According to an article by Mark Gongloff in Huffington Post, a study by the right-leaning Peterson Foundation has found that Republican austerity measures have cost 900,000 jobs. The current government shutdown has led to a 0.3 loss in economic growth. Gongloff cites Larry Summers who argues that the American economy needs stimulus, not deficit reduction in the form of large cuts in government spending. During the last presidential election, Republican led by Mitt Romney fell in love with the phrase “job creators.” According to the Peterson study, it seems that the GOP might be better labeled as “job killers.” Hopefully, this problem won’t grow even worse if the government defaults on its debt payments. Given the news out of Washington, I’m not very hopeful.
We fret about unemployment in the U.S., but we seldom consider the problem in other countries. Huffington Post linked to an article at 247wallst.com that lists European countries with the highest unemployment. Japan and the U.K. have slight higher unemployment. Countries like Greece (26.4%) and Spain (26.3%) face much higher, rates which are similar to estimates for the U.S. in the Depression of 1930s.
What if the U.S. had 25% unemployment? We would have a major problem. Even at the current rate, many job seekers are having problems finding jobs. Worse still, wages have flat and in some cases declined. Like Paul Krugman, I believe the government should play some role as an employer of last resort. It’s not a matter of the clichéd attack on Keynes that one worker fills a hole and another fills it. There is work to be done: infrastructure, public safety, education, and healthcare. We need to invest to build good country where everyone has opportunity. We have the wealth. We need the will.
Common Dreams reports on the global impact of austerity programs, especially how they are impacting job growth. Citing a recent report by the International Labor Organization, the authors note that countries embracing cost cutting programs have seen the worst job losses (in the U.S., see Wisconsin). They argue that government intervention will do more to spur job growth. I think the scariest news comes at the end of the article when the authors cite the ILO report finding “a downward spiral of wages.” Fewer jobs. Workers with less income and security. Who wins this game? The 1%.
Huffington Post reports that Mark Zandi, economist for John McCain’s presidential campaign, recommends more government spending to stimulate the economy. One area Zandi supports is extending unemployment benefits. Of course, McCain and his colleagues in the GOP are ignoring Zandi’s opinions. They want to cut spending, even if it drags the country into a deep, long term recession.