Obviously, giving federal money to consumers can be politically popular, just as bailing out bankrupt states can be politically expedient for politicians who depend on support from public-sector unions. But these short-term gimmicks do not lead to sustainable economic growth.

That’s how I interpret this quote from his article, not as just referring to his earlier mention of cash for clunkers, which was an incorrect characterization, in any case. And again, this is Reason Magazine we’re talking about here. Have they ever acknowledged the necessity of social safety nets? Good ones, not just something for the sake of appearance?

Maybe this article. No? In all of the ones I could find even if there was acknowledgement of the necessity, it was half hearted, contemptuous of it and tended to ignore the realities of our times and what job prospects are really like for many people.

My rant was about the fact that Randozzo doesn’t want that safety net. He was including the safety net in his list of things that contribute to the problems and should be eliminated. Didn’t you catch that?

Jim, because you claimed this, I went back and skimmed Rendozzo’s entire 4 page article even though I had already read it once.

As near as I can tell, you’re completely wrong. Rendozzo doesn’t say this at all. The vast majority of his article talks about TARP and the bank bailout, and how they are delaying the settling down of the housing market. At no point is there a “list” of bad government policies that should stop.

I challenge you to cite a quote from Rendozzo’s article which suggests the dismantling of the government’s various safety net programs for individual americans, like unemployment benefits and medicaid for the poor, and welfare, and aid to families with dependent children and so on.

You seem determined to totally mischaracterize Rendozzo’s article. I encourage anyone else reading this thread to read Rendozzo’s article and judge for yourself.

It’s not realistic to try to force companies to keep more employees than they need, but we can revise our social safety net for the 21st century: better unemployment benefits financed by companies, portable affordable health insurance not linked to employers, more robust job retraining.

My rant was about the fact that Randozzo doesn’t want that safety net. He was including the safety net in his list of things that contribute to the problems and should be eliminated. Didn’t you catch that? As I said, Randozzo and his compatriots are the purest of ideologues, dismissive of the real world costs of their ideas.

Randozzo had no solutions. Didn’t you notice that, kranky?

This does not make anything he says incorrect. The thesis of his article is that the economy is not recovering in the way that the cheerleaders are saying.

The really hard core truth is that the old system just doesn’t work any more.

Really? What’s this based on? I guess I don’t know what the “old system” is. If you were to have asked me, I would have siad that it’s the new system of the 1990s and 2000′s that didn’t work. The old system where you needed a down payment for a mortgage and lenders could not make risky loans and sell them to suckers was IMO a system that was pretty sound. Presuming you are actually against the current iteration (derivatives, collateralized debt obligations, etc) of the system, what’s your prescription for repair?

The difficult, slogging work of building a solid foundation for an ongoing economy just doesn’t make them enough money fast enough to interest them. Why else do you think all of these wonderfully “innovative” financial instruments and systems were created? Not to help the rest of the economy or any human beings other than investors and traders (Especially the traders.).

While elements of what you say here hold some truth, this still feels like you changing the subject. I am not going to get sucked into defending traders or derivatives, I didn’t defend them to start with. I don’t think Rendozzo did either.

And the old saw about retirement funds being among those investors doesn’t cut it when they are being ripped off left and right.

This does not strike me as a particularly logical argument. I think it’s sound to support regulations to curb future investment abuses and it’s also sound to avoid policy actions which will further damage institutional investors. These ideas encompass a whole host of sophisticated ideas. It’s not legitimate for you to dismiss a seriously valid point by citing unscrupulous behavior that, again, no one here is defending. Surely you don’t actually disagree that the majority of institutional investors like unions, pension funds, and so on deserves protection?

He goes on and on about how current government actions are just exacerbating the problem because they fail to address the root problems. His explanation of what those causes are seem to inevitably vanish into criticism of the government. From this I have to assume that he blames it all on the government. I actually just couldn’t find anything in the whole article that seemed to propose anything to address any root causes. Implicitly his solution appears to be for the government to do nothing no matter what.

What you seem to be missing is that there is an inherent catch-22 involved in government mitigation efforts, as I alluded to earlier. Again, no deep concern for human costs provides us with an escape route for these ruthless economic conundrums. When you jump to your feeling that Rendozzo is saying it’s all the government’s fault, you’re missing the point. I don’t think he’s saying it’s all (whatever “all’ is) the gov’t's fault. What he is saying is that many of the governments mitigative actions are delaying unavoidable reckonings. Reckonings that we will need to get past before we can really see sustainable growth.

Getting through those reckonings is precisely the “difficult, slogging work of building a solid foundation for an ongoing economy” that you have implied is of the utmost importance. If you really want to see all this difficult, necessary, slogging work happen, then you need to face the truths that Rendozzo points out.

