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Our Economy's ‘Special Problems'

The Final Call, News Analysis, Dedrick Muhammad Posted: Jul 27, 2009

“If you get to the end of this year or early next year and employment is still limping back, then we have to do some serious thinking about whether there might be special problems in the labor market that require targeted interventions.”

That quote is from Christina Romer, chairwoman of the President's Council of Economic Advisors. Hopefully she's feigning ignorance, because to those of us who recognized the American economy was in trouble years before the current crisis unraveled, it's apparent that — at best — employment rates will just begin the long walk back in 2010.

Job recovery is not something our country has excelled at in the recent past. After the recession of 2001 it took almost four years to compensate for job loss, and that recession was mild compared to our current economic crisis. There is nothing to indicate the rate of recovery will be faster this time around. Most likely it will take at least until the end of an Obama second term to return the employment rate to what it was in the pre-recession Bush years.

The Obama administration's best fix for unemployment has been the American Recovery and Reinvestment Act, which aims to create 3 million new jobs. But the fact is our nation has now lost more than 6.5 million jobs. According to the most recently released data from the Labor Department there were 467,000 jobs lost last month alone. The ARRA will not be enough to bring forth recovery.

So far most of the funds spent through the American Recovery and Reinvestment Act have gone to tax relief and aid to low-income, retired and unemployed Americans. Though this money has helped some survive the meltdown, it has not been the type of investment that will foster the long-term and economic shift that we need.

The ARRA was an important piece of legislation that provided a speed bump to the rapidly declining economy. But now we must get under the hood and work on an overhaul of the engine of the economy—the economic viability of the middle and working classes in America.

According to those who judge the economy by the profits of Wall Street, the years leading up to the recession were, “good economic times.” However, in that same period the economic picture for most Americans looked very different: Record numbers of people filed for bankruptcy and consumers were accumulating higher levels of credit card debt than ever before. Surely, these are indicators of the “special problems” that Ms. Romer of the Council of Economic Advisors is still looking for. For years too many Americans were living beyond their means while the wealth of America was being further concentrated in the hands of a few.

Just as America is facing the worst economic crisis since the Great Depression, America must engage in the greatest job creation and social investment since the days of the New Deal. This targeted intervention must be focused on redirecting the wealth of this nation to the working poor and those fighting to remain in the middle class.

The aim of future economic investments cannot be to get us to the good old days where Americans were mortgaging their future to maintain a debt-driven lifestyle while the richest 10 percent of America hold 70 percent of the nation's wealth. Nor should it return us to the America where disenfranchised minorities like African Americans have an unemployment rate during years of economic growth that is equal to the White unemployment rate during a severe recession. There must be a fundamental change to the great economic inequality that has handicapped the consumer base that—don't forget —fuels 70 percent of the economy.

Change as a political slogan is no longer good enough. It is time for a change in the economic direction of the country. There must be a change from trickle-down economics to bottom-up economics that will build a sustainable middle.

There is no denying that it will be expensive to re-build the American economy but our leaders have found billions of dollars to invade foreign nations and trillions to back Wall Street as it collapsed from its own greed. The wealth of the country can be found to build a shared prosperity that will get America and Americans working again. Without taking these difficult steps the only economic change the nation will see will be a change of from bad to worse.

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