Much has been happening lately, but the news is hard to digest. For now, I’d rather stay with the economic news and summarize what I think is going on. This post is largely a repeat from last year, but it makes a jumping-off point. I think that the context of the news is extremely important because without it all we have is a senseless jumble of events and not a coherent understanding.
If we can’t grab what is happening around us and make it our own, how can we call ourselves a free and democratic society? Barataria does what it can to offer a different way of looking at what is happening and relate it in story form, free of unexplained jargon. Hopefully, this will help to make a more real and useful politics.
After a few months of big events and heavy articles, it’s time to summarize the Baratarian view on the big economic picture in one polemic and invite your comments.
The economic situation we are in can best be described as a Depression – one which appears to have started around 2001. Labeling it a “Managed Depression” explains how the worst effects were not felt until 2008 as those in charge did their best to spend, keep interest rates low, and generally keep things going. They learned from previous depressions, rare but not unique events in US history. The system largely worked, but to limited effect.
How did this come about? In many ways, it was an inevitable part of the business cycles that still define our history as we swim our way through it. It’s hard to blame any one set of politicians, Democrat or Republican, for what happened – although there were policy decisions made in the 1980s and 1990s that clearly made this Depression more inevitable.
Working our way through this is a matter of time and Restructuring – building the economy of tomorrow rather than simply reflating the previous one that has already died. Much of our economic debate focuses on stimulus versus austerity, fairly traditional lines. But we have an economy that has been stimulated by many years of structural budget deficits and still cannot perform.
Our economy is like a kid fed a steady diet of candy for many years that now careens between hyperactivity and diabetic crashes. One side says give the kid more candy, the other wants to take it away. What the kid needs is a balanced, healthy diet and a little bit of exercise.
Getting us through to the other side is not going to be easy, but it starts with the acknowledgement that the tremendous pile of debt run up around the world is going to go away one way or the other. We can do it in an orderly way or we can wait for a horrific crash that erases it with panic, revolution, or at least incredible inflation.
One thing that marks this Depression is that it has hit the developed world far harder than the developing world. That means that a re-ordering of global trade and finance is very likely in the near future, again either in an orderly way or in a sharp, nasty transition. The US Dollar as a global standard is not likely to survive indefinitely, nor should it for the health of our nation. We have to regain control of our own currency, and that means surrendering our status as the coin of the realm.
Why is this important? Because manufacturing jobs have been hit hardest in this Depression, crashing from 24M to 16M in the last decade. These jobs are not only well paying, they represent real opportunity for young people who can start out in an unskilled position and gradually learn as they earn. That is what created the great Middle Class that once defined the US.
Most importantly, the old quote from Bill Clinton remains true – there is nothing wrong with America that can’t be fixed by what is right with America. We are not put together as horribly as Europe, where basic financial institutions needed to support the Euro single currency were never assembled properly in the first place. Attention to global trade and technology that can change how we use limited resources like oil will be critical.
The situation is bad, but it’s not dire. Politics won’t solve or even adequately describe the situation until voters demand that we look ahead to the next world and define it before it defines us. There is work to be done and, most importantly, a conversation based on truth and dedication that needs to be started. This is a Depression, but it could be a lot worse. Starting from there some of the decisions to make and work to be done become pretty obvious. Let’s do those, first.
This contains many links to past articles. All the claims and themes are backed up by 800 word essays in these links. To learn more, just make yourself a pot of coffee click through – and please, leave comments and questions so that we can all work this out together. That’s what will get us through this more than anything else.
Barataria - The work of Erik Hare 
The more I read about manufacturing I am not sure that is the answer either but neither was the service economy. Everything is so automated now. Was wondering if you watched or heard of Frontline’s piece last Tuesday called 2 families? It followed two Milwaukee families from the late eighties when both dad’s had “good jobs” ($18/hr with benefits) and how they struggled after losing their work at A O Smith and Briggs and Stratton . One dad stayed in manufacturing at about 50 to 60% of pay and has worked night shift all his life which ended with the breakup of the family. The other a black family with five kids managed to make it on other jobs but ultimately the family was savaged by health care costs but salvaged by government. Education, jobs with municipalities and even 1 son serving overseas. Sorry I can’t be more erudite or literate here but I thought I would comment. Looking forward to more comments and articles.
Several things about manufacturing. If your economy, however you define it, is not making as much as it consumes it is bleeding wealth. That can be made up in part with intellectual property and/or finance, but we aren’t really doing that, either. An economy bleeding wealth can’t remain where it is forever – but it can go on for a long time. So we do have to make something like what we consume if we’re going to maintain our standard of living – and we aren’t.
The other point is more subtle, but manufacturing jobs really have created opportunity for people who don’t know what they want to do when they are 18. There are a lot of people like that, too. Something that creates a place where people can grow on the job is desperately needed – and if that’s not manufacturing I’m OK with whatever fills the bill.
well I do have another comment . I also watched Moyers and company on Friday night as I stayed up late. It seems to me now that some highly intelligent older men like Krugman, and some of Moyer’s guests are becoming prophets. Almost slightly mad but with integrity. There is so much that needs reforming but the big money in new york and washington prevents it from happening.
Yes, very much so. People who actually look back and learn from history are unusually wise in this world. I have a lot of quibbles with Krugman, but they look less important all the time.
ok 1 more. I am starting to think that unions in the U.S. are historical anomolies (sp?) A lot of auto manufacturing is now in Mexico and the fact that the formation of many unions were on ethnic and familial and neighborhood and communities ties that have been greatly severed. A notable exception has probably been nurses unions. One thing I forgot to mention about two families is that 1 family lost their house and the mother is now essentially homeless. I will try to write something nice in the future.
The way they are constructed, yes. They are based on the old industrial model, which is crumbling around us – and your point about ethnicity is also very key. A new generation of organizers, such as those in the SEIU, will largely agree with this. The movement needs a re-invigoration much like every other institution that we’ve come to rely on, IMHO.
I like the idea that the system worked as it was supposed to because things could be a lot worse. That seems right to me. What I don’t see are the bigger trends of globalism and bigger and bigger banks taken into account. This is more than just a cycle but what exactly comes next is very hard to imagine.
Thanks. There are more constant forces on us, such as globalism and the Baby Boom’s demographics. The cyclical nature of debt has made it harder for us to grapple with those temporarily, but we’ll come back to them. I’m thinking a lot about the different nature of these trends, those that are cyclical and those that are directional.
Excellent blog.
Thanks!
In some or many ways the U.S. is manufacturing a lot as we have a lot of factories still churning out goods. True they are not very hands on and we are getting a lot from China and other pacific rim countries.
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