The Daily Beast
Fourteen million unemployed represents a gigantic waste of human capital, an irrecoverable loss of wealth and spending power, and an affront to the ideals of America. Some 6.8 million have been out of work for 27 weeks or more. Members of Congress went home to celebrate July 4 having failed to extend unemployment benefits.
We recognize the necessity of a program to cut the mid- and long-term federal deficit but the imperative requirement now, and the surest course to balance the budget over time, is to restore a full measure of economic activity. As in the 1930s, the economy is suffering a sharp decline in aggregate demand and loss of business confidence. Long experience shows that monetary policy may not be enough, particularly in deep slumps, as Keynes noted.
The urgent need is for government to replace the lost purchasing power of the unemployed and their families and to employ other tax-cut and spending programs to boost demand. Making deficit reduction the first target, without addressing the chronic underlying deficiency of demand, is exactly the error of the 1930s. It will prolong the great recession, harm the social cohesion of the country, and continue inflicting unnecessary hardship on millions of Americans.
The original signatories were:
Alan Blinder was vice chairman of the Federal Reserve and served on Bill Clinton’s Council of Economic Advisers; he’s the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University.
Daniel Kevles is the former faculty chair at California Institute of Technology and serves as a professor of history at Yale University.
David Reynolds is an international history professor and fellow at Christ’s College in Cambridge. His latest book is America, Empire of Liberty: A New History of the United States.
Derek Shearer served as the ambassador to Finland from 1994-1997. He is now a diplomacy and world affairs professor at Occidental College in Los Angeles.
Jim Hoge is editor of Foreign Affairs and the former editor of the Chicago Sun-Times, which won six Pulitzer Prizes under his tutelage. He is co-editor of How Did This Happen? Terrorism and the New War.
A journalist and author of the book How Markets Fail: The Logic of Economic Calamities, John Cassidy has been a staff writer at The New Yorker since 1995, covering economics and business.
Joseph Stiglitz is the former chief economist of the World Bank, and a recipient of the Nobel Prize and the John Bates Clark Medal; currently, he’s a professor at Columbia University. He is most recently the author of Freefall: America, Free Markets, and the Sinking of the World Economy and The Stiglitz Report: Reforming the International Monetary and Financial Systems in the Wake of the Global Crisis.
Laura Tyson served as the chair of Council of Economic Advisers and the director of the National Economic Council during the Clinton administration. She is a professor at the Haas School of Business at the University of California, Berkeley.
Lizabeth Cohen is the Howard Mumford Jones Professor of American Studies in the History Department at Harvard University, and author of Making a New Deal: Industrial Workers in Chicago, 1919-1939.
Sir Harold Evans is a journalist and former editor of The Sunday Times and the Times, who was knighted in 2004 for his services to journalism. His award-winning book, They Made America, chronicled the country’s most important innovators and inventors.
Nancy Folbre won a MacArthur Genius Award, is a professor of economics at the University of Massachusetts-Amherst, and recently wrote the book Saving State U: Fixing Public Higher Education.
Richard Parker, a former congressional consultant, is a public policy lecturer and senior fellow at the Shorenstein Center at Harvard’s Kennedy School of Government. He is the author of The Myth of the Middle Class, Mixed Signals: The Future of Global Television News, and John Kenneth Galbraith: His Life, His Politics, His Economics.
A professor of public policy at the University of California at Berkeley, Robert Reich was the 22nd secretary of Labor under President Clinton. He is the author of 12 books, including his most recent Supercapitalism: The Transformation of Business, Democracy, and Everyday Life.
Sean Wilentz is the Sidney and Ruth Lapidus Professor in the American Revolutionary Era at Princeton. His book, The Rise of American Democracy: From Jefferson to Lincoln, won the 2006 Bancroft Prize.
Sidney Blumenthal is a former senior adviser to President Bill Clinton and advised Hillary Clinton during her 2008 presidential campaign. His books include The Clinton Wars and The Permanent Campaign.
The author and host of the BBC documentary A History of Britain, Simon Schama is a historian who teaches at Columbia University.
The 16 additional signatories include:
– Marshall Auerback
Senior fellow ?at the Roosevelt Institute
– Clair Brown ?
Professor of economics, director of ?Center for Work, Technology, and Society, ?University of California, Berkeley
– Jim Campen
Professor of economics, Emeritus, University of Massachusetts-Boston
– Susan Feiner
Professor of women’s and gender studies and professor of economics, the University of Southern Maine
– Heidi Shierholz
Economist at Economic Policy Institute
– Michael D. Intriligator
Professor of economics, political science, and public policy, UCLA senior fellow, The Milken Institute, University of Western Sydney
– David I. Levine?
