Just to prove I don’t plan to dog Hillary at every turn, I’ll stick up for her remark on the un-centrality of business firms in creating jobs. Republicans would like to turn it into another “you didn’t build that” moment, which worked so well for President Mitt Romney. With no customers — consumption spending by individuals or governments — business firms would have no . . . business. With nothing to buy, of course, we would all be hunters and gatherers, like in The Walking Dead. So this is unavoidably a two-sided proposition. Remember supply and demand?
The ulterior motive of the GOP’s exhortations is to reduce taxes on capital and the rich, ostensibly to increase employment. Ergo “supply-side economics.” What is nearly beyond dispute is that presently the volume of customers continues to be held back in the wake of the Great Recession and in the midst of the Sucktastic Recovery. The most relevant remedy is more Federal, state, and local government spending, financed by more Federal debt. Unfortunately this is politically out of bounds, but not just because of Republicans.
When Democrats crow about reduced deficits under Obama, they are really endorsing a policy of job-killing fiscal restraint. Talking about the need for more jobs and a cupful of public investment is not adequate inoculation against generalized deficit delirium (GDD). If you propitiate GDD you foreclose future fiscal activism, in the event that it ever becomes politically possible.
The Republicans have a sneakier, more politically effective approach. They oppose deficits in principle but enable them in practice, since tax cuts and defense spending don’t count as factors that increase deficits. The opposition garners approval from idiotic, uncritical journalists, and the enabling wins them the affection of their constituents.
Under this political dynamic, fiscal activism becomes available to the Republicans, but off-limits to Democrats. Democrats surrender the liberal economic agenda, and poor white folks get herded into the GOP. Ain’t life grand?
For the long version of this sermon, see Dean Baker and Jared Bernstein.