily by pushing Fannie and Freddie, the giant housing agencies, to underwrite "politically correct" loans to low-income residents who shouldn't have been buying homes at all. In short, we all are to blame."
From a flawed narrative always comes a flawed policy prescription:
"The era of excess is over. We need to cut back on spending and borrowing. We need to reduce government debt by raising the Social Security retirement age and cutting social programs
We've got to reduce our wage and benefit demands if our companies are going to compete globally. ">
We have to live within our means."
Collective guilt is always seductive. It may even be programmed into our genes. It's possible that prehistoric homo sapiens survived by sharing blame in difficult times. But that soothing instinct does not serve us well today. ">
We need to know the truth behind this crisis if we're going to come close to solving it.
For starters, "we" didn't create this mess. Wall Street did, with the help of politicians who pushed through financial deregulation and an increasingly regressive tax structure that put outrageous sums of money in the hands of a few. Freed from regulations and flooded with money, Wall Street bankers went crazy. And before long, our economy crashed.
It really is that simple. Starting in the late 1970s our country embarked on a grand real-time experiment to "unleash" the economy from government rules and oversight. The theory was that to end the era of "stagflation," we had to cut taxes on the super-rich, freeing them to lead a gargantuan investment boom that would of course lift all boats. At the same time, the financial sector was liberated from its New Deal-era shackles. ">
Yes, those constraints had prevented a financial crash for more than 40 years. But now, argued the best and the brightest, the new world order required a more nimble financial sector. Naturally, the markets could police themselves.