Doulbe Dip and Dysfunction

[Donnachaidh]

http://www.huffingtonpost.com/rob-johnson/double-dip-and-dysfunctio_b_687577.html

Standin at the crossroad babe
risin sun goin down
Standin at the crossroad babe
eee eee eee, risin sun goin down
I believe to my soul now,
Poor Bob is sinkin down

--"Crossroad Blues", by Robert Johnson (1936)

We've been hearing a lot lately about the possibility of a double-dip recession. I do not know if we will actually go to a double dip or just substandard growth given the high level of underutilized human resources. But that is beside the point.

It is a very sad feeling, one that I had during the aftermath of Katrina, when the government reveals that it does not intend to respond to a crisis. It is a cold, dehumanized feeling. The tolerance of 9.5 percent unemployment, which is in reality a much larger number (say 15 percent) than the official numbers, is a symptom of dysfunction.

The dysfunction arises in part because of a failed vision. Society needs public goods and their repair. Adam Smith identified this in The Wealth of Nations. Education, schools, roads, and bridges are the lubricant of a productive society and there is no better time to repair or upgrade them than when you have slack resources that can be hired to address the task. Denigration of government's essential role has gone on too long. It is doing us harm. Yet it has roots in experience.

Our lockdown on spending is a symptom of lack of trust. It is also in part because our government is seen by the population as favoring large institutions and corporate power, not people. Given the choice between perceived corporate welfare that enlarges our future tax burden and curtailing the government, many people now opt for the latter. Not because people lack the desire for services, but because we do not trust our political system to deliver those needed services. See a recent Pew Reseach Poll, which illustrates the pervasive perception that government economic policies benefit Wall Street rather than Main Street.

This is a very difficult impasse. Given the way the government behaved, insuring the powerful during the bailouts and after, it is understandable that trust has eroded. It is a question of representation and political voice. It is like being asked to pay dues to a golf club but then being told that only the powerful and connected will get to play the course.


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