Grace Ross: There is No Such Thing as a Jobless Recovery

Tuesday, July 24, 2012

Grace Ross, GoLocalWorcester MINDSETTER™

Here we sit in the worst economy in our lifetimes. Some of the statistics are worse than the Great Depression and yet supposedly it was only a “recession”, the Great Recession, and supposedly it’s over.

However, the economic pundits do not use the same criteria to measure what a depression is now that they used then. In fact, they conveniently changed the economic definition of ‘recession’.

The Federal Reserve was created, supposed to protect banks from ‘runs’ on their assets; ‘runs’, people descending en masse on a bank to get their money back, led to all of the closed banks in the Great Depression; you remember the underlying story of It’s A Wonderful Life? The Federal Reserve was started to have a pool of assets to protect banks so that when there’s a run on one bank, they have cash reserves to actually stop it and meet people’s asset demands so that panic doesn’t spread and more folks go for the assets of more banks.

Role of Federal Reserve

The problem is that up and through the 70s, the Federal Reserve was suppose to monitor how our economy was doing and play a role in declaring what’s a recession and what’s not. By its legally-defined mission, they had three criteria (and are still supposed to) for deciding monetary policy. One of those criteria is policies that strive for full employment.

In the 70s they simply dumped that third part of their mission and ignore it even though it’s legally still there. That’s part of why we now get these “jobless recoveries” – not because without job creation there are actual recoveries, but because they took the measurement of employment out of the definition. Nothing has changed economically. So we can easily still be in a great depression. With the job creation figures in the toilet (see this month’s stats!), there’s no question that we are likely still on a downward spiral or at best at the flat on the bottom. We’ve not started to recover.

The problem is not accurately reporting what’s going on. And such misrepresentation creates further damage.

Maybe for some people this is a theoretical question, but it’s not for me.

Recovery Hasn't Happened for Everyone

I got a call from a friend who’s always been the rock in her family and the one who had the best earning potential; she raised one of her sister’s kids completely herself. The other siblings are mostly in financial trouble right now, but just recently two of her sisters landed on her doorstep. One with six kids and a husband, the other one with three kids and a very troubled relationship with her boyfriend. My friend is struggling to make ends meet herself right now, what’s she supposed to do when confronted with nine hungry kids?

The adults maybe she could kick out and tell them to find their own solution, but what is she supposed to do about kids who are hungry or who are doing without electricity in the middle of a heat wave when it’s dangerous to be outside or without air conditioning? She can hardly ignore those mouths even when she’s not sure how she’s getting food to feed herself, take care of her own responsibilities, or even keep her internet on since she is a remote access worker.

It’s simply a disaster and it’s too easy when the official story is a lie to blame individuals for something that’s a much larger economic problem.

I don’t know about you but I am tired of hearing the individual horror stories: the destruction of people’s lives and health, their ability to really survive on the one hand and what passes for political and economic analysis on the other – which is both unrecognizable and reprehensible.

Political Responsibility

As political leaders, you simply cannot have an economy that’s tanking, not do any of the things that were done after the Great Depression to bring things back into line, and then cut the basic services that everybody fought for during the Great Depression. There’s a reason why people fought for unemployment and social security and Medicaid and Medicare, across the board welfare benefits, etc. That’s because when our political leaders at the top make destructive decisions over and over again – probably at the behest of who’s giving them the most money to stay in office and to win the next time – we need to have people-oriented policy solutions in place.

It’s unacceptable that political leaders have done nothing to even admit to the depth of problems around jobs and the more underlying causes of the foreclosure crisis which is driving everything. On top of that to turn around and use their inaction and irresponsibility to then blame those who are the victims of their inaction and irresponsibility and cut services for them, it’s not ok.

The fact that too many of them have created rhetoric that makes us hate our neighbor for not being able to get over a systemic problem that would require real political leadership instead of ethical language to inspire us to stand with our neighbor is also not ok. They need to join us in insisting that together in a democracy (that’s supposed to be by and for the people) that our government focus on what regular people need and stop funding things that put more money in the pockets of a tiny percentage while destroying the economy for the rest of us.