Do you believe in magic? I don't. But I do believe that some people are more dazzlingly and consistently right than others. I believe this results from being smart, learned, and open minded. In the field of economics, as always, I commend you to Mr. Paul Krugman. He and a very small number of other economists and public commentators have gotten virtually every call right about the current catastrophic downturn. Broadly speaking, they are all Keynesian in macroeconomic terms and Liberals. So, I lean heavily on his data and analysis. The following is taken from a recent post of his titled, The Defeatism of Depression.
"All around, right now, there are people declaring that our best days are behind us, that the economy has suffered a general loss of dynamism, that it’s unrealistic to expect a quick return to anything like full employment. There were people saying the same thing in the 1930s! Then came the approach of World War II, which finally induced an adequate-sized fiscal stimulus — and suddenly there were enough jobs, and all those unneeded and useless workers turned out to be quite productive, thank you.
There is nothing — nothing — in what we see suggesting that this current depression is more than a problem of inadequate demand. This could be turned around in months with the right policies. Our problem isn’t, ultimately, economic; it’s political, brought on by an elite that would rather cling to its prejudices than turn the nation around."
Once again, I believe Krugman has it exactly right. But what if both he and I are wrong, at least partially. Suppose that because of globalization or technological advancement or whatever, there really is a higher rate of natural unemployment. Say, instead of 4% it is now 8%. What then? Should we simply say to our fellow citizens and future generations, Just suffer, Baby?
Hell no. We should write new economic rules of the road, as have been promulgated to answer past crises. What is so magical about the 40 hour work week, the 8 hour day, retirement after 60, and a minimum wage so low workers need two jobs to rise above poverty? Nothing. But once upon a time, all these rules represented large steps forward. Now we need social progress to once again keep pace with technological advancement. We need stronger unions, higher wages, shorter work weeks and days, earlier retirement, more people employed under better conditions than ever before, and a much reduced rate of unemployment. It's not that we don't have the money, it's that we don't have enough of it.