March/April 2013 issue: We have sent our March/April 2013 issue to the printers; subscribers should start getting it next week (e-subscribers will get it tomorrow). We've posted two articles: Ellen Frank's feature, Beyond Deficit Scare-Mongering, and Gerald Friedman's Economy in Numbers, which for its web version we're calling What Runaway Spending? Both are great pieces, and they complement each other. The "money quote" from Ellen's article is this paragraph explaining the value of deficit spending in arecession:
By borrowing money in a recession, the government puts to use resources that would otherwise sit idle in the private sector. Recessions and depressions, after all, are not caused by lack of resources. The labor force still exists, as do all the buildings and equipment that existed before growth slowed. What is lacking is a willingness by private businesses to employ these resources. This is where governments can step in, borrowing funds that would otherwise languish in the banking system, spending them, and putting people to work. Indeed, during hard times, the government should substantially increase its deficit to get the economy back on track. This causes GDP to grow and, as it grows, helps to bring down the ratio of debt to GDP.
In Jerry's piece, the part that I think is most powerful is the third graph, showing how much revenue has plunged in the Obama administration, which helps show that the decline in revenue, caused by the recession and by tax cuts, is to blame for the federal deficit, not "runaway spending." (Jared Bernstein makes a similar argument about falling spending in this recent blog post; hat-tip to Aslam K.)
About that provocative cover: about the time, a couple of weeks ago, that we were trying to figure out which article to put on the cover and what the cover would look like, I saw this blog post by Ryan Chittum at the Columbia Journalism Review site (I blogged about it here, in item #2) about Bloomberg Businessweek's racist cover accompanying a pretty good and non-racist article about the housing "recovery." One of the commenters on Chittum's post asked, "how's about a cover depicting the greedy loan officers and bank managers and finance charlatans who perpetuated this debacle?" Which gave me the idea that we could do something like that, as a parody of the Businessweek cover, to illustrate Darwin BondGraham's piece about big-money investors snapping up foreclosed homes. Masheka Wood executed this beautifully.
Here's the editorial note for the issue, which sums up the contrast between our take on the housing "recovery" and Businessweek's (and that of much of the rest of the business press), and then gives a tour of the rest of the issue:
The mainstream and business press are touting the housing market once again—the New York Times, Los Angeles Times, CNNMoney, and others have run gushing accounts—but are missing the upward redistribution of wealth in the so-called recovery. “A funny thing is happening to the United States housing market,” argued New York Times chief financial reporter Floyd Norris earlier this year. “It is getting better at an accelerating rate.” Well, it turns out another, not-so-funny thing is happening as well—millions of people have lost their houses to foreclosure, and many of them are now ending up with big-money investors as their landlords.
Politicians, economists, and big business never tire of screaming about deficits and debt. The mainstream media have uncritically applauded the supposedly “centrist” or “bipartisan”—actually corporate-backed—Fix the Debt campaign, and how it has a solution to the so-called debt crisis. But economist and longtime Dollars & Sense author Ellen Frank shows that the current federal debt level is not the cause for alarm that politicians and pundits make it out to be (and that their motives are not what they say).
The advocates of “free market” neoliberalism have long claimed—to use the mantra popularized by Margaret Thatcher—that “there is no alternative.” But economist James M. Cypher highlights the role of the state in both redistribution and industrialization under Brazil’s new economic-development model. As Cypher puts it, Brazil’s Workers’ Party government is helping to “break the mold” of neoliberalism in Latin America.
In “Up Against the Wall Street Journal,” John Milleronce again takes it to the WSJ editorial board, debunking the claim that state income taxes cause tax-flight by the affluent, reduce economic growth, and stifle job creation. In “Ask Dr. Dollar,” Arthur MacEwan shows that Keynesian economics, whatever its limitations, has not been eclipsed because it was proved incorrect or inapplicable to today’s problems—but largely because of opposition from the wealthy and powerful. Gerald Friedman’s “Economy in Numbers” shows that claims of runaway federal spending are runaway nonsense. Spending has grown more slowly under Obama than during most administrations and, in fact, has not grown nearly fast enough to cope with massive unemployment.
All that and more in this new issue. Subscribe today and we'll send it to you!
--Chris Sturr