I was just reading Christina Romer’s very well-done piece in Sunday’s New York Times, making the case that announcing nominal GDP targeting should be the Federal Reserve’s next policy move (I encourage you to read the article for the details). Here’s the key section I’d like to highlight:
HOW would this help to heal the economy? Like the Volcker money target, it would be a powerful communication tool. By pledging to do whatever it takes to return nominal G.D.P. to its pre-crisis trajectory, the Fed could improve confidence and expectations of future growth.
Such expectations could increase spending and growth today: Consumers who are more certain that they’ll have a job next year would be less hesitant to spend, and companies that believe sales will be rising would be more likely to invest.
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Though announcing the new framework would help, it probably wouldn’t be enough to close the nominal G.D.P. gap anytime soon. The Fed would need to take additional steps. These might include further quantitative easing, more forceful promises about short-term interest rates, and perhaps moves to lower the exchange rate. Such actions wouldn’t just affect expectations; they would also be directly helpful. For example, a weaker dollar would stimulate exports.
How many of you reading this article feel that our government is “willing to do whatever it takes” to get us out of this persistent unemployment crisis, with all of its attendant suffering and economic misery? I’d bet not a one of you – I certainly don’t think our government is trying its best to fix things. Of course, it depends on how one defines “government” I suppose, but if you initially think of our elected branches, since we voters have the most direct control over the executive and the legislative, then no, the “government” in that sense is definitely not working on our behalf!
And really, how ridiculous is it that the government of the wealthiest country that has ever existed can’t even act in a coordinated manner to stem the suffering of a massive segment of its population? Or perhaps even more sinister, it appears that the government won’t act to stem the suffering. Our elected officials have abdicated virtually any and all responsibility until after November 2012 in order to best position themselves politically and rhetorically for the electoral battles to come. Sure the President is still hammering away on his newfound populist message, his “jobs proposal,” and is taking actions on behalf of homeowners, student loan borrowers, and prescription drug patients, among others, but let’s be honest folks, his track record on the “following-through-on-populist-sentiments” score ain’t that great…(see option, public for an example).
So now we face the absurd reality that the Federal Reserve, the quasi-governmental entity that is perhaps the least-democratic, most-opaque, and most removed from the basic economic reality of most Americans is being pushed to solve our jobs crisis through pure monetary policy. The Federal Reserve has a dual mandate of preserving price stability as well as maintaining full employment, and the main critique of the Fed for many years has been that it has focused virtually exclusively on the former (in the form of interest rate targeting) while wholly neglecting the latter. Despite the fact that it has been broadly apparent that allowing interest rates to rise somewhat would facilitate the creation of more jobs, the interest rate hawks within the Fed have consistently put a stop to any of those practices, warning of mythical “bond vigilantes” who will decide that US Treasuries are no longer worth investing in if the interest rate rises even a smidge, despite massive evidence to the contrary. (The counterpoint, of course, is that investing in Treasuries represents the safest investment one can make in the troubled and volatile world markets, as while the state of the US debt and economy overall might cause debt holders concern if the rest of the world were in better shape, the relative position and strength of the US economy in the current world economy makes it a better investment vis a vis other sovereign bonds.) But I digress.
Why are people occupying so many public spaces in so many cities across the United States and abroad? I think it is precisely as a response to the massive systemic failure we’ve witnessed at all levels of our government to actually make a positive impact on the vast majority of Americans’ lives. This is not to say that Americans en masse are waiting for government aid or action or anything like that, rather that the silliness we are witnessing playing out on Capitol Hill and in the White House, the constant tit-for-tat, is leading Americans to see their government as willfully sitting on its perfectly-capable hands, rather than deigning to lift a finger to tilt the scales of justice even minutely back on their side.
A significant portion of these Occupiers likely played a large role in electing President Obama in 2008 – the sense of triumph in that election was not simply due to the historical nature of electing the first African-American president, but because Obama appeared to represent a turn of the page, or perhaps, a close of the book, from the utter depredation of the Bush Administration, hollowed out to a shell of itself in the end due to its sheer lack of competence. Post-Katrina America had scars, deep scars affecting the national sense of whether the government was truly acting in our interests or not if it could bungle emergency management so completely.
