We Need to Talk About the ‘Anthropocene’ [feedly]

The concept of 'anthropocene' -- considering the all around impact of human beings on the "earth system" -- is a good framework idea for considering ways to meet the many challenges facing global civilization. It injects --- tenderly -- the social and economic dimensions into the "climate change" debate. We need to say MORE than this article does, which only teases the reader with the need for structural social change, including changes in capitalism. The latter is the elephant in the room making any of the recommended  technological shifts and associated vast economic investments too doubtful to predict success.

Note that the billionaires, including the oil and gas owners as revelations from Exxon have shown, know full well that climate change will kill millions and cause huge, likely military, upheavals. The military is deep in to  planning for IT -- meaning,  to them, "Yeah, the losers will perish, but  I WILL NOT"  

If you can't fix capitalism --- and the only known way to do it is with "more -- but not too much -- socialism" --- then meeting the challenges will fall short. Market forces alone -- capitalisms -- are utterly indifferent to market failures. There is no correction. They simply collapse and rot. With no supply, demand moves on. Without social protection from "externalities", including those externalities that are themselves consequences of "market forces".

JM Keynes theories about the positive role public spending, money supply, and borrowing can play in correcting some market failures became a standard of economic science, because Roosevelt's New Deal and the second World War (a HUGE spending project) were as close as one gets to a laboratory historical proof of Keynes theory. Critics from the billionaire caucus then resisted Keynes, claiming that "in the long run" markets would correct. Keynes famous reply: "That may, or may not, be true, sir. But, in the long run -- we are all dead".. 

"Not me," says the billionaire.

************************************************

We Need to Talk About the 'Anthropocene'
https://www.globalpolicyjournal.com/blog/31/08/2018/we-need-talk-about-anthropocene

Why is the Anthropocene important? And what does our mass media's presentation of the Anthropocene tell us? Professor Emeritus Leslie Sklair shares his research.

There is an enormous amount of research on how 'climate change' and 'global warming' are being reported in the media all over the world. However, since beginning to study the Anthropocene (the geological concept intended to measure and name human impacts on the Earth System) it seems that while some academics, environmental professionals, and creative artists do engage actively with the Anthropocene, most educated and cultured elites do not. It is also becoming increasingly clear that most people in the world have either never heard of it or if they have, they have no clear idea about it. While climate change is important, it only tells part of the story of the threats to our planet and us.

Why is this important?

The simple answer is most scientists researching human impacts on the Earth System believe the Anthropocene presents credible existential threats to the survival of human life on the planet in the foreseeable future. In 2011, Nobel prize-winner Paul Crutzen (a leading populariser of the term) co-authored an article in Philosophical Transactions of the Royal Society which argued the ultimate drivers of the Anthropocene 'if they continue unabated through this century, may well threaten the viability of contemporary civilization and perhaps even the future existence of Homo sapiens'.

Researching how the Anthropocene is presented in mass media begins to answer my research questions – how likely is it that someone reading the daily news online will come across articles on the Anthropocene, and what will these articles tell them?

The project started in early 2017, and data has been collected from online searches of over 1,000 newspapers, magazines and other media websites from around 100 countries/regions from 2002 (the date of the first recorded articles) to the end of 2017. Media with paywalls and social media were excluded from the study.

The research has come up with some surprising results. Hundreds of Anthropocene articles are actually about events in the creative arts that incorporate Anthropocene references in their titles.  When it comes to the science reporting, it is the so-called 'good Anthropocene' that dominates press coverage, kicking the existential threats to human existence into the long grass.

Three very broad messages (Anthropocene Narratives) have been identified from the media searches:

1. While posing problems, the Anthropocene is a great opportunity for industry, science and technology, mostly business as usual, and/or casual references to the idea.
2. The planet and humanity itself are in danger, we cannot ignore the warning signs but if we are clever enough we can save ourselves and the planet with technological fixes, geoengineering, conservation, etc.
3. We are in great danger, humanity cannot go on living and consuming as we do now, we must change our ways of life radically, for example by bringing capitalism to an end and creating new types of communities.