You can bemoan the very legitimate human costs of ruthless labor force management by big corporations all you want, as you did in your lengthy closing rant. That rant isn’t inaccurate per se. It’s just that it doesn’t provide us with any insight into a supposed better way forward in the 21st century global economy. We’re stuck in a global economy now, and we have diminishing power to dictate terms to multinational companies. It’s not realistic to try to force companies to keep more employees than they need, but we can revise our social safety net for the 21st century: better unemployment benefits financed by companies, portable affordable health insurance not linked to employers, more robust job retraining. I’m OK with that stuff.

Personally, i support some of the gov’t mitigation efforts, especially things like unemployment benefits and subsidies for cobra. Those are direct ways of mitigating the pain for folks who have borne it directly via job loss. I am less supportive of instances of alleged economic stimulus, especially things which delay unavoidable pain.

Just to name a few: States who are still spending at levels that are no longer tenable based on post-crash revenue projections can’t expect fed subsidies to insulate them from budget cuts. Programs that just shift spending behavior around in time (like cash for clunkers and home-buying subsidies) are also suspect.

And the real estate market will not reach a sound stable basis for new growth until unsustainable loans have been wound out. So for example if someone has a seriously underwater loan and insufficient income to make payments, those situations have to be resolved. I am not at all opposed to also going after lenders who blithely made crappy loans, as well as all the other banking folks who profited on the subsequent risk packaging. But the crappy loans can’t be propped up. Fact is, the portion of bad loans that are close enough viability to be saved is not the lion’s share of the bad loans.

Although perceptive, what you describe has been ongoing for the last 15 years. Name one computer company that manufactures in the US? Name one cell phone company? In this arena, people will talk about how the US has priced itself out of competition, but will ignore the realities that nations with costs of living comparable to ours, strategically focus on research, development and manufacturing. We grouse about how our nation does not produce enough scientists and engineers, but we ignore the fact that there are decreasing opportunities for them due to our desire to outsource anything that’s not nailed down. Our nation (aka Wall Street) focuses on quarter to quarter growth and profits, ignoring the strategic need to invest in the ability to manufacture real goods. Over the last 10 years, we’ve educated China in what took us decades to learn. In another decade or two, China will not need our intellectual property to grow….I’ve experienced this first hand.

To those in this forum whose livelihood does not depend on producing tangible goods, this may seem like a radical rant. After 15 years of working in this sector, my opinion is that our nation has been sold out for pennies per unit of profit. The sad part is..I don’t see this changing.

On our current trajectory, here’s what I believe. In 20 years, the US’s major exports will be cultural: sports, music, movies and pop. (We’ve recently ruined the hopes that our financial capabilities are world-class).

Randozzo had no solutions. Didn’t you notice that, kranky? Where was one proposal? First, he never explicitly proposes anything. He goes on and on about how current government actions are just exacerbating the problem because they fail to address the root problems. His explanation of what those causes are seem to inevitably vanish into criticism of the government. From this I have to assume that he blames it all on the government. I actually just couldn’t find anything in the whole article that seemed to propose anything to address any root causes. Implicitly his solution appears to be for the government to do nothing no matter what. Millions out of work? Let benefits expire because government shouldn’t be spending money. Thousands of people losing their homes and businesses losing their locations? His solution is the same. Just let it play out no matter what happens to anyone. Yes, I think that his only “proposal” would cause immense suffering. And like pretty much every other libertarian, he doesn’t care. He isn’t even very good at digging out facts. He spouts the typical conservative line about the “cash for clunkers” program. Of course it’s wrong. It’s always the same. Government bad. Government evil. Corporations good. Free enterprise perfect. Was there anything I missed in his article that didn’t fit into that mold?

It seems that conservatives still buy into a supply side concept that says that businesses can be encouraged to create jobs when there just isn’t consumer demand. What’s really funny is that none of them gave a damn about unemployment before. Why do I say this? Simple. Where was any criticism of the fact that every single time a business fired thousands of people Wall Street cheered them? It didn’t matter if they weren’t losing money. It didn’t matter if they’d just announced record profits. Firing employees was always something to celebrate. It was an action that was easy to take to boost stock prices and never, ever punished. When Abbott Labs announced record profits and the firing of thousands of employees the same day there wasn’t any disconnect. A pharmaceutical company gutting their research division? Why, that made perfect sense.

The bank bailout during Bush’s last days in office averted disaster in financial markets, but the stimulus package passed in 2010 has had very little measurable effect (except on bailing out state and local governments). Obama was involved in the crisis during the campaign, conferring daily with Paulson and Bush’s team, according to the book “Game Change” (McCain was less interested, and not in contact every day). That’s why Obama’s financial gurus look a lot like Bush’s.

Government can be effective in acting when a true crisis is imminent, mainly because government is the only thing large enough to make a difference. So Tarp probably had the right effect, even if it had its problems (forcing non-endangered financial institutions to take money, etc.) Messy, but probably necessary.

But the recession continues. Unemployment may be high for a few more years, especially if companies fear uncertainty and don’t want to invest. Uncertainty comes not just from market conditions, but also the regulatory arena. As some of the overheated rhetoric about massive new regulations fades after November, we may see some improvement. I would be very surprised if unemployment dips below 6% in 2010; most economists I’ve read say we could be in for a long period of relatively high unemployment.

