James Galbraith on the Job-Loss Recovery

James Galbraith doesn't get nearly the attention from the blogosphere his work deserves. But he's now the regular economics columnist for Salon.com, so we'll be hearing more from him on a regular basis. Which is great.

One of his recent columns (03/15/04) takes a pessimistic look at the current job situation: Behind the jobs debacle. Galbraith is certainly no fan of Bush or his economic policies. But he thinks that, while critics like Paul Krugman are right to criticize Bush's failures, the job-loss recovery reflects deeper problems. He argues that the Administration's jobs forecasts have been persistently low, not so much due to deliberate deception: "Bush's jobs forecast failed because a jobs recovery never began at all." And he says:

The conditions for this disaster were set by the tech debacle, by the enormous and unsustainable accumulation of household debt, by the decline in our trade competitiveness and trade balance (under the "high dollar policy"), and by the unsustainability of regressive and opportunistic state and local tax structures. Not since the 1920s had growth been so dependent on speculative investment and mortgage finance. Not in history has our trade position been so weak.

He argues that much of the underlying weakness of the economy was evident in the recession during the first Administration, but that most economists missed it. His take on the policy problems underlying the current dilemma:

The failure of Bush and his economists ... lies in the wanton pursuit of a strategy of tax cuts for the long term aimed at the political, not economic, objective of exempting plutocrats and their fortunes from federal tax. In lies in the rush into military adventures -- from missile defense to Iraq -- that achieve little, waste vast resources and make a proper jobs-and-security policy even more difficult down the road. Most of all, it lies in failing to care, one way or another, what might happen.

Galbraith hopes a Kerry Administration will be taking office in January. And he hopes it will take a pragmatic, flexible approach to a policy aimed at boosting American employment.