Tag Archives: fiscal policy

Jobs and Benefits, Short and Long Term

13 Sep

Two separate points, both on problems with Obama’s jobs bill – as it stands in its yet untrimmed, ‘uncompromised’ form.

First, defenders of Obama’s jobs program are touting this report by Macroeconomic Advisors that the bill is predicted to create 2.1 million jobs over the next two years, 1.3 in the first year alone. Possibly more. That’s better than nothing. Or is it? In the short-term, it’s undoubtedly a good thing (making the bad assumption here that the bill as presented is the one that gets passed.) However, there is the question of paying for it. Obama has promised slightly higher taxes on the wealthiest, but he also called, in his speech, for “making modest adjustments to health care programs like Medicare and Medicaid.” Whether the final bill makes modest or more serious adjustments, Obama is saying he wants to trade lasting cuts to an important entitlement for a middling jobs bill that will only have short-term benefits. As the same Macroeconomic Advisors report points out, since the different bits of the jobs plan will expire by the end of 2012, “GDP and employment effects are expected to be temporary.” So a short-term bump to employment – and Obama’s electoral fortunes – facilitates an attack on a more enduring, long-term benefit. A problem that could be amplified once Republicans get down with their subtractions to the bill. One step forward two steps back?

Second, in previous posts we suggested that a problem with the jobs bill is that it will treat unemployed as a distinct interested group from the employed. More generally our point was that people who have interests in common – unemployed and the employed, low-wage work and higher-wage work, underemployed and those with two jobs – are not addressed or mobilized as if they have shared interests. We were accused in comments of focusing only on ‘labels’ or discourse, rather than actual policy. So it’s worth pointing out that some of the actual policy is more or less in line with our initial worry – dividing up the interests of the working classes.

The usually Obama-boosting Wonkblog observes that there is a potential problem with a work-sharing provision in the jobs bill. This work-sharing system, borrowed from the Germans and already picked up by some states, is a system whereby the state subsidizes an employer’s decision to keep workers on at reduced hours, rather than fire some and keep the rest on. What Wonkblog observes is that this tends to work best before workers have already been fired – ie where we are now – and what’s more, it may have “positive effect on full-time employment but doesn’t help temporary employment, which could make it harder for those who are unemployed to reenter the workplace.” This worry is taken from another paper, by Cahuc and Carillo, who point out that

“But short-time compensation programmes are no panacea. They can induce inefficient reductions in working hours. Moreover, workers in permanent jobs have incentives to support such schemes in recessions in order to protect their jobs. Employers also have incentives to support short-time compensation programmes in countries where stringent job protection induces high firing costs. Therefore, there is a risk attached with using these programmes too intensively. The benefits of insiders can be at the expense of the outsiders whose entry into employment is made even more difficult.” (our underline)

So not only might this produce an inefficient allocation of labor, but it helps protect the jobs of those who have them more than helps those who don’t have them in the first place – a double whammy, since inefficient allocation of labor will also hold down growth, which also suppresses employment. Of course, the effects, given the small size of the proposed program, are likely to be very small or unobservable, at least at first. But this does create a division of interests – the full-time employed, committed to a new program that holds their jobs in place, and which is really unconnected to serious efforts at creating jobs for those who don’t have them. Somewhere down the line, one can imagine one or the other being on the chopping block, or some trade-off needing to be made, and two segments of a group that ought to be on the same side would be put in competition with each other.

 

The Dutch solution

12 Sep

Usually more Catholic than the Pope in matters of macroeconomic policy, at least when the Pope resides in Berlin, the Dutch prime minister and finance minister published last week their answer to the Eurozone crisis.

According to Mark Rutte and Jan Kees de Jager, the European Union should create a new post, that of a commissioner for budgetary discipline. This commissioner would have the power to tell countries with deficits what their spending targets should be and to ensure compliance with these targets. Rutte and de Jager suggest that the commissioner would have the power to force national governments to levy new taxes in case of shortfalls, and also to slap fines onto deficit-ridden economies. National budgets should – in the interests of prevention – be presented to the commissioner first, before they are presented to national parliaments for approval. In extremis, the Eurozone should be able to expel repeated budgetary offenders.