The first two narratives are often difficult to distinguish, and they have been characterised as versions of the 'good Anthropocene'- supported by a variety of think tanks and foundations, arguing that human ingenuity will minimise the risks posed by the Anthropocene in the various eco-systems that constitute the whole Earth System (climate, oceans, forests, soil, biodiversity, etc.). Relatively few articles advocate radical change to the status quo.

A serious appreciation of the potential dangers of the Anthropocene will provide a useful gateway for relatively uninformed publics into a variety of issues that are ignored or misrepresented by the media. It is understandable that both the science and media establishments, and the business and political interests which underpin them, would tend to lean towards reassurance rather than desperation in portraying the perils of the Anthropocene.

However, this is a high-risk situation, probably not for anyone living at present, possibly not even for their grand-children or their great grand-children, but almost certainly for generations to come. Given the continuing failures of governments and international organizations to act decisively, this is a reality that the media and all citizens need to grasp – the issue of human survival is at stake.

An open source article summarising the project to date can be found here.

 -- via my feedly newsfeed

YANIS VAROUFAKIS: The Three Tribes of Austerity [feedly]

The Three Tribes of Austerity
https://www.project-syndicate.org/commentary/three-tribes-of-austerity-by-yanis-varoufakis-2018-08

The Three Tribes of Austerity

Aug 30, 2018 YANIS VAROUFAKIS

Austerity prevails in the West because three powerful political tribes champion it. Enemies of big government have coalesced with European social democrats and tax-cutting US Republicans, to create a cartel-based, hierarchical, financialized global economic system.

ATHENS – No policy is as self-defeating during recessionary times as the pursuit of a budget surplus for the purpose of containing public debt – austerity, for short. So, as the world approaches the tenth anniversary of the collapse of Lehman Brothers, it is appropriate to ask why austerity proved so popular with Western political elites following the financial sector's implosion in 2008.


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The economic case against austerity is cut and dried: An economic downturn, by definition, implies shrinking private-sector expenditure. A government that cuts public spending in response to falling tax revenues inadvertently depresses national income (which is the sum of private and public spending) and, inevitably, its own revenues. It thus defeats the original purpose of cutting the deficit.

Clearly, there must be another, non-economic, rationale for supporting austerity. In fact, those favoring austerity are divided among three rather different tribes, each promoting it for its own reasons.

The first, and best known, "austerian" tribe is motivated by the tendency to view the state as no different from a business or a household that must tighten its belt during bad times. Overlooking the crucial interdependence between a government's expenditure and (tax) income (from which businesses and households are blissfully free), they make the erroneous intellectual leap from private parsimony to public austerity. Of course, this is no arbitrary error; it is powerfully motivated by an ideological commitment to small government, which in turn veils a more sinister class interest in redistributing risks and losses to the poor.

A second, less recognized, austerian tribe can be found within European social democracy. To take one towering example, when the 2008 crisis erupted, Germany's finance ministry was in the hands of Peer Steinbrück, a leading member of the Social Democratic Party. Almost immediately, Steinbrück prescribed a dose of austerity as Germany's optimal response to the Great Recession.

Moreover, Steinbrück championed a constitutional amendment that would ban all future German governments from deviating from austerity, no matter how deep the economic downturn. Why, one may ask, would a social democrat turn self-defeating austerity into a constitutional edict during capitalism's worst crisis in decades?


While Steinbrück did not spell it out fully, his underlying message was clear: Even if austerity destroys jobs and hurts ordinary people, it is necessary in order to preserve space for democratic choices. Oddly, it did not occur to him that, at least during a downturn, democratic options are best secured without fiscal tightening, simply by increasing taxes for the rich and social benefits for the poor.Steinbrück delivered his answer in the Bundestag in March 2009. "It's democracy, stupid!" would be an apt summary of his tortured argument. Against a background of failing banks and a mighty recession, he opined that fiscal deficits deny elected politicians "room for maneuver" and rob the electorate of meaningful choices.

The third austerian tribe is American and perhaps the most fascinating of the three. Whereas British Thatcherites and German social democrats practiced austerity in an ill-conceived attempt to eliminate the government's budget deficit, US Republicans neither genuinely care to limit the federal government's budget deficit nor believe that they will succeed in doing so. After winning office on a platform proclaiming their loathing of large government and pledging to "cut it down to size," they proceed to boost the federal budget deficit by enacting large tax cuts for their rich donors. Even though they seem entirely free of the other two tribes' deficit phobia, their aim – to "starve the beast" (the US social welfare system) – is quintessentially austerian.

