4 Nov 2009
by Colin Greer
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Boom and Bust

We are now seeing in the extreme what happens in a boom and bust cycle–when the “boom” years are followed by a bleak period after the bubble bursts.

To rid ourselves of these extreme gyrations, the government should act like a balance wheel, which aims both to stabilize social conditions and maintain social equilibrium.

During the trough of the cycle, like we have found ourselves in now, it is essential for the government to inject more money in the public sphere, maintain employment levels and generate revenues. To do this the government needs to continue spending, despite the fact that the nation is in a recession and the inclination is to be tightening our belts. What we need is a repeat of Franklin D. Roosevelt’s New Deal.

The public sector can be an active partner in producing profit, stabilizing enterprise, and addressing the enduring problems of unemployment, underemployment, and low wages. Direct aid to working people is equal in importance to aiding ailing banks: working people are too small and too many to be allowed to fail. Indeed, sustained attention to the elimination of poverty is possible, even a necessity in these difficult times. All in all, the once prized mixed economy can produce greater labor force capacity and greater corporate competitiveness when the burdens of effective education, health care, and job insurance are shared and born by government with resources earned both through taxation and investment return.

The challenge of eliminating poverty parallels the current challenge of addressing environmental degradation and pollution.

In each, we face critics who argue the inevitability of the conditions that we seek to address: the poor will always exist, they say; Or the planet will continue to get warmer no matter what we do to try and reverse the trend. Arguing with such critics is of much less value than recognizing that no matter what is inevitable, there are causal factors produced by humans leading to global warming on the one hand and painful levels of poverty and insecurity on the other.

Poverty, like pollution, is the signal of the need for action. Yes, some poverty may always be with us. Whether we exploit it and depend on its sustainability is a choice we have to make. We have typically not made it well.

We need an approach to anti-poverty policy that operates at several levels. The actual conditions of poverty, like hunger and homelessness, should be relieved. This can be done with reverse-income tax credits, targeted low-income housing, food, and emergency health care. However, a reform dimension is necessary that addresses the generating circumstances of poverty and builds education and healthcare programs that are at once universal and so reduce the vulnerability of all citizens. Further, a renewal approach that recognizes that with poverty comes the loss of the work force and their contribution to society is also necessary. Every community is replete with talented individuals, indeed each is a treasury of merit that can be the basis for building local, democratic economies that will bring achievable scale to policy goals and rebuild national economic and political participation from the ground up. Finally, a transformational moral umbrella is required that will move us through policy inventiveness and responsible risk-taking, to a broad-based social imperative that makes decent living conditions and dignified work the priority value of a good society.

 

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