It doesn't take a Nobel prize-winning economist to understand that if the economy is a) not responding the Federal Reserve's interest rate hike; b) reducing real wages for 90 percent of the nation's workers; c) encouraging the wealthy to opt-out of public services such as education, health-care, drinking water, and police; and d) creating the security threats of today (oil-related terrorism) and tomorrow (conflict with China)...that that economy is broken. Irreparably.
But what we hear from economists on both sides of the aisle is the same old mix of policies that focus on trade and interest rates. The problem is China's bottomless labor supply. Or the problem is Greenspan's housing bubble. Sometimes the problem is that Europe and Asia are not buying enough American goods. Or that Americans are buying too many foreign goods.
Wrong, wrong, wrong. The problem is much deeper. The problem is based on the simple fact that the American economic formula of cheap gas, suburban sprawl, subsidized resources, and employer-provided healthcare is no longer viable. I'll be writing more about this over the next few months but right now, I wanted to provide the context in which James Galbraith's quick summary of a progressive economic engine makes enormous sense.
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