I’m not an economist. Most of my news comes from listening to NPR, reading BBC news, Yahoo Finance news, CNN Money news, and This Week with Christiane Amanpour. The Great Recession is over, because the economy is no longer contracting. The recovery though is more of a flat-line average rather than increasing value that we are hoping for. My understanding of our current economic situation in the US is that for many years we have spent more money than we had, enjoying a period of growth and prosperity, a bit more than we had actually earned. Now the bill is due and we are struggling to pay all the debts.
Given that economic situation, why do we think that a recovery can be achieved so quickly? We are in an economic “correction” and paying for the economic speculation previously enjoyed. This will take time, especially when during the time period of overspending, wages of the working and middle classes have not kept up with inflation.
It seems that policies from the US Government and the Federal Reserve have propped up the economy above the natural strength, slowing the downturn during the recession enough to officially end the economic contraction. As those policies are ending, we are facing the true value and independent strength of our economy. With the upcoming political debates for the Presidential Elections, the focus is on plans and policies that will quickly regenerate the growth and prosperity.
The debate over plans and policies needed to regrow the economy will vary by many biases. The politicians are divided between Republican (reduce spending and taxes) and Democratic (reduce some spending and increase taxes) ideologies; both of which are focused on an immediate support for the economy since their election cycle is on a 4 year schedule. Are they going to falsely prop up the economy and leave the cost of these measures for future generations? What will happen to the US if uncontrolled spending and debt causes extreme inflation?
What kind of policy and programs are needed to create a legitimate and long lasting economic recovery? We need a means of increasing the value of our economy, at home and abroad. That will likely come from technology and services which requires education and support for research and entrepreneurs.
We must tell the politicians how to address these issues, instead of leaving it up to corporations and the rich. That might entail a continuation of the flat-line economy until we catch up with the debt and invest in our future.
A day after writing this, the radio program On Point discussed the status of our economy with Nobel Prize-Winner Peter Diamond. He comments that the actions of President Obama’s administration have prevented a deeper recession/depression that likely would have included further job loss. In order to get jobs regrowing again, we need more stimulus, but down the road everyone needs to pay more in taxes to reduce the debt (when will we agree to that?). For long term development we should invest in education and focus on programs and policy with a proven benefit. All of these points of view are contrary to the Republican point of view.