The First Step In Addressing the Debt Is Making Us a Wealthy Nation. We Get Wealthier By Putting People Back To Work.

I know this isn't exactly news, but it bears periodic repetition.

First off, if we're richer as a nation, then (a) we'll pay more taxes anyway, which will help balance the budget, and (b) the remaining shortfall will be easier to deal with, because any problem having to do with money is easier to solve when you're wealthier.

Yeah, I know.  Pretty grade-school stuff.  But it's amazing how many people around DC don't even think about that.

Second, the source of our wealth is in the goods and services we produce.  If we produce more, we have more for ourselves, and more to trade for the goods and services available elsewhere.  The quantity of goods and services we produce is basically the product of how many people are working, and their productivity.

We aren't hurting on the productivity side, but I think we've all noticed a bit of a problem on the 'how many people are working' factor in that product over the past few years.

So what we want to do is put people back to work.  Even if we think our national debt is Problem #1.  We get on the road to solving that problem by increasing our wealth, and we increase our wealth by getting people back to work.

It's not like there isn't plenty that needs doing.  We need to put teachers back in the classroom, because saving money by doing an inferior job of educating our kids is a false economy, like saving money in your household budget by taking your kid out of college and putting him to work at McDonald's.  It may temporarily help your bottom line, but it's a bad long-run tradeoff of the sort you want to avoid if there's any way at all to avoid it.  And as a nation, we can borrow money for nothing these days.  We can put teachers back to work.

Similarly with infrastructure.  If we repair aging water and sewer systems, fix crumbling bridges, or build better rail systems, we create lasting wealth.  We're richer.  And the people who would do these things are sitting idle because there's no damned work for them to do.  So we'd be richer, and they'd be richer, and life would be good.

And they'd have money to buy things, which would put other people back to work, and eventually we'd all be working, and we'd be as wealthy as a nation as we could possibly be.  Tax revenues would go up, money spent on unemployment benefits and food stamps would go down, and our fiscal problems would be smaller.  And what remained of our deficits would be easier to deal with because we'd all be richer, and it would be less of a burden to deal with the rest of the problem, if it was still a problem.

And all we have to do to make this happen is borrow some money for free now, and pay it back when we're rich.  It would be a bargain at twice the price.

Putting people back to work: it's the one-size-fits-all solution to all our economic problems.

End of rant.  Open thread.

Comments

[nancy]

Excellent rant. Should be written up and nailed to the doors of Congress, Martin Luther style.

[kathy a.]

l-tc -- that really is the big and basic thing. it's a good part of why romney looks like such a freaking loser right now, because he is not able to grip that -- partly by party design; partly by his own limited life experiences, and inability to put himself in somebody else's shoes.

the "hate them, they are taking from you" party line can only go so far. what matters to people who try to support their families every day is having the chance to -- even if misfortune befalls, as it does for those of us lower in the stratosphere.

[Sir Charles]

A perfectly appropriate rant.

I have no idea why supposedly smart people -- some of whom I know -- cannot understand the degree to which deficit issues stem directly from the depressed economy. If you put people back to work and stimulate demand in the process it will begin to close the deficit.

[beckya57]

Sorry, but I don't think it's an accident that so many of our elites promote policies that hurt employment. I think it's pretty obvious that the 0.01% LIKE having a lot of unemployed people, because this situation reduces their bargaining power. People who are still working are often afraid to push for more money or better conditions because they feel like they're lucky to have a job at all, and that if they make a fuss they might lose it. Employers actually had to raise wages and benefits during the Clinton years, because we were in a nearly full-employment economy then. Our Galtian overlords like the present situation a lot better. I think there's some pretty obvious motivated reasoning going on here.

[beckya57]

P.S. The deficit of course went down during the Clinton years, partly because of tax increases but also because of the roaring economy. That was quite recent. I don't think a lot of smart people have suddenly developed amnesia. The most likely explanation that I see is that our elites either benefit directly from high unemployment, as I suggested in the previous comment, or that they live in a universe in which the prevailing memes are generated by people who are benefiting from unemployment. These people go around all day telling each other that of course the deficit is the big problem and of course the only way to address this is by cutting "entitlement" programs that "we can't afford anymore" and nodding at each other sagely. This is the universe in which Paul Ryan is considered a serious thinker, after all.

[kathy a.]

<< spit >> paul ryan. his whole package, such as it is, consists of "put everybody who is not earning a full paycheck (+ saving enough for catastrophe) on the iceflow, and let the rest of us get back to growing wealth." ok, he probably also thinks that "more war = more profits"; same tune.

ayn rand did not ever deserve this much attention.

[Linkmeister]

"Fk the Deficit. People got no jobs. People got no money."

That is, as Charlie Pierce puts it, the basic economic philosophy of The Politics Blog at Esquire, where he's principal blogger, s***-stirrer and rabble-rouser.

Krugman has been saying the same thing in a more genteel way for some time, as have I. As l-t-c says in the original post, doing this would solve an awful lot of fiscal problems.

[low-tech cyclist]

Linkmeister - I basically agree with Krugman and Pierce on this. I think our focus should be - and should have been, over the past few years - on getting people back to work, even if putting people back to work didn't also help solve our deficit problem.

The deficit is pretty abstract. The cost to people's lives of being out of work for long periods of time is all too tangible. And it's a cost that a civilized society should regard as intolerable, when it's in a position to do something about it, which we most certainly are.

