Truthdig Radio: The Great Recession, Jobs and the Royal Spectacle

Posted on Apr 28, 2011

Photo illustration from an image by Colin Grey

Truthdig Radio airs every Wednesday at 2 p.m. in Los Angeles on 90.7 KPFK. If you can’t listen live, starting on Wednesday nights look for the podcast and transcript of each week’s show right here on Truthdig.

On this week’s show, our guests sing to Obama; deep-dive the job market; get bossy with Tina Fey; and brace us for an AT&T world. Plus, Truthdig crashes the royal wedding.

Click to listen to the show, or continue reading the full transcript below.

Full Transcript:

Peter Scheer: This is Truthdig Radio, bringing you the best interviews, criticism and commentary from Truthdig.com and KPFK. On today’s show our guests sing to Obama; deep-dive the job market; get bossy with Tina Fey; and brace us for an AT&T world. Plus, Truthdig crashes the royal wedding. Stay with us.

 

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Josh Scheer: This is Truthdig Radio, and we’re sitting here with Robert Scheer and Heather Boushey from the Center for American Progress discussing the great recession, jobs and the economy. Thanks for being with us, Heather.

Heather Boushey: Thank you. It’s a pleasure.

Robert Scheer: The reason we wanted to talk to you is because you had this terrific testimony, and then a joint article you wrote with someone on two, basically two points: that the job mess that we have, the loss of jobs, is a direct result of the banking meltdown, the recession we’re in; it’s not systemic; and the other was that there should be some caution that our dependence upon foreign suppliers and what we saw in Japan, interrupting supplies, and that maybe there’s an argument to be made for being more concerned about restoring or revitalizing the American manufacturing sector. So, can you say something about both of those things?

Heather Boushey: Certainly. You know, on the first issue, if I understood your question correctly—I mean, certainly the unemployment that we’re experiencing today is a direct result of the collapse of the housing bubble and the ensuing financial crisis. And what has been truly tragic over the past couple of years is to hear more and more people complain that there’s something wrong with workers, or that people just aren’t trying hard enough to find jobs, when in fact all of the empirical evidence really does point to the fact that there is a lack of demand that was caused by the collapse of the housing bubble and the financial crisis, you know, and just—firms now just not seeing enough customers to make them go out and start hiring. So that really is a challenge. Your second question …

Robert Scheer: Well, let me deal with the first one. I don’t mean to be rude, but that—I think that’s really provocative, because even from President Obama, we had in his speech, you know, his big speech, that—it’s education; we have all these problems with kids not learning enough, and so forth—all of which are true, and all of which have been with us for a long time. The biggest issues we’re facing right now are the collapse of the job market—as you point out, as a result of what happened on Wall Street—and secondly this debt crisis. I looked up the figures just before coming on the air. In 2007, before this thing hit, we had $9 trillion in debt, and now we’re at $14 trillion. And that’s a direct result of what happened on Wall Street. And so why are we blaming teachers, why are we blaming, you know, the educational system or anything, when in fact what we had was a mismanagement of the economy by bankers allowed to run wild by deregulation?

Heather Boushey: Well, you know, I—I appreciate your question as to why we’ve let it happen, and honestly I think that really is the six million dollar question. I don’t know that I can pin an answer on it, but I can completely agree with you that we’ve seen … I mean, let me start with the education piece first. I mean, it is of course the case that we want every kid in America to be able to go to school; those who want to go to college should be able to, and to be able to afford it; you know, college has become increasingly unaffordable for middle-class families, even over the recession, and kids are taking on more and more debt, burdening them when they graduate. And it’s also the case that there are a lot of folks—especially among men—who go to college, get that degree, but they still don’t outearn the typical high school graduate. And so it is not the case that a college degree is a panacea, and that’s going to solve everyone’s problems in the job market. So, I agree with you that it’s important, I agree with the president that it’s important, but I also just want to underscore … that’s a longstanding problem: getting every kid into school is not going to solve our short-term unemployment problem. Moreover, even if that could solve our unemployment problem in the long run, it’s a long-term solution. It takes a long time to get a lot of kids through community college or get that bachelor’s, and that’s not going to happen overnight, and yet we’ve got these, you know, millions of folks who are out of work and a lot more that have been out of work for a long time and have given up job-searching. So … so, yeah.

Robert Scheer: But let me ask you a little more personal question, in the sense that—you know, OK, you’re a well-educated person; you have a Ph.D.; and the president has stressed the meritocracy, stressed learning so much—but the fact is it wasn’t kids at some community college who were struggling with math who got us into this mess. It was some of the best mathematicians at MIT and Harvard and Yale who got us into this mess; some of the best economists who got us into the mess. They’re the ones, like Lawrence Summers, who justified collateralized debt obligations being unregulated; you know, the passage of the Commodity Futures Modernization Act, which Clinton signed off on. And so isn’t this kind of a weird scapegoating, to say if kids would just study harder, if teachers would just teach better, we wouldn’t be in this pickle, when we’re in this pickle because the so-called geniuses, the smart guys, the brilliant guys, said no, let Wall Street run wild, and Wall Street did, and they bankrupted us?