It is difficult to know where to start with this proposal. Everything is wrong about it. Rutte and de Jager’s account of the crisis is almost facile in its simplicity. Today’s problems in European economies all stem from the fact that some countries didn’t follow the budgetary rules. Ergo, if everyone is made to follow the rules in the future, we will have no crisis. As well as being a post hoc explanation – where were the Dutch truthsayers when Germany ignored the rules of the Stability and Growth Pact under Gerhard Schroder? – it also presents macroeconomics as merely a matter of rules. As argued in previous posts, macroeconomics is also about institutions, interests and social structures. The Eurozone crisis brings together all of these factors: it is a mixture of national histories, national politics and European integration. To present it as only a problem of debt is already a sign of where the Dutch stand in the struggle between debtors and creditors in Europe.

The dogmatic attachment to rules is also oddly naïve. Rules are there in order to protect outcomes or goals; the validity of the rules depends upon what they are intended to achieve. Rutte and de Jager seem to believe that budgetary discipline can solve the Eurozone crisis. This flies in the face of the current debate, namely about whether a recession-inducing austerity budget is the best path to growth. Even the IMF is not arguing this. Rutte and de Jager also buy into the technocratic mindset of European public policy. This mindset rests upon the presumption that policies are independent of each other, and can be dealt with in the manner of separate and discrete filières (streams). Thus, a budget discipline commissioner would only deal with budgets. But this would involve making decisions that touch upon all aspects of national public life. Budget cuts affect jobs, welfare, industrial policy, foreign policy. Who would be responsible for connecting decisions about cuts with decisions about consequences? The result would be national governments implementing painful programs over which they claim no responsibility; with a European commissioner for budgetary discipline denying any role in determining how budgetary decisions are implemented. That, he or she would say politely, is “national competence”.

The Dutch solution fails to grasp the causes of the present crisis. Its blind adherence to rules ignores the extent to which rules are only as good as the purposes which they serve. In this case, the purpose is little more than to shift onto deficit-ridden states all the responsibility for the woes of the Eurozone. And in a way that further diffuses responsibility for difficult decisions across a hotchpotch of national and European level officials. Let’s hope Rutte and de Jager’s proposal goes no further than the pages of the Financial Times.

In advance of ‘the speech’

8 Sep

We plan to post tomorrow in response to Obama’s speech today. But in the meantime, we wanted to flag three small items. The first is just a statistic. Over the past three years, public employment at the state and local level has contracted by 671,000. This is further evidence for an argument we pointed to earlier: state and local level fiscal policy has worked against national policy, leaving stimulus nearly a wash. And the background political point is that federalism makes even knowing what the heck is going on in the US more obscure than it ought to be.

Second, in honor of (America’s weirdly timed) Labor Day, Mike Konczal over at Rortybomb had a very interesting discussion of the rise of free labor (second post here), including some fascinating comments by Corey Robin. The discussion was a reminder to us that the jobs issue is not just about consumption but power. A further piece of evidence for that point is that, as unemployment has risen, equally has the bargaining power of the employed fallen: the EPI briefing paper we cited earlier in the week found that 38% have seen a decline in wages, benefits or hours, and 24% lost health insurance.

Finally, we enjoyed Matt Taibbi’s entertaining account of his Sophie’s choice between screaming children and Obama’s speech Sunday, but were left with only one question: why did you ever believe Obama in the first place?

Austerity in Europe

31 Aug

In France, the word rigueur is associated with political failure: it brought down the government of Raymond Barre in the late 1970s, marked the abrupt end to François Mitterrand’s experiment with “socialism in one country” in 1983-4 and coincided with the downfall of Alain Juppè’s government in 1997. Unsurprisingly then, current president Nicolas Sarkozy and his finance minister, François Baroin, are refusing to employ the term rigueur to describe their own recently announced austerity plan. Looking at the details of the plan, there is little doubt that rigueur is what lies ahead. Strikingly, though, France’s plans are relatively restrained compared to some others undertaken by national governments across Europe. Le Monde recently detailed these different austerity plans, reproduced below.

