The day after I stood cheering with a million and a half people standing in the Mall at Obama's inauguration, I walked to Capitol Hill to visit an old friend, a staff person for a Congressional committee. "What do you think of Obama's prospects?" I asked.
"I think he's got a lot going for him," the fellow replied, "but his economic team -- Geithner, Bernanke, and Summers -- is very bad news. They're full of the worst kind of advice for getting the country out of the recession."
And so it was and so it continues. At the beginning of his presidency I wondered why Obama's inner circle did not include the likes of Robert Reich or Joseph Stiglitz. The answer is obvious. Their advice would have questioned plain vanilla neo-liberalism (aka free market conservatism) that the administration has followed so slavishly, right to the point of "double dip," lost decade or worse.
Here are some of Stiglitz's latest thoughts on our predicament.
"Throughout the crisis – and before it – Keynesian economists provided a coherent interpretation of events. Pre-crisis, America, and to a large extent the world economy, was sustained by a bubble. The breaking of the bubble has left a legacy of excess leverage and real estate. Consumption will therefore remain weak and austerity on both sides of the Atlantic now ensures the state will not fill the void. Given this, it is not surprising that companies are unwilling to invest – even those that can get access to capital.
When the recession began there were many wise words about having learnt the lessons of both the Great Depression and Japan’s long malaise. Now we know we didn’t learn a thing. Our stimulus was too weak, too short and not well designed. The banks weren’t forced to return to lending. Our leaders tried papering over the economy’s weaknesses – perhaps out of fear that if we were honest about them, already fragile confidence would erode. But that was a gamble we have now lost. Now the scale of the problem is apparent, a new confidence has emerged: confidence that matters will get worse, whatever action we take. A long malaise now seems like the optimistic scenario."
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I'm not an economist or presidential adviser. But I do talk with lots of college students and parents who still expect their will be good, high paying jobs at the end of the pipeline, especially the STEM pipeline: Science, Technology, Engineering and Math -- the golden pathway to ...?
What should I tell them now?