Unfortunately, this ongoing damage to people's lives is invisible to most of the inhabitants of Versailles-on-the-Potomac. But even they, in their unreasonable concern for the deficit, and in their view of unemployment as an abstract problem, should see that the first step needs to be putting people back to work.

becky - no question about it, the top 0.01% is quite happy with high unemployment. I think the evidence is pretty clear at this point: they love having a large pool of unemployed workers on tap if they need them, especially for their effect in keeping their current workers in line. And they'd even rather have that, than have low unemployment with a higher bottom line.

They're not only fighting a class war (old news), but they're putting class warfare ahead of their own economic interests. They'd make more money in a booming economy, even with higher labor costs, but keeping the proles in line is more important to them.

What I don't see is where the Villagers absorb so much of the 0.01% perspective. I know they're pulling down a hell of a lot more money than I am (and I've got no complaints), but you'd think they could figure stuff like this out. I think part of it may be that few of them are comfortable even with arithmetic, and so they're easily buffaloed by the Paul Ryans of the world. And they're just more attuned to listening to whatever Honest Conservative Budget-Balancer that they've just invented, and uninterested in listening to someone like Paul Krugman who actually knows shit.

I wish they'd at least read Krugman. Occasionally he has some wonkish posts on his blog, but most of his writing at the NYT is really easy to follow. I really think they don't read him at all, because if they did, after awhile they'd have to start asking themselves if he has a point.

[oddjob]

I'm no economist but to my mind focusing on the deficit now is not unlike how Hoover handled the Great Depression.

[low-tech cyclist]

Well, you gotta admit Hoover knew how to make a depression 'Great.' American exceptionalism at work!

[oddjob]

:)

[Lex]

[[Excellent rant. Should be written up and nailed to the doors of Congress, Martin Luther style.]]

Stapled to their foreheads, more like.

[beckya57]

LTC: I don't think it's that much of a mystery why the Villagers fall for this stuff. Thanks to media consolidation most of them work for mega-corporations now. That means they're constantly being bombarded with the top 0.01%'s views, because they're the ones who own the companies. Plus right-wing think tanks and the Pete Petersons of the world have expended enormous energy and money on the "we can't afford the welfare state" memes. Reality has a hard time getting through all of that. I'd hazard a guess, just to take one example, that most of them have no idea that life expectancy isn't going up for everybody; that factoid has gotten very little attention.

[Sir Charles]

Becky,

I think that there is both the element that most journalists are economic illiterates and they rely heavily on think tankers like the Peterson Institute to tell them what to think and -- for reasons that puzzle me -- there really is a sense that the unwashed masses have it too good and need to sacrifice. It's very odd -- they seldom express such sentiments about the very rich.

[beckya57]

You live much closer to that world than I do, Sir C, so I'll take your word for it. And that is profoundly weird. Makes me wish for a magic machine that would make them all live like one of the "lucky duckies" for a week or 2. I suspect that many of them would change their minds. I think one of the reasons that I haven't gotten more conservative in my middle age is that my work (and my husband's) has constantly exposed me to the struggles of people who have far less than I (or most of the people in my circle) do. It's pretty easy for the upper-middle and upper classes in contemporary America (which includes a lot of political reporters) to have very little contact with the working classes, and thus to have very little idea what their lives are really like. I'm very aware, for example, of how people who do a lot of manual labor see their bodies break down over time, because my husband used to work in occupational rehab and we both now work for the Army. I also used to work as a floor nurse, so I met a lot of nurses with joint problems from overuse injuries. Anybody who's watched this stuff knows in their bones that expecting people in these jobs to work until their late 60's is insane. However, if you work in an interesting desk job and only see other people in interesting desk jobs you might think most people can work that long with no problems.

On the other hand, I may be fooling myself. I have a colleague who does the same job I do. He was trying to tell me today that the polls are skewed, Obama and Romney are actually tied, and that Glenn Beck is saying that if Romney wins the left will say that the election was stolen (that last part might be true, but not for those reasons). He was also claiming that Obamacare won't allow Medicare to pay for patients if they get readmitted to the hospital within 30 days of a previous hospitalization. (On another occasion he tried to blame the current nationwide shortage of Adderall on Obamacare; it's actually due to a combination of manufacturing problems and high demand.) I let him go on for a few minutes, and then asked him if he'd gone out on his boat this weekend. That (mostly) put an end to it.

[oddjob]

Nice bit of rhetorical ju-jitsu. :)

[low-tech cyclist]

It's pretty easy for the upper-middle and upper classes in contemporary America (which includes a lot of political reporters) to have very little contact with the working classes, and thus to have very little idea what their lives are really like. I'm very aware, for example, of how people who do a lot of manual labor see their bodies break down over time, because my husband used to work in occupational rehab and we both now work for the Army. I also used to work as a floor nurse, so I met a lot of nurses with joint problems from overuse injuries. Anybody who's watched this stuff knows in their bones that expecting people in these jobs to work until their late 60's is insane. However, if you work in an interesting desk job and only see other people in interesting desk jobs you might think most people can work that long with no problems.

All too true, becky. Part of the reason I feel as strongly about this stuff as I do, is that my wife's from a blue-collar background, and I have watched my in-laws' bodies break down. My father-in-law was an electrician who worked on food processing and refrigeration equipment, which involved a lot of crawling around, in, and under assorted machines, in widely varying temperatures and conditions. Both of them just barely made it to 62, and I thank God they could get some Social Security starting then; I'm not sure either of them could have kept on working to 63, let alone into their late 60s.

I really hate their cluelessness about things like this. There is a real "let them eat cake" detachment to it, a similar disconnect with what people's lives are like who are not similarly privileged.

[kathy a.]

let's talk overseas investments, shall we?