In this sense, Donald Trump is a Republican in good standing. Aided by the dollar's exorbitant capacity to magnetize buyers of US government debt, he feels certain that the more he boosts the federal budget deficit (via tax giveaways to his ilk), the greater the political pressure on Congress to cut Social Security, Medicare, and other entitlements. Austerity's usual justification (fiscal rectitude and public-debt containment) is jettisoned in order to achieve austerity's deeper, political objective of eliminating support for the many while re-distributing income toward the few.

Meanwhile, independently of establishment politicians' aims and their ideological smokescreens, capitalism has been evolving. The vast majority of economic decisions have long ceased to be shaped by market forces and are now taken within a strictly hierarchical, though fairly loose, hyper-cartel of global corporations. Its managers fix prices, determine quantities, manage expectations, manufacture desires, and collude with politicians to fashion pseudo-markets that subsidize their services. The first casualty was the New Deal-era aim of full employment, which was duly replaced by an obsession with growth.

Later, in the 1990s, as the hyper-cartel became financialized (turning companies like General Motors into large speculative financial corporations that also made some cars), the aim of GDP growth was replaced with that of "financial resilience": ceaseless paper asset inflation for the few and permanent austerity for the many. This brave new world became, naturally, the nurturing environment for the three austerian tribes, each adding its special contribution to the ideological supremacy of austerity's appeal.

Austerity's pervasiveness thus reflects an overarching dynamic that, under the guise of free-market capitalism, is creating a cartel-based, hierarchical, financialized global economic system. It prevails in the West because three powerful political tribes champion it. Enemies of big government (who see austerity as a golden opportunity to shrink it) coalesce with European social democrats (dreaming of more options for when they win government) and tax-cutting Republicans (determined to dismantle America's New Deal once and for all).

The result is not only unnecessary hardship for vast segments of humanity. It also heralds a global doom loop of deepening inequality and chronic instability.


Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.
 -- via my feedly newsfeed

China-India rapprochement will benefit entire region [feedly]

China-India rapprochement will benefit entire region
http://www.atimes.com/china-india-rapprochement-will-benefit-entire-region/

Adopting similar stances on free trade, counterterrorism and global issues such as climate change, recently Sino-Indian relations have become more multi-dimensional in nature. Working together on platforms such as BRICS and the Shanghai Cooperation Organization (SCO) has produced a new synergy between the two nations that could prove auspicious for South Asia.

On the world stage also, China and India account for more than a third of the global population and 20% of its gross domestic product. Not only that, they are the biggest, fastest-growing and most populous developing countries, so this is not a minor development.


India has been in the process of a rapprochement with China for the past few months. Bilateral ties have been on an upward trajectory since several high-level visits this year, the most significant of which was Indian Prime Minister Modi's Wuhan summit with Chinese President Xi Jinping.

Having met as many as 15 times in the last four years, the two leaders have developed a good understanding, and attending the SCO Summit in Qingdao, Modi affirmed in his speech, "We have reached a stage where physical and digital connectivity is changing the definition of geography. Therefore, connectivity with our neighborhood and in the SCO region is our priority."

Several factors may have contributed to the new synchronicity in Sino-Indian relations, such as the prevalent US tendency toward protectionism that has affected even its allies such as South Korea and India, forcing the latter to rebalance itself closer to home. Notwithstanding the fact that it is described as a "leading global power and major defense partner of the United States" in the 2017 US National Security Strategy, India is still being hit by trade tariffs, and it is being criticized by Washington for its trade policies.

Another factor is the upcoming election in India, ahead of which Modi has to present a better economic outlook for the next five years. Negotiating a new bilateral Sino-Indian economic agreement, India could also do with some help to boost Modi's Make in India policy.

When he launched the policy in September 2014, the Indian PM pledged to create 100 million new jobs by 2022 and make manufacturing account for around 25% of GDP by 2025. However, according to the World Bank, only 650,000 new jobs had been provided while manufacturing accounted for just 16% of the economy by financial year 2017-18, and economic growth slowed from 7.1% to 5.7%in 2018. Demonetization, inadequate infrastructure and tough labor laws are said to be the reasons behind this failure of "Make in India."

