For Washington, Unemployment in America is Like Famine in Africa: Someone Else’s Problem.
For people like me who find Washington’s acceptance of high unemployment puzzling, Jonathan Chait has a nice column explaining why. Chait is a senior writer for the New York magazine.
..The recovery looks safe for those of us who are not already screwed. That, sadly, has come to be the primary focus of our economic policy…
It’s important to respond to arguments on intellectual terms and not merely to analyze their motives. Yet it is impossible to understand these positions without putting them in socioeconomic context. Here are a few salient facts: The political scientist Larry Bartels has found (and measured) that members of Congress respond much more strongly to the preferences of their affluent constituents than their poor ones. And for affluent people, there is essentially no recession. Unemployment for workers with a bachelors degree is 4 percent — boom times. Unemployment is also unusually low in the Washington, D.C., area, owing to our economy’s reliance on federal spending, which has not had to impose the punishing austerity of so many state and local governments.
I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they’ll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa. For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.
Beezer here. The fact is that at 8.3% unemployment, 91.7% of people are working. Even if you add the underemployed at 14%, that still means 86% of people are employed. Add to that the fact Chait points out–that in areas where the decision makers live like Washington DC, unemployment is as low as 4%. This allows the decision makers to decide high unemployment is not our top problem. For the Federal Reserve, which in their defense has used some unusual monetary tools to fight the recession–it’s inflation that worries them more than unhealthy unemployment numbers. Of course there’s no inflation and hasn’t been for four years, but you never know. It could become a problem, you know. And forget Congress. Most of the stimulus comes in the form of tax cuts, the only policy response Republicans will allow. Republicans blocked all the administration’s effort to hire directly for infrastructure projects, or to transfer funds directly to state’s which stops them from firing public employees. These policies would drop the unemployment rate several percentage points. Failing to transfer funds to cash strapped states added a full 1% to the unemployment rate and clipped almost 1% from the country’s Gross Domestic Product. Republicans in Congress who blocked these common sense, fiscal reponses that guarantee jobs, now attack the administration for not creating more jobs. They obviously represent their wealthy patrons, who have experienced no recession at all. The cynicism involved is breath taking.