Obama represented a shift towards competence, towards smart folks who looked at the data to get things done and make decisions…and yet, after the health care debate, the pyrrhic victory of an apparent giveaway to the health insurance industry, combined with the Wall Street-friendly nature of the new Administration, and the declaration that many of the high-level prosecutions that many desired for actors both inside and outside of government were to be strictly off-limits by Obama and Attorney General Holder marked a certain continuity between the Bush and Obama Administrations: elites are coddled, bailed out, and constantly regaled, no matter their transgressions. The little people, the 99%, have no place in this insular Washington-Wall Street-Pentagon calculus.
The election of Obama, in this narrative, represents not the shift, the hope, the change that people were hoping for, but the continuation of the perpetual insult to the nation’s sense of values and fairness – an insult that, prior to the rise of the Occupy movement was largely undefined and nameless for many Americans. Guantanamo, Abu Ghraib, bank bailouts, auto bailouts, the death of the public option, no Wall Street prosecutions, no torture prosecutions, warrantless wiretapping, unmanned drone strikes on countries and civilians we aren’t at war with, wars that are declared against enemies that are largely undefined…whose heads roll for any of these awful decisions?
The failure of our institutions, and the growing widespread understanding of that fact, as I alluded to a few weeks ago, and more obliquely, in the title of my last blog post “Don’t think it’s not bipartisan, it is,” is profoundly bipartisan. It had to be to manifest itself so clearly to so many at just this point in time. Just as you would likely not have a Tea Party had John McCain won, the nature of the Occupy movement, if it were to exist in an alternate world under a McCain Administration, would be very different to what we see today. It took the failure of Obama, the landslide-elected change agent to bring justice, to bring accountability to the corrupt elites of this country, for the Occupy movement to spring up. In this case, perhaps the Change that is thus far unrealized will be the catalyst for the realization of the true Change, whatever that may be.
The bipartisan failure is a wholesale indictment of the entire construct of democracy in this country, and has likely soured many in the Millenial generation on the act of voting itself. Perhaps democracy, as it is now constructed, is not in fact the method for enacting the change we wish to see in the world? Could it be that the leverage points upon which the entrenched interests and powers can bring their influence to bear on candidates and nominating parties in our democratic system are simply too numerous and too porous? The vast constellation of special interests funding candidates these days ensures the ascendance of a certain type of candidate: one who must be conversant in the ways of money, though preferably not “of” money (they’re easier to control with the promise of high-paying post public service jobs, you see) and who have hewn lines that conform to the dominant economic and social memes of the day, thus ensuring the continued preservation of the entrenched classes. Any “change” will thus be marginal, minimal, the scraps thrown to those too poor to afford their own public affairs divisions or hired-gun lobbyists to press their case in the halls of power.
Ultimately, though, it doesn’t matter whether Obama speaks the right words, or even whether he follows through on his newly populistic leanings with actual substantive legislative victories; the narrative is no longer his to drive, nor is it the GOP’s or the Tea Party’s. They are reacting, all of them. Consider:
Occupy Wall Street has already achieved a stunning victory – a victory that is easy to overlook, but impossible to overstate. In just one month, the protesters have shifted the national dialogue from a relentless focus on the deficit to a discussion of the real issues facing Main Street: the lack of jobs -- and especially jobs with decent benefits -- spiraling inequality, cash-strapped American families' debt-loads, and the pernicious influence of money in politics that led us to this point.
To borrow the loosely defined terms that define the Occupy movement, these ordinary citizens have shifted the conversation away from what the “1 percent” -- the corporate right and its dedicated media, network of think-tanks and PR shops -- want to talk about and, notably, paid good money to get us to talk about.
What were you reading about daily in the newspapers as recently as 6 weeks ago? Austerity austerity austerity. What did the Occupy movement bring to the table? Non-manufactured talking points that actually speak to people. Something you can bring home to your family and discuss at your kitchen table as a concept that everyone understands, intuitively. Fair wages, decent jobs, non-criminal banks, supporting your neighbors and your community. These are American values, no matter what the cable news pundits say who myopically search for the “demands” of the Occupy movement despite the hundreds and thousands of protest signs shouting demands right at them.
People want a fair shake, for themselves, their children, their coworkers, their neighbors, their fellow churchgoers. That’s pretty much all I’ve come up with, at the end of the day, and it’s pretty simple. How we get to the fair shake for all is the more complicated problem.
