by Randy Shannon
Jeremy Grantham manages one of the largest asset funds in the world. He has been a consistent critic of the bubble economics of the Federal Reserve and the big banks. In a recent interview on MSNBC he called for direct government hiring of the unemployed. Below are some key excerpts from his interview.
What I worry about most is the Fed’s activity and — QE2 is just the latest demonstration of this. The Fed has spent most of the last 15, 20 years— manipulating the stock market whenever they feel the economy needs a bit of a kick. I think they know very well that what they do has no direct effect on the economy.
The way you address a weak economy, particularly very substantial excess unemployment is through fiscal policy. You must either bribe corporations to hire people who have been unemployed, which they did in Germany. A lot of economists think that’s perfectly effective.
Or you must go in there and hire people yourself as a government. I would never do it unless there was clearly quite a few million extra unemployed. I wouldn’t go after too many skilled labor because there’s never— enough of them to go around. And that does cause crowding out. I would go after the— what I called lightly-skilled workers.
The kind of people who were building the extra million houses in— in ’05, ’06 and ’07. And find— and find jobs for them. We have an infrastructure that is decades behind schedule.
We could insulate every house in the Northeast. These are high-return projects, great— for society in general. And to— to allow people to sit there unemployed. Their skills are deteriorating. Their family morale goes to hell. And— it’s a deadweight on society. And you have to remember when— when the government hires someone, it doesn’t pay the full price like a corporation does.
The government, pays a lot for someone sitting down unemployed. All the many ways that unemployed get helped plus— the government carries the atrophying of the skills. Society loses that, the longer they’re unemployed.
The profoundly destructive effects of the ongoing financial and economic crisis on our society over the coming years is a cause for concern for everyone. Japan’s lost decades are a harsh lesson for those paying attention. Grantham’s concern shows that the bubble economy is still pursued by the banks through the Federal Reserve. It is even a threat to the investor class and pension funds, not just to homeowners, wage earners, and retirees. The bankers’ unhinged and unhindered drive for ever higher profits threatens to bring the United States and our Government to its knees. The threat to America is not without, but within.
Direct government hiring of the unemployed is the most cost effective way to immediately alleviate the unemployment crisis. As described in “Time to Fight for Full Employment,” published on this website, direct hiring of the unemployed is recommended by the U.N. International Labor Office. The article also calls for a direct tax on the speculative activity of the Wall Street banks to curb their destructive power. Solving the unemployment crisis will also strengthen the hand of the state against the predatory banks.
Congressman John Conyers of Michigan will re-introduce “The 21st Century Full Employment and Training Act” – HR 5204 in the new Congress that will be seated in January. HR 5204 sets up a fund in the US Department of Labor to train and hire unemployed workers. The fund will be financed by a one quarter percent tax on Wall Street speculation in stocks, bonds, commodities, and currencies.
This bill is the real change maker and is the tool we need to educate, organize, and mobilize the American people to fight for their real self-interest.
A national coordinating committee is being organized to wage a campaign to support HR 5204. A new website has been set up www.PutAmericaToWork.net. Progressive Democrats of America supports this important legislation and will be involved in the campaign to organize support for HR 5204. Stay in touch with 4th CD Chapter of PDA to get involved in this effort.