I recently happened to be at an event where billionaire George Soros was being interviewed. The right wing hates Soros because he is: (a) liberal, (b) rich, and (c) fearless. [I could also make a case that they hate Soros because he is (d) Jewish, but I leave that up to you.]
Soros said a lot of things, but he said two sentences that I wish that everyone could hear. This is what he said:
“You can’t cut your way out of a recession. You have to grow your way out of a recession.”
The simple truth in those nineteen words seems to have eluded our policymakers, both Democratic and Republican, for the past four years. Here is a chart that proves it:
The chart has been featured regularly at Daily Kos, but it comes from the Calculated Risk Blog. It graphs job losses during and following each post-WWII recession, month by month, as a percentage of total employment.
As you can see, the job losses in America since 2008 are not only the worst in postwar history, but also feature the weakest “recovery.” In every single other recession, employment returned to peak levels in less than four years. (In fact, leaving aside the Bush Recession of 2001, employment returned to peak levels in less than three years.) Yet here we are, four years after the Great Recession started, still almost four percentage points under peak employment.
Which is five million jobs. Five million people who can’t find work. Five million people with no income.
So, as Soros and I might ask on Passover, “why is this recession different from all other recessions?” There is a simple answer: the austerity fetish. The bizarre notion that cutting is healing.
The Wall Street Journal recently confessed that without local government layoffs – police officers, firefighters, teachers and others – unemployment would be a full percentage point lower. I think that that’s an underestimate. If those police officers and firefighters and teachers still had jobs, we would be safer, and our children smarter. But beyond that, as those public employees spent their earnings, a lot of carpenters and waiters and real estate agents and cashiers would be able to get back to work.
And we have no one to blame but the cut-cut-cut policymakers, in whichever party. As Nobel Prize-winning economist Paul Krugman put it three weeks ago:
Consider, if you will, the current state of our nation. Despite hints of economic progress, we’re still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technological know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.
Soros and Krugman are right. It’s time to end this man-made economic disaster. It’s time to stop slashing our own economic wrists. It’s time for jobs.