A jobless recovery is not a recovery III

Full employment was once the primary objective of presidential economic policy. It was required by law, mandated by Congress in 1946 under Harry Truman in the Full Employment Act. That Act required an annual report to describe what the president was doing to achieve this end. This report, The Economic Report of the President, is still a terrific source of data, but it has lost its focus on jobs and has become little more than repository for failed predictions.

In 1946, the object lessons of the Great Depression and then World War II were fresh in the minds of the people and their lawmakers. They knew that the Depression was only the deepest in a series of crippling troughs that had afflicted the prewar capitalist economy. Previously these events were called "panics." (The much milder downturns subsequent to World War II have been termed "recessions.") But the Great Depression was the formational event of generations.

The economics of this period was energized by three things: the development of Demand Side economics under John Maynard Keynes (KANES), the commitment of many of the most capable minds of the era to solving the social pandemic of Depressions, and the patent fact that the successful economies of the 1930s were those of Nazi Germany and Stalinist Russia.

The economic discipline suggested by Keynes, which is now considered so left wing, actually delivered capitalism from its own internal contradictions. The mobilization of the country during World War II demonstrated beyond a doubt that government action and organization could effectively focus the apparently uncontrollable energies of a capitalistic market economy.

What emerged from the Depression and the War has been called welfare capitalism or social capitalism. It was not the unfettered capitalism of pre-Depression years, but capitalism nonetheless. To be clear, though he was a prominent figure in political circles, and an able advocate, no country implemented Keynes' prescriptions as a blueprint, not even Britain. Roosevelt's New Deal was more an American invention than a knock-off of the British economist's ideas. To demonstrate his reach, however, realize that prior to Keynes macroeconomics did not even exist conceptually.

The Americans, followers of Keynes and others, who schooled themselves on the Depression and instituted the New Deal, were key players in the financing and industrial organization of World War II. They then managed a very dicey transition back to peacetime. After that they sponsored a postwar economics focused on jobs, and won the peace with the Marshall Plan to rebuild Europe (arguably saving democracy and capitalism there). From this period arose the steady trend line in growth we now take for granted. (We take more or less steady growth for granted even though it has not been the experience for half of our population for the past 25 years.)

Richard Nixon said in 1972, "We're all Keynesians now." Since the moment he spoke the words, they have become less and less true. The stagflation of the 1970s, the Supply Side debacle of the 1980s, even the return to fundamentals under Clinton and Rubin in the 1990s, and especially the bullshit first, ask questions later, policies of George II, have left us adrift in a confusion of laissez faire combined with corporatism that allows only tinkering at the margins.

The successful economy of the 1950s and 1960s and 1970s has gradually been left behind. Calling the current US economy successful when its citizens are hungry, cold, sick without care, homeless, uneducated, clinging to meaningless jobs, unable to meet clear and obvious environmental challenges, uncertain of their futures, is simply sick. The class structure that has emerged and now demands dominance is not a necessary evil to promote dynamic markets. It is simply decadence and decay.

The successful economies are those of Scandinavia, where 50 percent of GDP goes to taxes, and the government is a true partner with business and labor. That 50 percent includes true social security with health care, plus other high-value public goods, including government sponsored R&D that helps business. (Helping business in America means tax giveaways to the rich and powerful.) Even to dream of this system is impossible in the political and economic climate of modern America.

We sit at a crisis point in the governance of the country, a crisis point in the ecological life of the planet, and a crisis point in the social welfare of our society. We see education, energy, transportation, health care, the environment as burdens too heavy for our aging population. We experience a globalization captured by corporate powers and have little idea of what to do about it but object. We hear a lot about the information economy, and the needs of the new technical age, and looking forward is essential. But equally important is to reform the old technologies and systems, to rid ourselves of the entrenched corporatism that controls them, and to regain control of the government, with its disastrous incompetence and cronyism, they have put in power.

The magic of the 1990s was new industries, the tech industries, that demanded skilled workers and created an upward mobility that refreshed everything. Rational work-first economics is still viable. It requires appropriate valuation of public goods such as education, environmental balance, public health, etc., and the willingness to structure government and the market accordingly. These many challenges can be the very engines of growth, if we but define value and then create and realize that value by putting people to work.

That would be a recovery.