The Case for Economic Doom and Gloom
Why we’re not out of trouble yet--not even close.
John B. Judis
The New Republic
May 11, 2010
The American economy added 290,000 jobs in April, the biggest monthly increase in four years. Clearly, a recovery has taken hold. But how strong and buoyant will it be? Will we eventually get back to growth rates above 4 percent and to an unemployment rate of less than 5 percent? Or will this recovery sputter like the last one that began in 2002?
The strongest case for gloom that I’ve read has been made by UCLA economic historian Robert Brenner in a new introduction that he wrote to the Spanish edition of his 2006 book, The Economics of Global Turbulence. New Republic readers will detect a similarity between Brenner’s views and my own, but his are grounded in a far greater knowledge of economic history than mine. His pessimism also outpaces mine.
Brenner’s analysis of the current downturn can be boiled down to a fairly simple point: that the underlying cause of the current downturn lies in the “real” economy of private goods and service production rather than in the financial sector, and that the current remedies—from government spending and tax cuts to financial regulation—will not lead to the kind of robust growth and employment that the United States enjoyed after World War II and fleetingly in the late 1990s. These remedies won’t succeed because they won’t get at what has caused the slowdown in the real economy: global overcapacity in tradeable goods production.
(More here.)
John B. Judis
The New Republic
May 11, 2010
The American economy added 290,000 jobs in April, the biggest monthly increase in four years. Clearly, a recovery has taken hold. But how strong and buoyant will it be? Will we eventually get back to growth rates above 4 percent and to an unemployment rate of less than 5 percent? Or will this recovery sputter like the last one that began in 2002?
The strongest case for gloom that I’ve read has been made by UCLA economic historian Robert Brenner in a new introduction that he wrote to the Spanish edition of his 2006 book, The Economics of Global Turbulence. New Republic readers will detect a similarity between Brenner’s views and my own, but his are grounded in a far greater knowledge of economic history than mine. His pessimism also outpaces mine.
Brenner’s analysis of the current downturn can be boiled down to a fairly simple point: that the underlying cause of the current downturn lies in the “real” economy of private goods and service production rather than in the financial sector, and that the current remedies—from government spending and tax cuts to financial regulation—will not lead to the kind of robust growth and employment that the United States enjoyed after World War II and fleetingly in the late 1990s. These remedies won’t succeed because they won’t get at what has caused the slowdown in the real economy: global overcapacity in tradeable goods production.
(More here.)
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