March 19, 2011
In The Forgotten Millions column at the New York Times Paul Krugman says:
More than three years after we entered the worst economic slump since the 1930s, a strange and disturbing thing has happened to our political discourse: Washington has lost interest in the unemployed....So one-sixth of America’s workers — all those who can’t find any job or are stuck with part-time work when they want a full-time job — have, in effect, been abandoned.It might not be so bad if the jobless could expect to find new employment fairly soon. But unemployment has become a trap, one that’s very difficult to escape. There are almost five times as many unemployed workers as there are job openings; the average unemployed worker has been jobless for 37 weeks, a post-World War II record.
The big debate in Washington is about how whether to cut $10 billion or $61 billion from the federal budget between now and September 30. Succinctly stated the Republican view is that less government spending equals more private sector jobs. Yet the clear and present danger to the prospects of young Americans isn’t the deficit. It’s the absence of jobs.
The Republicans figure this tactic the one sure way to unseat Obama. They know that when the economy is heading downward, voters fire the president. Anyone who suggests that the Americans actually need to focus on unemployment instead of slashing spending now can expect to face harsh attacks, which leads all too many Democrats to shy away from the current economic policy debate. They give ground in spite of the stagnating incomes and high rates of unemployment.
The social-democratic solution to this kind of situation was developed in the early twentieth century. Jon Elster in Alternatives to Capitalism described this solution thius:
It was recognized that market institutions create unacceptable inequalities and leave some citizens in circumstances of insecurity, deprivation, and indignity; and it was argued that the institutions of the state needed to correct these tendencies through the establishment of a strong social safety net. The majority of a society would have the electoral strength to create and maintain strong protections of the interests of ordinary working people through a combination of positive economic rights.
The triumph of social and economic conservatism -- starting with Thatcher, Reagan, and other conservative European leaders and their political parties -- took this theory of the role of the state off the public agenda, and the past thirty years have witnessed the systematic disassembly of the institutions of social democracy in most countries.
The consequences are predictable in the US: more inequality, more deprivation, more severe disparities of life outcomes for different social groups.