Dean Baker: The Washington Post Wants You to Accept High Unemployment (and Social Security Cuts)

[marmar]

The Washington Post Wants You to Accept High Unemployment (and Social Security Cuts)
Saturday, 20 August 2011 08:53


The Washington Post ran a major article today telling readers that they should just get used to high unemployment. The article presented the view of some economists, that the economy can only recover from a financial crisis after a prolonged period of economic weakness, as somehow reflecting a consensus opinion within the economics profession.

For example, the subhead told readers that while presidential candidates promise a quick recovery, "analysts say this post-recession comeback may take longer." Since this pessimistic view is far from the consensus within the profession, a real newspaper would have said "some analysts." Similarly the sentence, "but because of the severity of this recession, and the accompanying crises hitting banks and other lenders, economists believe that recovering from it will be more difficult," would have the phrase the phrase "some economists" in a serious newspaper. (The article does include some dissenters, but it implies that their views are an exception.)

The article then includes a set of charts that show a number of countries in which it took more than a decade for the unemployment rate to return to its pre-crisis level following a financial crisis. It is possible to tell a very different story using a different set of countries as is shown below.


Source: International Monetary Fund

As can be seen the unemployment record of these five recent victims of financial crises is mixed. Four years after the crisis (which would be 2012 in the U.S. case) South Korea and Malaysia had unemployment rates that were above the pre-crisis level, although in both cases they were at or below 4.0 percent. Most people in the United States could probably live with this outcome. In the case of both Russia and Mexico the unemployment was below the pre-crisis level four years after the crisis. In Argentina the unemployment rate was 8 full percentage points below the pre-crisis level, although the country had already been in a severe recession prior to the onset of the financial crisis. ............(more)

The complete piece is at: http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-wants-you-to-accept-high-unemployment-and-social-security-cuts

[dkf]

1. Yup, it's the housing bubble...

" The reason why demand remains weak is that over-building of the bubble years has left construction badly depressed. Also, a trade deficit that is close to 4 percent of GDP is effectively draining $600 billion a year out of the economy."

[OHdem10]

2. The Washington Post sets the Narrative for the country and has

done so since around 2000. Prior to that it was NYT.

I will agree with the fact that this recovery is going
to be much longer and they are doing a service by
throwing a reality shock out there.

It will be interesting to see how each party deals with
this and especially how they would deal with long term
unemployment.

There is much more at play here than just the Financial
Industry.

Globalization and bad Trade Policies have played and will
continue to play a significant role in Chronic Unemployment
in this country.

WAPO sets the pace. Will the Democratic fall in line?
Will the Democratic Party say just a minute--there are
many things going on, but we can do better than accept
Chronic Unemployment and cuts to SS?

[saras]

3. At least they show us what countries they want to compare us to

[applegrove]

4. So the middle class will continuously fight inflation with lower wages

while the rich get richer and don't have to suffer a 'tight money policy' to fight inflation the way it was done in the 1990s.