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This is something I saw a while ago Elysian, that I found very interesting. It's a little over 11 mins long. Perhaps at can be the spring board for some conversation.
It's been awhile since I've seen that one! It's on the long side, but it's a thoughtful history of the economic crisis.
From the current news, there seem to be a few major questions floating about. I'll point to one that I've been hearing a lot of people debate lately, around the role of government to create jobs. I'm going to grossly oversimplify a lot of details, and try to tie some points back to some philosophical questions about governance.
The new jobs plan
I'm not going to get into too much detail because there's a lot of argument on how people come up with their numbers, but anyway, it looks like President Obama is putting together a $450b jobs package, with public works projects as one central component. One of the arguments pro public works projects is that, even if the projects don't necessarily provide a lot of utility to the population, it puts short-term revenue into the pockets of workers and companies. Those workers and companies will go to the market and purchase more goods than they would have without this increase in work. Some of the criticism of the last round of public works project were slow permitting, few projects that were shovel-ready (ready to get going quickly), and the government pushing projects to only use unionized workers.
Do these programs work?
The question, though, is whether public works projects only helps things in the short-run, or are tied to long-term recovery. There's a strong contingent that argues that government spends money without much oversight, whereas private companies tend to do much more due diligence in their investments. A glaring example of this is how closely the government monitors defense contracts. There's a crazy story in Rolling Stone about two Americans in their mid-twenties who won $300 million contract from the Pentagon:
http://www.rollingstone.com/politics/news/the-stoner-arms-dealers-20110316
Finally, Japan made many similar efforts over the last two decades since its own asset bubble crash, but most global economists agree that those efforts were a bust. The money was spent inefficiently, there was a lot of crony capitalism, and the projects (massive highways, bridges, etc.), driven by special interests, were created in places that didn't really need them, like remote rural areas, and now lay mostly unused. One of the biggest criticisms of Japan is how special interests run the country and keep a reformist from getting anything done. A NY Times oped writer praised Sarah Palin today for calling attention to this in the US:
http://www.nytimes.com/2011/09/10/us/10iht-currents10.html
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She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).
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Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”
Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.
Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.
So, does the US need another government jobs stimulus, or is there a better way, proven or unproven, to stimulate the US economy? Are these government jobs programs doomed to be just a short-term shot in the arm, as most government jobs don't end up creating more jobs? For example, I've heard on NPR that in computer hardware/electronics, if a company like Samsung or Sony creates one job, it creates 10 to 20 related jobs across the world (channel sales, brick-and-mortar, repairs/servicing, third-party components and manufacturing, etc.). As an interesting comparison point, when Facebook or other social networking sites create a job, it only creates 2 related jobs (such as a data center service technician or channel advertising sales). This is partially why some people argue that the private sector is much better at these ripple effects than the public.
Paul Krugman with the NY Times is one of the biggest proponents of an increased stimulus, but the other side is arguing for focusing on policy reform. Some of the major ideas Romney and the GOP are touting are: refocusing spending onto basic technology (rather than the DOE working as a venture capital fund), setup federal retraining programs and personal reemployment accounts, making it much easier for foreign graduates of US universities to obtain and retain work visas, lower the corporate tax rate from 35% to 25%, giving government agencies more power to layoff workers (the USPS is not allowed to layoff any workers due to union contracts arguably forced onto them by Congress. Labor is 80% of the USPS's costs, 53% of UPS's, and 32% of FedEx's), etc.
What now?
What's the best way the US government can get people back to work given our massive deficits, and the huge amount of personal debt for US households? Should we go for an even bigger stimulus plan? Should we adopt a two-stage plan which combines a short-term stimulus (can we afford one?) with significant (and painful) long-term budgetary reform? Is there an even better solution?
I've glossed over many adjacent issues like growth expectations across the rest of the world, China's tightening of monetary policy, the eurozone debt crisis, US interest rate at 0.25%, Treasury yields decreasing due to safe haven buying, and the general health of US corporate balance sheets, etc.
Feel free to comment on even just one of these points if any of them seem interesting to you
Even with how dismal news is, there are a lot of fascinating issues for people interested in economics and political philosophy.
Also, please continue sharing your stories, as they've been really interesting, and I think a lot of people have been reading them carefully.
