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Robert Reich: We Need a New WPA and CCC

On ABC’s This Week this morning, one of Amanpour’s panels consisted of Robert Reich, Senator Shelby of Alabama, and some corporate media talking head who was really irrelevant to the conversation.

Reich said that there was no recovery because there was no demand, there was no demand because 70% of the American economy is based on consumer spending,  there was little consumer spending because there were no significant jobs being created, and jobs would not be created by the private sector until there was demand. Therefore, the only way to stimulate demand was for the government to directly create jobs by a new WPA.

Of course, the talking head waffled and Senator Shelby said we had tried stimulus spending before and it didn’t work. Reich cut through something inane the talking head and Amanpour tried to say to ask Shelby a direct question:

“Senator, why can’t we have a new WPA and CCC to create jobs?” Shelby replied, “The WPA didn’t get us out of the Depression, the war got us out of the Depression.”

Reich: “Yes, because when the war started we spent 120% of GDP on job creation. The government put money into people’s pockets, and that created the demand that got us out of the Depression. You cannot have an economic recovery without a jobs recovery.”

Amanpour: “Senator, is there any chance of a new stimulus package being passed by this Congress?”

Shelby: “No.” Talking head: “Blah blah blah.” Amanpour: “Well, that will have to be the last word. Next, (we’ll talk about political sex scandals).” Segue to commercial.

Now, I’m not a total Reich disciple, but he made perfect sense to me today. I found it interesting that no one was able to substantially counter his argument, probably because there IS no substantive argument against it from even  a capitalist point of view. Why should businesses spend money to hire people when there is no one out there with the money to buy the goods or services those new hires would provide? The short-term capitalist profit answer is, of course, no reason whatsoever.

So Reich described the bottom line very well. No amount of tax cuts for businesses and the rich, no amount of deficit reduction, no amount of preaching about the wonders of the free market, none of this will create jobs in the numbers required to increase demand.

Since neither the Obama Administration nor the Congress nor the private sector has any intention of implementing a massive program to create jobs, the Great Recession will continue. We have seen this scenario before, from 1929 to 1933 during the Hoover Administration. Hoover and his minions constantly prated that things were getting better, that if people just had faith in the free market and the creativity of business that there would be a “chicken in every pot,” that all government could do was stay out of the way, reduce the deficit, and business would provide.

It didn’t happen then, and it won’t happen now.

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Ohio Barbarian

Ohio Barbarian