Some crisis links (11.8.2008)

Writing in the Nation, Robert Polin states the obvious:

The recession is certainly here, so the question now is how to diminish its length and severity. A large-scale federal government stimulus program is the only action that can possibly do the job.

His plan:

Recessions create widespread human suffering. Minimizing the suffering has to be the top priority in fighting the recession. This means expanding unemployment benefits and food stamps to counteract the income losses of unemployed workers and the poor. By stabilizing the pocketbooks of distressed households, these measures also help people pay their mortgages and pump money into consumer markets.

Beyond this, the stimulus program should be designed to meet three additional criteria. First, we have to generate the largest possible employment boost for a given level of new government spending. Second, the spending targets should be in areas that strengthen the economy in the long run, not just through a short-term money injection. And finally, despite the recession, we do not have the luxury of delaying the fight against global warming.

To further all these goals we need a green public-investment stimulus. It would defend state-level health and education projects against budget cuts; finance long-delayed upgrades for our roads, bridges, railroads and water management systems; and underwrite investments in energy efficiency — including building retrofits and public transportation—as well as new wind, solar, geothermal and biomass technologies.

Briefly put, Polin believes that the best possible stimulus program will, if effective, conserve the lives and well being of those individuals most harmed by the crisis, reindustrialize an American economy gutted by finance capital and the Pentagon, refurbish the decaying American landscape and, most importantly, begin to transform the American economy from a system based on resource waste, wealth and income polarity and imperial exploitation to as system that is more ecologically and socially sound.

Ironically, Polin defends his plan, in part, by comparing it to the Reagan stimulus of 1983-4, which was modestly successful in resolving the early 1980s recession. But Polin's plan will intentionally avoid Reagan's Military-Keynesian and trickle down components. It is right to avoid the Reagan strategy since the long and consistent use of the Reagan strategy has produced the current economic crisis.

"This is no time to be timid," as Polin rightly asserts. He hit the mark because Americans will not have too many political opportunities to retool the economy and put the country on a sounder economic base.

Despite the economic crisis, business leaders are looking with suspicion at the pending Obama presidency, according to Business Week. And yet they also find themselves indulging in the personality cult forming around the President-elect:

One notable irony about CEOs and Obama: When the bosses talk of the President-elect, they often invoke Roosevelt. "We need a very, very strong leader, almost like FDR," says Garo H. Armen, CEO of New York-based Antigenics (AGEN), a biotech startup. "He needs to put in place an FDR effect," says Dow Chemical (DOW) Chief Executive Andrew N. Liveris. FDR often antagonized business, but he electrified the nation with his decisiveness. Business executives, like many other Americans, are waiting anxiously to see what FDR effect Barack Obama can produce.

In any case, the President-elect recently pledged to implement a stimulus program as soon as possible (see this, this, this and this).

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