Thus an economically cooperative relationship with China has become a necessity for India. It requires Chinese infrastructure investment to bring back vibrant economic growth and fulfill its dream of becoming an economic and geopolitical powerhouse by 2025.

Having the resources and authority to help build India's industrial foundation, China could enhance its prospects with the Belt and Road Initiative (BRI). Recently, India put together a list of goods that are becoming costlier because of the trade war and which could be exported to China instead of the United States. Increasing exports would also help reduce the US$63 billion trade deficit it has with China, its top trading partner.

Trade value between the two nations reached a high of $84.4 billion recently, and generally there is 20% growth every year. By lowering barriers on some Indian goods, in turn China has also made efforts to address Indian reservations over the trade deficit.

From the foreign-affairs aspect, organizations like the SCO and trade and infrastructure projects like the BRI are binding the region closer in a mutually beneficial equation. Unfortunately, both the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have failed to deliver, and this region needs to find common ground to achieve a better understanding.

At present, South Asia lacks unity and integration, and good relations between the two major powers, China and India, is a good omen. Even as bilateral relations between China and India become more tightly knit, it may be just a matter of time before Pakistan and India also sort out their issues. Playing a supportive role, China could help build bridges, and even if just a modicum of success is achieved, an India-Pakistan-China triangle could ensure the long-term peace and prosperity of South Asia.

Finally, in recent times, India has become the world's largest weapons importer by purchasing 13% of the arms in the world, according to the Stockholm International Peace Research Institute (SIPRI). In the future, those finances could be re-channeled to poverty reduction and economic development if vibrant geo-economic relations are established.

Focusing on preserving global free trade and increasing economic bilateral interaction, Sino-Indian diplomatic and economic ties have immense potential to transform the whole region if they can achieve sustainable, coordinated priorities. -- via my feedly newsfeed

SSA Staffing Shortage Hurts Hard-Working Americans [feedly]

SSA Staffing Shortage Hurts Hard-Working Americans
https://www.cbpp.org/blog/ssa-staffing-shortage-hurts-hard-working-americans

The Social Security Administration (SSA) faces a staffing shortage that hurts hard-working Americans trying to access their earned benefits, but a Senate-passed funding bill wouldn't help — and one that the House Appropriations Committee passed would only make things worse. The House bill would cut SSA's administrative budget by 2.5 percent compared to last year, and the Senate's version would provide a paltry 1 percent increase.

 -- via my feedly newsfeed

Xi and PLA could join North Korea’s national day parade [feedly]

I forward this as further evidence that the entire 'concert' arranged for Trump in NK was co-orchestrated with China, and SKs silent support. If so, Trump's arrogance is nowhere better exposed than thinking he could form any real relationship with NK while insulting and attacking China with his divisive gaslighting tactics. It appears convergence with China, not divergence is the emergent trend.

Xi and PLA could join North Korea's national day parade

http://www.atimes.com/article/will-xi-and-pla-join-north-koreas-big-national-day-parade/

peculation is rising that Chinese President Xi Jinping – possibly accompanied by an honor guard of People's Liberation Army troops – will appear alongside local leader Kim Jong Un at a symbolically important parade in Pyongyang next month.

At a time when Washington has unleashed a trade war upon Beijing, while the denuclearization process agreed between Kim and US President Donald Trump in Singapore at their June summit appears to be stalled, the appearance of the Chinese leader – and elite PLA troops – would send a significant cross-Pacific message about Sino-North Korean amity.

September 9 is the 70th anniversary of North Korea's founding, and the day is expected to be marked with a massive parade in Kim Il Sung square. The flagship plaza at the center of Pyongyang was created from the rubble of buildings bombed flat during the Korean War, and is a frequent site for massive military parades.

Chinese state newspapers including the Global Times and Reference News have run stories this week speculating on the size and significance of the big parade. Typically though, neither the Korean Central News Agency nor Korean Central Television – key media organs in one of the world's most opaque states – have dropped any hints about the upcoming muster of military might.