Eugene E. and Catherine M. Trefethen Professor, Haas School of Business, University of California, Berkeley
– Victor D. Lippit
Professor of economics, University of California, Riverside
– Robert Lynch?
Professor of economics, ?Washington College?, Chestertown, Maryland
– Arthur MacEwan?
Professor emeritus, Department of Economics?, senior fellow at the Center for Social Policy, University of Massachusetts-Boston
– Richard MacMinn?
Edmondson-Miller Chair?, College of Business at the ?Illinois State University
– Eric Maskin
Nobel laureate in Economics, A.O. Hirschman Professor of Social Science, Institute for Advanced Study, Princeton
– Daniel McFadden?
Recipient of the 2000 Nobel Prize for Economics and 1975 John Bates Clark Award, University of California, ?Berkeley
– Walter W. McMahon
Professor of Economics (Emeritus), University of Illinois
– Peter B. Meyer?
Professor emeritus of urban policy and economics?, director emeritus of the Center for Environmental Policy and Management, University of Louisville
– Michael Nuwer?
Professor of economics,? SUNY Potsdam
– Erik Olsen?
Assistant professor?, Department of Economics, ?University of Missouri
– Dimitri Papadimitriou?
President, The Levy Economics Institute
– Bruce Pietrykowski?
Professor of economics, University of Michigan-Dearborn
– Robert Pollin?
Professor of economics? and co-director of the Political Economy Research Institute at the University of Massachusetts-Amherst
– Malcolm B. Robinson
Professor of economics,? Thomas More College
– Mary Huff Stevenson?
Professor of economics, ?University of Massachusetts-Boston
– Peter Skott?
Professor, University of Massachusetts-Amherst
– Mark Zandi
Chief economist and co-founder, ?Moody’s Economy.com
Comments of signatories:
Richard MacMinn, Edmondson-Miller Chair, Illinois State University:
If we have learned anything from Keynes then it is that it takes a massive investment to restart a floundering economy. Given the aging infrastructure and the underinvestment in education as well as so many other fields including energy, the potential for large returns from those investments and to the economy seems clear. It is also clear that inaction will yield large losses in economic activity. This is not the time to let fear of a deficit create inaction. Rather the opposite is called for.
David I. Levine, Trefethen Professor, Haas School of Business, University of California, Berkeley:
We all agree the United States has a serious deficit problem over the next generation. This medium-term problem is largely due to the rising expected cost of paying for health care for the elderly. It is crucial we learn how to deliver quality care without ever rising prices. At the same time, the serious problem of exploding health-care costs is no excuse to ignore the urgent short-run need to get Americans back to work.
• The Original Reboot America Manifesto We know how to fight unemployment: Support the purchasing power of the unemployed with extended unemployment insurance, give states more assistance so cities and states do not keep laying off teachers and firefighters, and so forth. My description of the root cause of our long-term problem suggests one particularly useful way to fight recession: Research into how to provide high quality health care at lower cost is a great investment in creating in jobs today, ensuring fiscal soundness for the next generation, and improving the lives of Americans.
Victor D. Lippit, Professor of Economics, University of California, Riverside:
There are only four sources of aggregate demand in the economy: consumption, private investment, government spending, and net exports. With high levels of unemployment characterizing the U.S. economy and household and retirement savings devastated by the fall in the stock market since 2008, the fall in house prices on which many households relied as their “store of savings,” and the sudden realization on the part of many that household debt must be repaid and savings levels rise, the U.S. is in for an extended period of subpar consumption increases. Business investment to produce consumer goods and services will, therefore, remain modest as well. And weak economies in Europe and Japan limit export demand.
For some time, then, government spending will be needed to provide stimulus to the economy and aid to the unemployed, who can scarcely be faulted when jobs are unavailable. Over the medium and long term, government deficits must be addressed, but the time to do that is after a more substantive recovery has taken place and jobs are again available. Those refusing to support an extension of unemployment insurance at this time without government cutbacks elsewhere betray a deep ignorance of the fundamentals of economics, creating serious injustice to those who have lost their jobs and deep harm to the economy as well.
Michael Nuwer, Professor of Economics,? SUNY Potsdam:
In early 2009, when the economic stimulus was being debated, many economists expected that the spending amounts under consideration where not enough to lift the economy out of the Great Recession. And sure enough, they were right. The unemployment rate remains unacceptably high, state and local government budgets are in crisis, and there are no signs of improvement in the economy. Now is the time for Congress to get the economy back on track and the American people back to work.
Source: The Daily Beast