Europe’s Austerity Plans

Country Size of cuts Methods include…
France 12 bn Euros (2011-2012) Exceptional 3% tax on highest earners; tax hikes on alcohol and cigarettes
Greece 28 bn Euros of cuts (2011-2015); 50 bn Euros raised through privatisations Cuts in salaries of public workers; rise in retirement age; freeze on pensions; rise in VAT; lengthening working week of civil servants
Italy 45.5 bn Euros (2012-2013) Freeze on hiring and salaries in public sector
Portugal Approx. 20 bn Euros Privatisations
Germany 80 bn Euros (2010-2014) Tax rises, privatizations
Spain 65 bn Euros (2011-2013) 5% cut in public sector salaries; pension freeze
Ireland 15 bn Euros (2011-2014) Reduction in welfare spending and cut in minimum wage; cut in public sector employment
United Kingdom 95 bn Euros (2010-2015) End of fiscal opt-outs and modification of regime of family benefits; freezing of public sector salaries

Source: Le Monde (27/08/11)

Compared with a few months ago, governments and economists seem to have realized that if austerity is applied universally across Europe then it will lead to a collapse in growth. Medium-term fiscal rectitude combined with short-term stimulus is the message from the IMF, but not heeded by many European governments.

Those critical of austerity have tended to focus on its equity effects. Do the plans hit the rich more than the poor? This we saw was the line of attack of France’s Front de Gauche, led by Mélenchon. The theme of fairness also drives those out in the streets protesting against cuts. At issue for protestors is not the need to balance budgets so much as a desire to shift responsibility from ordinary taxpayers to risk-loving bankers. It is less a question of ‘should we pay’ so much as ‘who should pay’.

The size and nature of the plans listed above tell us two things. The first is that the approach taken by governments has been to freeze wages and cut social security. Exceptional taxes on high incomes have been levied in some cases but they are, as is made clear to everyone, only exceptions. The second is that those voices critical of the cuts have little by way of their own growth model to propose. Export-led growth demands a buyer of last resort to soak up exports. Austerity plans demand a laggard of last resort able to show by virtue of his own profligacy how well other governments are doing. These are all zero-sum options. Hiding behind the collective and consensual appearance of the Eurozone is competition between national capitals, referrred to by many as the “asymmetry” of the Eurozone. Whether or not this competition will be transformed into conflict will depend on whether the Eurozone is able to return to growth.

Are falling government bond yields a good thing?

22 Aug

Recent financial news has highlighted a paradox: as the US finds its credit rating downgraded, the extra it has to pay on its bonds to convince private investors to buy them have fallen. Yields of government debt – meaning the overall rate of return available on government bonds – have fallen, making it cheaper for the US government to borrow than before. A similar phenomenon exists in the UK: as the economy heads towards another recession, investors are keener to hold government bonds than before the ‘double dip’ recession debate began. In fact, they are so keen to do so that yields on UK government bonds have fallen to a historical low (a hat tip to Lee Jones for the graphic).

An obvious question to ask is why this is happening. Do private investors have secret information about the US and UK economies making their bonds particularly attractive? Not at all. The movement of bond yields reflects a change in sentiment amongst investors about the future of stock markets across North America, Europe and Asia. Investors increasingly think – based on bad economic data and ongoing crises – that stock markets will be bearish (losing value) for a long time to come. In comparison with that, government bonds seem like a reasonable investment. What are driving down yields are the poor growth prospects of OECD countries. In Switzerland, investors are fighting to hold government bonds whilst in Japan many are turning to gold instead of bonds, melting down individual gold holdings (jewellery, even teeth) to resell the gold as a way of profiting from surging gold prices. As ever, investors want to put their money where they will get a good return. If the stock market isn’t performing, the money will go elsewhere. Into government bonds, into gold, and anywhere else where there is a decent return.

Another question is whether falling yields are a good thing or not. They are announced in the language of doom and gloom but presumably it’s a good thing for those governments who can now borrow at a lower rate. Compared to the borrowing problems of Italy, Greece and Spain, who are having to pay interest rates of up to 6% if they want to finance their borrowing on the international markets, the US and the UK can borrow cheaply. Doesn’t that mean that they can spend their way out of the current downturn?

There are a number of problems with this. The first is that the lower yields are only part of what is otherwise a very gloomy picture. That government bonds may start outperforming equities is a trend associated with Japan over the last 20 years, prompting a debate amongst journalists, economists and analysts about the likelihood of ‘Japanisation’ of Western economies. In general, lower yields will not do anything to solve the underlying problems of an anaemic private sector. As is widely reported, a difference between today and the crisis in 2008 is that credit markets have not dried up and big companies are sitting on large amounts of cash which they have accumulated in recent years. But they are not investing it in a new round of capital accumulation.