We may see the market re-gain all that it has lost by mid-2010. We will be back to 2008 levels. But the unemployment problem will cause things like housing start to remain low. And a second wave of mortgage defaults could cause a double-dip recession. That would not be good at all.

Kranky gets it. Aspirin can reduce your fever for a time but won’t (can’t) cure your flu. And too much aspirin can make you sick in other ways, even kill you. And when you do recover from the flu, it won’t be because the aspirin cured you.

Jim and Justin are apparently too busy shooting the messenger with ideological ad hominems to actually grapple with the content of the message. But snark doesn’t create real jobs, nor make the underlying problems go away. Such as the looming crash of a few million underwater mortgages, a number that is growing, not shrinking. Or the persistence of unemployment and the increase in those still employed but reduced to part-time work. If J & J are interested in reviewing the actual current employment data, they can find it here, at that nasty old libertarian Bureau of Labor Statistics. I do not think it says what they think it says. But I’ll throw in a big broad hint — when consumer demand rises substantially AND employment starts creeping up, THEN we’re doing better.

But it won’t be because we upped the aspirin dosage. It will be despite it.

Good luck, wj. Glad it’s picking up somewhere.

I’m working for a small start-up company. You know, the kind that generally create the most jobs in the economy. We too on employees 2 and 3 back in 2007 (including me). This past week, we added employees 4 and 5. Won’t show up in the statistics for months, but….

In short, not only is business picking up (which for us it has been doing for 3-4 months now). But hiring is getting going again.

Brought to you by the same folks who said “Let the market correct itself” in 2008. Sorry, but I’m really down on libertarian economists at this point. Their blind adherence to what they consider to be virtually infallible market forces is divorced from the realities of what we faced then and what we’ll continue to face in the future.

As with anything, different circumstances call for different solutions and over the past couple years the government was the spender of last resort. And everybody acknowledges that’s not a sustainable path, but you’ve gotta put gas in the engine if you want it to start up again.

Last, everybody knows that employment is a trailing indicator. Those green shoots people were talking about last fall are now bearing fruit and job gains are just around the corner. So I don’t think a double dip is in the offing and you have to give at least some credit to the economic policies of the Obama administration for that.

I think that the opening of Randozzo’s article is spot on in pointing out that the government is in a catch-22 where they can only mitigate the depth of the pain by extending the length of time until a genuine recovery occurs.

Sooner or later, we need growth that is sustainable without being propped up by massive government spending and subsidies. There’s really no way around this, no matter how much each one of us cares about human costs.

We need jobs that come from self-sustaining enterprises that are offering products that others want and are willing and able to pay for on their own. Wish there were a clever way around that. There isn’t.

But no point in my wasting typing time when someone else has already done a fair job of it.

And just perhaps the moral hazard we created by bailing out the people who (in part) caused this mess will lead in the future to even greater risk-taking by even worse villains, causing us to enter into a new boom-and-bust cycle, wherein we will once again be forced to bail out private, profit-seeking firms.

Meanwhile, until just the other day Charlie Rangel, who played a major role in the financial melt-down by his defense of Fannie Mae and Freddie Mac and their risky lending ventures, was in charge of the Congressional committee overseeing the entire federal budget, while Chris Dodd, who also supported risky lending practices (which led to the crash) by Fannie Mae, Freddie Mac, and purely private companies like Countrywide, wasn’t even censured for accepting financial favors from those mortgage behemoths.

Sell the lie that the Democrats give a damn about the private economy or the budget deficit to folks who are ignorant of the real facts. I’ll grant you that Republicans also failed to do a lot of things they should, but much of their failures (such as their failure to increase regulatory oversight over Fannie and Freddie) stemmed from their refusal or inability to overrule Democratic objections to needed reforms.

And again with the “death spiral”? I’m assuming you’re now ok with the “politics of fear”?

Pat…also, the AEI? Come on…

Chris, I completely disagree. If it bleeds, it leads and people only tune in if they think they have to pay attention…in other words, only if they’re in danger.

Overarching…I do like how, when I share positive news about the economy, all of the critics then focus on those things that are negative and, as mentioned, out of control of the President. He has done what he can, but he can’t force employers to hire more workers. If companies are collectively deciding that they’re not going to staff up and pour more work on their current employees’ backs, the POTUS can do nothing about it.

About the deficit…Obama has appointed an independent panel to take a look at this. But the one thing you don’t want to do when you’re trying to pull the economy out of death spiral is focus on the deficit. But now it’s recovering and it’s a priority on his list. We’ll see what he actually does from this, but it’s not like Cheney say, “Reagan proved deficits don’t matter.” Again folks…some perspective is needed.

However, to kranky’s point…

This is IMO a normal “once burned twice shy” response to the depth of the economic changes we are undergoing.

Agreed. But let’s have the coverage mirror that and acknowledge that the signs are pointing in the right direction and that our economy didn’t just fix itself.