Heather Boushey: A hundred per cent. And in fact, going back to the earlier question you were asking, those same folks, highly educated folks, were going increasingly into those financial services jobs where they could make tons of money for doing things that we now know weren’t necessarily good, were not good for the economy, while we’ve seen a dearth of folks going into the kinds of hard sciences and engineering and high tech that could actually create the kind of investment that would move our economy forward. So you saw a lot of kids going into a sector that is financed but became too bloated, and has not propelled our economy forward in a positive direction. So there’s a number of things going on there. And you’re right—it was the deregulation of the financial sector that has played a huge role in the crisis and in the unemployment that we’re seeing for millions of everyday Americans right now. And that is the tragedy of it—that while we did see some reform that passed through Congress in the last congressional session for financial regulation, I think we still have a long ways to go before we’re going to be done with that. And unfortunately there does not seem to be a lot of appetite here in Washington right now to sort of dig in and do that hard work.

Robert Scheer: You know, another point you made in your article and your testimony was that we have to have demand in this country; people have to be making enough so they’ll buy things. And one of the things that’s happened, where you had these recent Commerce Department statistics that these big multinational corporations have shifted an enormous amount of jobs abroad. And good jobs. [General Electric CEO Jeffrey] Immelt—who, after all, Obama has appointed to be one of his top advisers, outside advisers—his company shifted an enormous number of jobs, GE, abroad. And he points out it’s not in pursuit of cheap labor anymore; they’re following their markets. And so we’re in this weird thing where our multinational corporations—so-called “our”—expect our government to protect them, expect our government to use diplomacy and military power to protect their interests; on the other hand, they’re shifting jobs and consumer power abroad. So the market moves abroad, and our workers are, to be crude about it, being screwed.

Heather Boushey: Well, you know, two things. I mean, one, they certainly aren’t “our” multinationals; they’re global, and their interests do not appear to be aligned with the United States in many ways [laughs], so that is certainly a … a trend. But you know, we have seen—and I think what is so incredibly apparent now, if it wasn’t before—but we have seen that the hollowing out of America’s middle class that’s been happening for decades now has played an important role in the instability of our economy, and an important role in this crisis. While it is true that we have this housing bubble, and that financial deregulation played a role, another piece of the puzzle was that families were increasingly going into debt just to keep up with the living standards that they had before. We know over the 2000s, the typical family in America actually lost income over the economy recovery, the first time in the post-World War II period; families quite simply weren’t keeping up, and they were borrowing to make ends meet. And once you open that door to borrowing, you know, people got these bigger and bigger loans, and, well, you know, we saw what happened with that in terms of the housing bubble. So not having a solid middle class here in the United States was both a part of the problem and, as you’ve just pointed out, you know—if you don’t have a broad-based middle class in this country you don’t have a lot of consumer demand. And you’re not going to until you get those folks back to work and you commit to having productivity increases and wages actually moving at the same pace again, like we saw in the decades after World War II, but which has not happened since the end of the 1970s.

Robert Scheer: You know, treating this as more of a discussion than a [laughs], a straight interview, it has occurred to me that a book that John Kenneth Galbraith once wrote, called “The Affluent Society”—it’s quite relevant to the discussion. And what Galbraith argued was that America was in a uniquely affluent position regarding the rest of the world, and that the challenge was not to prevent other people in the world from making things or competing with us, but rather to make sure that the benefits within our own society were spread around. And so in terms of these multinational corporations, fine—go make money, do your thing, but as long as you spread it around in terms of paying taxes instead of hiding your profits abroad; keeping good jobs here; helping protect the social safety net, and so forth—we could have a stable society and a stable middle class. But in fact, the lobbyists for these companies have done their best to destroy that and to act in a very selfish way. Now, you worked on the Hill. To what degree does the public even get involved in writing these laws? Is there any consumer protection, or is it just basically written by the lobbyists?

Heather Boushey: Well, you know, I worked on the Hill but I worked for a nonlegislative committee, so I don’t have as much experience at that. But certainly, one of the things you see here in Washington is there are a lot of fantastic groups that focus on making sure that consumers get to have a voice here in Washington. But they are certainly outnumbered, outfunded, out-whatevered by the lobbyists for the corporations. And I think that you can certainly see the influence of money throughout a variety of legislation, of course, passed in the last Congress. And I would point again to the financial regulation legislation that, while good and certainly moved us forward, there were a lot of pieces where the banks got and Wall Street got what they wanted. And I think we should be concerned about what that means moving forward, and whether or not the U.S. taxpayer is going to have to bail them out again.

Robert Scheer: You know, I want before we end this to turn to the second part of my question—the other article you wrote about the need for a manufacturing center; the need for Americans to be able to make things that the rest of the world wants to buy, and the kind of support that the government should be putting into that. And you offer the example of the disruption of production in Japan as a reason for revisiting that issue; that supplies are cut off, and so forth. So do you want to say anything about that?

Heather Boushey: Yes, certainly. One of the things we saw after the tragedy in Japan, with the earthquake and the tsunami, and then nuclear disaster, was we saw, we got a glimpse of just how dependent our economy is on Japanese suppliers and global suppliers—you know, suppliers globally, more generally.  And you heard of planned closures, or furloughs because they couldn’t get the parts they needed. Now that’s not—you know, it certainly is a great thing that companies can trade, and we certainly don’t want to clamp down on that wholeheartedly. But it does—it should open our eyes to the fact that we are vulnerable to these kinds of supply-chain interruptions, and that we might want to have a more concerted effort here in the United States to make sure that we still can make things here. You know, just in terms of the national security issues. The key issue here, when you’re thinking about U.S. manufacturing, is that manufacturing is connected to the kind of innovation economy that the president talks about wanting to have; you know, the interaction between the engineer and the folks on the shop floor who are actually making the goods that the engineer is creating. There’s a—there are real important processes used … if we want to continue to be a leader in technology, we’re going to have to continue to make stuff, or that technology’s going to go overseas, and we’re not going to be the kind of leading country that Americans want us to be.

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