The trauma we’re experiencing right now resembles the trauma we experienced 80 years ago, during the Great Depression, and it has been brought on by an analogous set of circumstances. Then, as now, we faced a breakdown of the banking system. But then, as now, the breakdown of the banking system was in part a consequence of deeper problems. Even if we correctly respond to the trauma—the failures of the financial sector—it will take a decade or more to achieve full recoveryFixing the banking system isn't enough, he argues.
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.The problem is his suggested cures are all standard liberal nostrums. He may be a Nobel-winning economist, but his ideas at least in this case lack imagination. Huge new government spending programs for "investment" and higher taxes. More money for education, more money to help the states to close budget shortfalls.
In other words, more money flowing to public service unions that reliably fund Democrats and boost their pensions at the expense of public services.
I agree when he argues we need more money spent on infrastructure. That, at least, is genuine 'investment'. But it has to be sensible investment, not pork.
"Today we are moving from manufacturing to a service economy.", he says. No, we're not. We're moving from a service economy to something which lies beyond an service economy. He doesn't get that the problem is actually deeper than he concedes. And THAT's the problem.