Joseph Stiglitz takes a hard look at what really ails the economy:
The problem today is the so-called real economy. It’s a problem rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with. The real economy has been in a state of wrenching transition for decades, and its dislocations have never been squarely faced. A crisis of the real economy lies behind the Long Slump, just as it lay behind the Great Depression.
He nails it. What’s wrong with the economy has nothing to do with monetary policy or even the banks. That’s short-term thinking. We are going through a revolution much bigger than that – a shift to a new type of economy. It’s the forever recession.
The problem is the solution he proposes – increase government spending like we did in World War 2. It worked then because our country had a singular goal (the war) that we were working toward. It shifted our society from agriculture to manufacturing. However, our government today is so inept that we end up with homeland security buying $900 snowcone machines.
No doubt though, this is the approach we need to take. Fighting to turn things back to the way they were will only hurt our country in the long run.