Lack of censorship looks to confirm speculation

Posts hinting that President Xi will visit Pyongyang to review troops alongside Kim have not been pulled from social networking platforms by party censors since related rumors started to swirl last month. Nor has talk that Xi may dispatch PLA honor guards to goose-step shoulder-to-shoulder with their North Korean comrades.

While Xi and Kim had never met before this year due to bilateral tensions sparked by Kim's execution of his uncle Jang Song-taek – who had strong connections in Beijing – and by China's support for international sanctions, they have met three times so far in 2018. The meetings proceeded as part of Kim's unprecedented diplomatic offensive, which has also seen him meet Trump once, and South Korean President Moon Jae-in twice.

The friendship between the two avowedly communist states may be in a process of rejuvenation, but is not new. China's intervention in the Korean War saved the North Korean state from extinction at the hands of US-led UN forces in October 1950.

In 1961, the two signed the Sino-North Korean Mutual Aid and Cooperation Friendship Treaty; its second article calls for mutual defense against external enemies. The treaty has been renewed twice and is up for renegotiation in 2021.

Goose-steppers' paradise, but no ICBM?

The general consensus is that the parade could be considerably larger than one held in February on the anniversary of the Korean People's Army.

Large cavalcades of troops, tanks and artillery on the ground and swarms of war-craft in the air are anticipated, after Kim reportedly ordered the military to put its best foot forward to shore up the morale of North Koreans and cast the image of an invincible army.

A satellite image of the preparation for the national day parade at the Mirim Parade Training Ground in Pyongyang. Photo: The Stimson Center via Planet Labs, Inc

The Mirim Parade Training Ground in Pyongyang has been a hive of activity, as seen on satellite imagery taken earlier this month, with around 120 military vehicles in formations, including assault tanks, unmanned-aerial-vehicle launchers and six tarp-covered Scud-class transporter-erector-launchers, among others, captured practicing on the facility's roads.

A replica of Kim Il Sung Square, and an expended tent area believed to house and service troops were also visible in these images.

But the Global Times cited the Stimson Center, a Washington-based think tank, as saying that no launchers for intercontinental ballistic missiles were spotted so far.

Cui Zhiying, director of the Shanghai-based Tongji University Korean Peninsula Research Center, told the tabloid that the Hwasong-15 nuclear warhead-capable ICBMs – with a theoretical range covering almost all of the US – would not be showcased this time for the sake of the thaw in ties between Pyongyang and Washington.

However, those ties, over the last week, appear in danger of freezing over once more, following Trump's order to US Secretary of State Mike Pompeo not to travel to Pyongyang last Friday to attend negotiations. Trump cited a lack of progress in North Korea's denuclearization as the reason for his move.

Moon on a mission

Xi, assuming he does appear in Pyongyang, will not be the only high-profile visitor in September. Amid an apparent downturn in relations between Pyongyang and Washington, South Korean President Moon has also announced a summit with Kim in the North Korean capital next month.

While there, Moon's key mission will be an intermediary one. He hopes to reinvigorate the denuclearization process and bring Pyongyang and Washington back onto the same page, South Korean presidential officials say.

However, while the dates for Moon's trip have not yet been released, he is highly unlikely to visit on the 9th – the date when the communist state was founded in contravention to his own, US-backed state in 1948.

 -- via my feedly newsfeed

The 21st Century Has Been Hard On US Households [feedly]

The 21st Century Has Been Hard On US Households
https://economicfront.wordpress.com/2018/08/21/the-21st-century-has-been-hard-on-us-households/

The 21^st Century has not been a good one for most working people in the United States.  In fact, for most of this century, real median household income has been below its starting value in January 2000.

The chart below shows real (inflation-adjusted) and nominal (or current dollar) median household income over this century.  As we can see, the fall in real median household income over most of the first eight years was nothing compared to the hit median household income took over the next 8 years. This record is even more appalling when one considers that the US was officially in an economic expansion from November 2001 to December 2007, and then again from June 2009 to the present.

The next chart brings the pressures working families have faced this century into sharper relief.  It shows the percentage change in real median household income, both monthly and using a three-month moving average, over time.  It does this by dividing the value of each median income variable by its respective value at the beginning of 2000.