A second problem is about what governments should do if their yields are lower. This may undercut those arguing for the necessity of more austerity but even here the argument is increasingly nuanced. IMF head, Christine Lagarde, recently argued publicly for mid-to-long term government debt reduction coupled with short-term fiscal stimulus. The Financial Times recommended over the weekend that in place of universal fiscal retrenchment we should opt for an internationally coordinated move that includes fiscal tightening for some but not for all. It has finally dawned on policymakers that if everyone is cutting their spending, then the economy will bomb. But this takes us to an issue that we’ve discussed before on the Current Moment – the pros and cons of government spending.  The technicalities are vast, as are the different options. The existing approach of quantative easing by the Federal Reserve in the US hasn’t worked. More controversial moves, such as job creation programs, have not been tried yet. There are many things governments can do to try to stimulate the economy but these will ultimately be determined by political factors. The options chosen by governments will reflect the balance of forces in society. The stock market downturn may make borrowing cheaper for some governments, but it will not change these balance of forces.

In and of themselves, the changes we are seeing – falling yields, falling equity prices, fluctuating exchange rates – only become good or bad when placed within a wider analysis of the political economy of the current moment. Lower yields may seem to give some governments more options but given the state of play politically today it is unlikely that any of the more radical options will be chosen.

Their debt problem and ours

11 Aug

As more economists, including Joe Stiglitz, join the chorus reminding us that this recession is not just a normal recession, but a financial contraction, it is worth thinking more fully what that means. We mentioned Ken Rogoff‘s analysis before, but he is by no means alone in pointing out that a major obstacle to recovery during a financial contraction is debt overhang. Total American debt (private and public) is 288% of GDP, Britain’s 495% just tops Japans’ 492%,  France, Spain and Italy are in the 300s. Household and non-financial companies, each, in the US are somewhere between 75-100% of GDP. Regardless of how cheap credit is, everyone is stuck with a balance sheet problem, which is why, even though there is lots of cheap credit out there, few want to borrow to invest. That is why the dispute over which best policy instruments would be best is a dispute over how to resolve the balance-sheet problems facing households, businesses, and governments – inflate it away? more stimulus? pray?

As far as it goes, this analysis tells us about one element of a financial contraction. But it does not tell us everything, and a few stories that were somewhat lost in the mix of the debt-ceiling ‘debate’ remind us of some less discussed dimensions. Two stories that caught our eye were, first, a Wall Street Journal article from March reporting the rise of something akin to modern debtors prisons. The second article was the decision to drop or essentially stop criminal investigations into IndyMac Bancorp, New Century Financial Corp and Washington Mutual. What unites these two stories is the way they indicate, in the famous phrase, who can do what to whom.

After all, the balance sheet problem is not just a matter of who is able to pay their debts, but also who is allowed to collect, and at what rate. That is to say, another major feature of a financial contraction is the distributional struggle over whose debts are honored in full, in part, or not at all. This is a major feature of a financial contraction because that contraction involves, on the one hand, a sudden worsening of the ability of debtors to pay, and a sudden increase in creditors wanting their money. This distributional struggle is necessarily mediated by the state, because the claims are all legal claims – debts called in. Though creditors run around screaming about the sanctity of contract, we know that, at a time when the ability to pay is considerably outweighed by current demands on that ability, contracts can and will be renegotiated. But whose, and how?

That is where the real politics comes in, and that is when these random, seemingly unconnected reports start to tell a larger story. Remember, for instance, that Goldman Sachs was made whole, paid back every dollar that A.I.G. owed it, basically via the government bailout of A.I.G. At the time, there were protests indeed. Eliot Spitzer, writing in Slate, made the point:

“But wait a moment, aren’t we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off. Why can’t Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn’t we already give Goldman a $25 billion capital infusion, and aren’t they sitting on more than $100 billion in cash? Haven’t we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn’t they have accepted a discount, and couldn’t they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?”

The point isn’t that Goldman Sachs stands alone, but rather that there is a whole politics behind the way the balance sheet problem is resolved. The current way seems to be lean hardest on the least well off, right down to the recreation of a modern version of debtors prisons, to lean not very hard on medium-level banks, even those involved in systematic mortgage fraud, and to give the most support to the banks at the top. That is the thread that connects the stories: the current way of managing the debt crisis is to do it in the way that least disturbs the existing class structure.

