Between a Rock and a Hard Head

The long-term economic forecast doesn't look good.  Estimates are that by 2012, we'll still see unemployment just below 10%, certainly in California.  Matt Yglesias writes:

What’s so terrifying this is to contemplate what the long-term unemployment situation is going to look like by 2012 if this forecast comes to pass. We’re going to be talking about a simply stupendous number of people who’ve been out of work for three or four years, and it’s going to be nearly impossible to get these people back to work. The Depression Era teaches us that the manpower needs of a major global war would suffice, but otherwise who even knows.

It appears we're stuck between a rock and a hard place.  As a society, in terms of political philosophy, we have these two very different and competing ideological narratives.  Both claim to have the solution to our economic woes, but the reality is that neither has the political representation to implement its vision on a scale that its theory calls for.  Thus, you have a sort of catch-22 in which even if either economic narrative might have worked, political reality dictates that only half-measures can ever be taken: liberals' stimulus, conservatives' austerity and tax cuts, will only ever be inadequate.  

OK, so liberals think we can create jobs through government stimulus, conservatives think we can create jobs through tax and spending cuts. One’s Keynes, one’s Laffer. In the meantime, everyone complains about immigration, and sending jobs overseas.

But at the end of the day, these ideas, while originating in serious economic theory, are chosen out of ideology. Do we really know what drives job growth?  I mean, when the economy was booming, none of this seemed to matter. Who among us really has the chops to decipher which macroeconomic theory is legitimate?  It could certainly be possible that stimulus works, but no conservative would admit it.  It could be possible that tax cuts and austerity is what is needed, but no liberal will admit to that.

Yglesias' reference to the WWII as stimulus seems reasonable, but conservatives will disagree. To what extent is their opposition ideologically driven? They’ll present variables that don’t exist today, thereby making the case that the situation is different. But they don’t like the idea of “redistribution” in the first place, in the sense that government spending is supported by taxes which come from individuals – unless this redistributive spending is on the military, which has a whole ‘nother ideological appeal. Liberals simply don’t have a problem with the redistributive aspect of taxation, and in fact would prefer it to be more progressive, believing as they do in a more deterministic view of society in which winners and losers are largely by-products of social policy.

In the meantime, we'll all continue to enjoy the basic services the government provides - schools, roads, military, unemployment, social security, medicare, health insurance subsidies, etc.  But we'll blame each other for their inadequacies, and for the fact that spending on each feels more and more onerous and unfair. And we'll feel like the continuing recession is someone else's fault - the government, our neighbors who voted these "crooks" in to office, the immigrants, the greedy corporations. 

But maybe, in the end, there's no single reason.  Maybe it is a variety of things.  And maybe there could have been a variety of solutions.  Most tragic of all, maybe if we had only picked one path and committed to it we would have prevailed.  Or maybe there was nothing we could have done. 

But maybe, in the end, the important thing is to be thankful for what we do have.  We have a democracy that encourages different forms of thought.  While slow and at times even ineffective, it honors the idea that we each have a voice that is special, no matter how brilliant - or ignorant - our words and thoughts may be.  And if it may be reduced to any one, simple premise, it is that we are all in this together, and we will live or die by our capacity for honest debate and critical thought.  On that we can all agree.  And it is indeed something to be thankful for.