An excerpt from the book, Aftershock: The Next Economy and America’s Future by Robert Reich is on the truth-out.org web site. Since I don’t have express written permission from the copyright holder, I cannot even show you an excerpt from the excerpt.
I can tell you that in Reich’s telling of the story, bankers as a class during the Great Depression did not necessarily have a social conscience or if they did, the didn’t have the knowledge to fix the problem of the continuing depression. In the story,as told by Reich, one particular banker, Eccles, had a social conscience and had the knowledge. Some others who lacked the knowledge at least had the ability to know what it was that they didn’t know so that they knew enough to ask for help.
I need to read this book, and you probably do, too.
If only the Mormon, Eccles’ knowledge had been passed on to the current Mormon politician, Mitt Romney.
June 26, 2011
I have obtained a copy of the book from my local library. Just in the first few chapters my eyes are opening wider and wider.
I now realize that there are some things about Keynesian economics that I was not taught in college. I was taught about the value of deficit spending during a steep recession or depression and the need to run surpluses during boom times.
What I don’t remember learning about was the need to make income distribution somewhat more level (not completely level) as a necessary step after the deficit spending phase in order to make the recovery last beyond the deficit spending phase.
If you haven’t figured it out, rescinding the Bush tax cuts is not only not a job killer, it is absolutely essential to making the recovery self-sustaining.
June 27, 2011
Here are some remarks I have posted on comment boards about President Obama’s getting involved in the budget talks.
According to the book “Aftershock: The Next Economy and America’s Future” by Robert Reich, things like the Bush tax cut are exactly what is holding the economy back. Without rescinding those tax cuts and giving the middle class more spending power there will never be a self-sustaining recovery.
So the Repubs are exactly wrong when they say raising taxes is a job killer. In fact, not raising taxes on the wealthy is the job killer. It is Obama’s duty to make this point very strongly and very publicly. It is about time the American public got an education so that they would know what they ought to be fighting for.
The Great Depression was overcome not only by deficit spending but also by shifting the distribution of income toward the middle class. It was not until the distribution of the wealth of the nation was shifted to a little more equity that the middle class had the purchasing power to sustain the recovery.
This is the part of Keynesian economics that my college courses in economics failed to teach.
I hope Bernanke, who claims to be a an expert on the causes and cures of the Great Depression, understands both parts of the solution. There is the part about the government temporarily replacing the lost private demand with public demand to get investment going again. He has demonstrated that he understands this part.
He should demonstrate that he also knows that a premanent increase in demand to draw forth investment can only come when enough wealth is put in the hands of the middle class. With so much wealth in the hands of the top few, there is not enough purchasing power to buy all the things that the economy would be capable of producing in a complete recovery.