What Happened?

The US government and Federal Reserve has pumped about $4.7 trillion into the economy to get it moving again.  That’s about one third of the total annual gross domestic product, or what the entire nation produces in a year.  If you don’t think it seems to have done as much as it should have, you’re far from alone. Why this traditional stimulus has failed to kick-start the economy has been at the heart of many policy debates over this summer as we contemplate what comes next.  The central problem, however, is that we have been treating the situation as just another recession and not something very different– despite obvious signs.

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Next Generation’s Economy

There is little doubt that the economy needs some kind of breakthrough in order to get moving again.  Official readings tell us that the recession is over, but with unemployment remaining high very few people believe it. There is one simple and very direct solution to kick-start job creation if the Federal government is willing to take drastic action – which I think is essential.  That would involved making people close to retirement age eligible for Social Security and allow them to tap their retirement funds ahead of schedule, freeing up jobs in the private sector for a new generation of workers.

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Now that we’ve passed out of Summer and into Autumn, a strange quiet has settled over my neighborhood and my city, Saint Paul.  It’s been raining hard enough to cause an unusual September flood in many parts of the state – a bubble of Gulf of Mexico air has reached this far north and continues to refresh itself.  The start of Hockey season has been met with temperatures above 70F.  Everything seems a bit out of sorts and silently anxious.

Call me a romantic or an idiot, but I think that the weather is always trying to tell us something.

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A political campaign is tricky.  You have to get your message out and keep control of the situation, but at the same time you have to let it go and roll with the punches.  It’s a lot like any other advertising campaign in a mixed old/new media world, but with a strong deadline and high stakes that fire passions.  More importantly, the conduct of that campaign itself is often more important than the candidate because, like new media, you’re not just selling a product but a relationship.

The Governor’s race in Minnesota is crackling with a very good example of what not to do right now.  The Emmer campaign is so consistently far over the top in their efforts to control their message that they are clearly doing great harm to their candidate – and calling into question their philosophy, policy, and identity.

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Economic Theory

While “Tea Party” activists have gotten most of the press this election cycle, they haven’t been the ones providing the heavy lifting for right-wing thought and plans.  Every candidate needs more than “we’re angry!” if they expect to be elected.  On the right that tends to take the form of what we might call Austrian School Economics, which includes the campaign of Tom Emmer for Governor of Minnesota.

I’ll spare you the details of this set of theories – you can follow the link yourself.  The short version is that a high tax social safety net diverts wealth away from the vibrant part of the economy, individual choices, thus destroying wealth and ultimately working against its own aims by making everyone poorer.  You don’t hear about this philosophy too directly because its adherents know it’s a real snooze and its detractors honestly don’t seem to understand where it’s coming from.  I’d like to do my best to explain why this theory doesn’t work.

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