It has been a long, hard slog, but finally, in 2018, the average household is enjoying some real growth in income.  Real median household income, as of March 2018, was 1.8 percent above its January 2000 level. The 3-month moving average was also 1.8 percent above its January 2000 benchmark.

While encouraging, recent gains have been far too small to compensate for the many preceding years of actual loss. Moreover, it remains to be seen how much longer this expansion will continue.  As the New York Times reported,

Federal Reserve officials are beginning to worry about a possibility that seems remote to workers who still feel left behind: the danger of the economy's running too hot, destabilizing financial markets and setting off a rapid escalation in wages and prices that could force the central bank to slam the brakes on growth.

Translated, this means that if labor costs rise enough to eat into corporate profits, Federal Reserve officials will respond with interest rate hikes to slow down economic activity and weaken labor's bargaining power.  And so goes the new century.

The 21^st Century has not been a good one for most working people in the United States.  In fact, for most of this century, real median household income has been below its starting value in January 2000.

The chart below shows real (inflation-adjusted) and nominal (or current dollar) median household income over this century.  As we can see, the fall in real median household income over most of the first eight years was nothing compared to the hit median household income took over the next 8 years. This record is even more appalling when one considers that the US was officially in an economic expansion from November 2001 to December 2007, and then again from June 2009 to the present.

The next chart brings the pressures working families have faced this century into sharper relief.  It shows the percentage change in real median household income, both monthly and using a three-month moving average, over time.  It does this by dividing the value of each median income variable by its respective value at the beginning of 2000.

It has been a long, hard slog, but finally, in 2018, the average household is enjoying some real growth in income.  Real median household income, as of March 2018, was 1.8 percent above its January 2000 level. The 3-month moving average was also 1.8 percent above its January 2000 benchmark.

While encouraging, recent gains have been far too small to compensate for the many preceding years of actual loss. Moreover, it remains to be seen how much longer this expansion will continue.  As the New York Times reported,

Federal Reserve officials are beginning to worry about a possibility that seems remote to workers who still feel left behind: the danger of the economy's running too hot, destabilizing financial markets and setting off a rapid escalation in wages and prices that could force the central bank to slam the brakes on growth.

Translated, this means that if labor costs rise enough to eat into corporate profits, Federal Reserve officials will respond with interest rate hikes to slow down economic activity and weaken labor's bargaining power.  And so goes the new century.

 -- via my feedly newsfeed

Joseph Stiglitz: The Myth of Secular Stagnation [feedly]

Joseph Stiglitz, Nobel Prize winner and former chair of the World Bank under Clinton,  here gives a major rebuttal to the "secular stagnation" thesis enunciated primarily by Larry Summers, the former Treasury Secretary and Chairman of Obama's Council of Economics advisers. He implies it is a cover for the failure of the Obama administration to sufficiently stimulate the economy following the 2008 Great Recession onset. He makes a convincing case for the shortcomings. However I am not sure he is calculating the political dimension (e.g. counting VOTES) correctly, if at all, in making the critique.  Summers is a genius too. And is reported "on the inside" to have argued forcefully for a stronger stimulus. Nonetheless, identifying the critical points in  the string of failures that got us into this SERIOUS mess hopefully can shine the light on the path out of both secular, and ideological, stagnation

The Myth of Secular Stagnation
https://www.project-syndicate.org/commentary/secular-stagnation-excuse-for-flawed-policies-by-joseph-e-stiglitz-2018-08

Aug 28, 2018 JOSEPH E. STIGLITZ

Those responsible for managing the 2008 recovery found the idea of secular stagnation attractive, because it explained their failures to achieve a quick, robust recovery. So, as the economy languished, a concept born during the Great Depression of the 1930s was revived.

NEW YORK – In the aftermath of the 2008 financial crisis, some economists argued that the United States, and perhaps the global economy, was suffering from "secular stagnation," an idea first conceived in the aftermath of the Great Depression. Economies had always recovered from downturns. But the Great Depression had lasted an unprecedented length of time. Many believed that the economy recovered only because of government spending on World War II, and many feared that with the end of the war, the economy would return to its doldrums.


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Something, it was believed, had happened, such that even with low or zero interest rates, the economy would languish. For reasons now well understood, these dire predictions fortunately turned out to be wrong.