To put it another way, it is true that the debt overhang is a major problem. But neither creditors nor debtors are a uniform class. A.I.G.’s debt problem was not the same as the average American household’s.  Goldmans Sachs’ credit claim was not the same as workers who lost their pensions. This is just another reminder that, for every general economic problem, there is usually more than one way to resolve it, and the choice between them is a matter of political and social power. The United States continues to put the full weight of the state behind not just one of the more economically useless (fiscal austerity + pseudo-inflationary monetary policy) but one of the least equitable approaches – one that will only reinforce the existing lines of political power that produce this outcome in the first place.

Why economics is also politics, or inflating away the debt

9 Aug

Why are economists so bad at politics? A good post over at Rortybomb reminded us of this question. The post included links to Ken Rogoff and Carmen Reinhart, authors of This Time is Different, who have been reminding us that this is not just a recession, it is a financial contraction, maybe even the ‘Great Contraction’ (Rogoff and Reinhart). The financial dimension is important because it changes the dynamics of a ‘normal’ recession. Here’s Rogoff:

“In a conventional recession, the resumption of growth implies a reasonably brisk return to normalcy. The economy not only regains its lost ground, but, within a year, it typically catches up to its rising long-run trend. The aftermath of a typical deep financial crisis is something completely different. As Reinhart and I demonstrated, it typically takes an economy more than four years just to reach the same per capita income level that it had attained at its pre-crisis peak.”

As 2012 looms, it appears even that goal might not be reached, especially if a double-dip is on the way. What is one to do in such a situation? Rogoff again puts it most starkly:

“But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation.”

Before the reader gets excited and thinks that a former Chief Economist of the IMF is proposing a pseudo-socialist scheme of wealth redistribution, let’s consider the argument in more detail. Rogoff and Reinhart propose to transfer wealth from creditors to debtors mainly by inflating away debt. Reinhart, for instance, thinks zero interest rates are “very appropriate” and Rogoff has called for some fiscal stimulus plus, mainly, lower interest rates. Now we’ve discussed the limits of monetary policy on this blog as have a number of others (recall recent Henwood and Robin posts).

But the problem is not just that loose monetary policy has failed to get investors to invest, only produced mild inflation, and left the debt overhang unresolved, (on national, corporate and household debt, see this fantastic graphic from The Economist). It is also that Rogoff and Reinhart seem to think that some expert managers can simply decide to engage in a “scheme to transfer wealth from creditors to debtors,” wave their magic interest rate wand, and we’ll have the right solution. Despite their very appropriate warning that we should not forget we’ve lived through a Financial Crisis, they have a limited view of what this period of high finance was about.

Besides producing overleveraging, the last twenty to thirty years have also seen a dramatic restructuring of class power. Financialization coincided with a dramatic decline in working class power. This chart on strikes from LBO kind of says it all on the worker side:

Cheap borrowing, amidst stagnation of real wages, is what allowed living standards, for a time, to be maintained, even while the ability of workers to defend earning power – say through strikes – declined. Though this is for another post, finance also facilitated deindustrialization (or shift to less unionized states) in the United States. Moreover, it helped create a class at the top that, on the whole, has been very effective at protecting its gains.

Why does this matter? Because a significant transfer of wealth from creditors to debtors is something creditors won’t like. And they will do everything they can to stop it, and that means economic policy immediately becomes a matter of social and political power. Moreover, there is more than one way to reconstruct balance sheets. At the household level, for instance, falling house prices is a serious problem as it increases debt-to-income ratios – the one underlying asset keeps falling. But the longer-term cause of increasing household debt is the decline in average earnings. Why not reconstruct balance sheets not, or at least not just, by inflating away debt, but by actually undertaking measures that strengthen the earning power of the struggling majority? Why, furthermore, not simply use the coercive power of the state much more aggressively to modify mortgages, progressively tax high earners, provide employment, even take over banks (as was briefly considered during the bailout)? These are, of course, just those things the Obama administration has avoided doing in any serious way. The DOJ doesn’t even seem to be all that interested in prosecuting white collar crime.

A number of the aforementioned measures would a) transfer wealth but b) in a way more favorable to the long-term earning potential of many households, and might even c) increase their social and political power. These are by no means panaceas for deep, structural problems in the economy. But the point is that economic policy is not just about knowledge and expert maneuvers. Each policy is a product of and continues to produce social power. That is doubly so for a policy whose basic premise is a massive wealth transfer.

