Jobs: Recovering, But Slowly. What’s Missing? Let Robert Reich Tell Us

America’s corporations have money; many are, as conventional wisdom has it, “sitting on piles of cash.” Unemployment is beginning to come down, ever so slowly; at this rate, according to Robert Reich, it would take another five years to replace the backlog of 10 million jobs… 4.7 million due to the growth of the working-age population, and 5.3 million lost during the recession. It’s a steep uphill climb, as long as companies are reluctant to hire.

For better and worse, Americans are by nature consumers. In better times, we’d all be out buying huge-screen TVs and subscribing to a lot of channels, upgrading to better computers, buying smart phones and game stations, buying new equipment for our small businesses or farms, planning and funding parties, etc. Instead, as Reich tells us, “American consumers have replaced worn-out cars and appliances, but little else. They haven’t had the dough.” No kidding. You know it; I know it.

Now that the employment rate is turning in the right direction, what’s missing? It’s really simple, according to Reich:

But whether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.

Consumer demand is the key. Some of us understand that in periods of low demand, according to Keynes (whose ideas, unlike, say, Hayek’s, have weathered a real-world test), the government must be the purchaser of last resort. If government spends, either by hiring people or providing direct incentives for companies to hire people, or by launching large infrastructure projects… say, repairing our decaying highways, or building more and better railways; there’s no shortage of useful long-term investments in public infrastructure… that will “prime the pump” so to speak. With more people employed, more people will spend, and the aforementioned 70 percent of the economy can regain its momentum.

This can be done. We know… and not just in theory… what to do to make it happen. All we need is an abandonment of the “family” model of economics… the wholly backward, wrongheaded approach that says “families are tightening their belts, so government must tighten its belt” … and we can climb out of the recession much, much sooner. It’s worked before. It can work again.

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