Those responsible for managing the 2008 recovery (the same individuals bearing culpability for the under-regulation of the economy in its pre-crisis days, to whom President Barack Obama inexplicably turned to fix what they had helped break) found the idea of secular stagnation attractive, because it explained their failures to achieve a quick, robust recovery. So, as the economy languished, the idea was revived: Don't blame us, its promoters implied, we're doing what we can.

The events of the past year have put the lie to this idea, which never seemed very plausible. The sudden increase in the US deficit, from around 3% to almost 6% of GDP, owing to a poorly designed regressive tax bill and a bipartisan expenditure increase, has boosted growth to around 4% and brought unemployment down to a 18-year low. These measures may be ill-conceived, but they show that with enough fiscal support, full employment can be attained, even as interest rates rise well above zero.

The Obama administration made a crucial mistake in 2009 in not pursuing a larger, longer, better-structured, and more flexible fiscal stimulus. Had it done so, the economy's rebound would have been stronger, and there would have been no talk of secular stagnation. As it was, only those in the top 1% saw their incomes grow during the first three years of the so-called recovery.

Some of us warned at the time that the downturn was likely to be deep and long, and that what was needed was stronger and different from what Obama proposed. I suspect that the main obstacle was the belief that the economy had just experienced a little "bump," from which it would quickly recover. Put the banks in the hospital, give them loving care (in other words, hold none of the bankers accountable or even scold them, but rather boost their morale by inviting them to consult on the way forward), and, most important, shower them with money, and soon all would be well.


What was needed was more than a massive bank bailout. The US needed a fundamental reform of its financial system. The 2010 Dodd-Frank legislation went some way, though not far enough, in preventing banks from doing harm to the rest of us; but it did little to ensure that the banks actually do what they are supposed to do, focusing more, for example, on lending to small and medium-size enterprises.But the economy's travails were deeper than this diagnosis suggested. The fallout from the financial crisis was more severe, and massive redistribution of income and wealth toward the top had weakened aggregate demand. The economy was experiencing a transition from manufacturing to services, and market economies don't manage such transitions well on their own.

More government spending was necessary, but so, too, were more active redistribution and pre-distribution programs – addressing the weakening of workers' bargaining power, the agglomeration of market power by large corporations, and corporate and financial abuses. Likewise, active labor-market and industrial policies might have helped those areas suffering from the consequences of deindustrialization.

Instead, policymakers failed to do enough even to prevent poor households from losing their homes. The political consequences of these economic failures were predictable and predicted: it was clear that there was a risk that those who were so badly treated would turn to a demagogue. No one could have predicted that the US would get one as bad as Donald Trump: a racist misogynist bent on destroying the rule of law, both at home and abroad, and discrediting America's truth-telling and assessing institutions, including the media.

A fiscal stimulus as large as that of December 2017 and January 2018 (and which the economy didn't really need at the time) would have been all the more powerful a decade earlier when unemployment was so high. The weak recovery was thus not the result of "secular stagnation"; the problem was inadequate government policies.

Here, a central question arises: Will growth rates in coming years be as strong as they were in the past? That, of course, depends on the pace of technological change. Investments in research and development, especially in basic research, are an important determinant, though with long lags; cutbacks proposed by the Trump administration do not bode well.

But even then, there is a lot of uncertainty. Growth rates per capita have varied greatly over the past 50 years, from between 2 and 3% a year in the decade(s) after World War II to 0.7% in the last decade. But perhaps there's been too much growth fetishism – especially when we think of the environmental costs, and even more so if that growth fails to bring much benefit to the vast majority of citizens.

There are many lessons to be learned as we reflect on the 2008 crisis, but the most important is that the challenge was – and remains – political, not economic: there is nothing that inherently prevents our economy from being run in a way that ensures full employment and shared prosperity. Secular stagnation was just an excuse for flawed economic policies. Unless and until the selfishness and myopia that define our politics – especially in the US under Trump and his Republican enablers – is overcome, an economy that serves the many, rather than the few, will remain an impossible dream. Even if GDP increases, the incomes of the majority of citizens will stagnate.


JOSEPH E. STIGLITZ

Writing for PS since 2001
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Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump. -- via my feedly newsfeed