The other (and final) way of putting our point is the following. If Rogoff and Reinhart really do want such a significant wealth transfer via inflation, why stop there? Why not substantially strengthen the ability of ‘debtors’, but mostly workers, to maintain their wealth once they have it?

Jobs and Power

18 Jul

When we were back in college, we were told that 5% unemployment was roughly the ideal rate for fully developed economy. (It was called the ‘non-accelerating inflation rate of unemployment,’ or rate of unemployment below which inflation would start rising. To our minds, it was something of a fudge term invented by mainstream economics to redefine full employment, but nevermind.) It so happens that before the crash of 2007-8, the United States was just below 5% unemployment. However, according to a post over at the Wall Street Journal’s Real Economics, if we set ourselves the low expectation-goal of returning to pre-crash unemployment, we would not reach that level until December 2024. That calculation is based on assuming that jobs and the labor force grow at the rate they have for the past six months. Those are, needless to say, dismal prospects.

Anemic job growth is bad news not just for the unemployed, but for the currently employed too. A large, and desperate, reserve army of labor weakens the bargaining power of existing workers, a point that another recent Real Economics post made clear. According to a survey of 600 employers, paid family leave is down from 33% in 2007 to 25% now: “Other casualties include assistance with adoption expenses, which tumbled to 8% from 20% in 2007; elder-care referral services, down to 9% from 22% in 2007; and mentoring programs, which fell to 17% from 26% in 2007.” The same goes for wages. In the US, families may be making more, but it is not because wages are higher, but because they are worker longer hours – “In 2009, for instance, the typical two-parent family worked 26 percent longer than the typical family in 1975.” This is a “jobless and wageless” recovery.

This news goes to the heart of a recent debate over the use of fiscal or monetary policy – ie jobs programs and payroll tax cuts or higher inflation targets. This debate began between Matthew Yglesias, who argued for higher inflation targets, and Corey Robin and Doug Henwood, who argued for jobs programs and against the effectiveness of monetary strategies. The debate soon ballooned outwards, getting picked up, at least thematically, by Paul Krugman and Brad Delong. Henwood’s ‘the limits of easy money‘ is the best (and seemingly final) summary and statement of the stakes of this debate, as is this post by Corey Robin (which also contains the links to the earlier posts, for those who want to follow all the ins and outs). There is an important point from this debate that bears directly on recent job market news regarding declining benefits and stagnant wages. One thing that both Henwood and Robin point out is that a jobs program isn’t just a good form of economic stimulus – especially when current monetary strategies haven’t done much – it is also a good way of increasing the economic power of those who don’t have much:

Henwood – “[a jobs program] would put a floor under employment, making workers more confident and less likely to do what the boss says, and less dependent on private employers for a paycheck. It would increase the power of labor relative to capital.”

Robin – “what a government jobs program would mean to us…greater chances of unionization; better options (often) for pay and benefits; greater options for exit from bad private-sector work and thus, in the long run, better options for voice and power at that work.”

A jobs program is no silver bullet, there are undoubtedly some downsides. But this point, especially in the current moment, is an important one to make. Different strategies for stimulating the economy are never just a matter of which technical fix is the most appropriate. They are also a matter of how power is distributed in the economy, and thus human freedom. There is often a tendency in public debates to argue over the ‘right’ answer, as if this can easily be determined independent of political questions about whose interests are served best, and how this shapes the lines of power in society. But, as we have tried to argue previously regarding financial regulation, expert knowledge and narrow policy concerns are not so easily extricated from questions of power and values. That is why unemployment is a problem for everyone, not just the unemployed – it’s not just a matter of people’s ability to survive, but to exercise power in and over their daily lives.

Of course, as we have stressed in previous posts, we can also see here some of the underlying political economy of certain economic proposals. Employers know quite well the dangers of a more assertive labor force. That is why a something like a jobs program would require more self-assertion amongst workers, and a greater willingness to make openly class based appeals by political leadership. Even more minimally, it would require political leaders  to be more willing to accept and make explicit that, in choosing between forms of stimulus and budget deals, some interests have to be sacrificed to others, no matter which policies they end up choosing. In the conservative, tax-cutting and benefits-slashing climate of the debt-talks, honesty on these issues is in even shorter supply than jobs.

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