Robert Barro - a polemicist looking for a place to pole dance - in writing about the virtues of eliminating unemployment insurance in this weeks Wall Street Journal, ignores inputs that really matter to real people.
He compares and contrasts other recessions and trends in, and after, their cycle. Mostly he uses the 1983 recession as a bellweather. He is cherry-picking his "facts" and using hasty conclusions in a rush to defend the indefensible. Mainly the destruction of the middle-class, by the middle-class, in order to spite "those that ain't us." It amounts to bad politics and bad policy.
Some things he ignores:
The whole of recession history dating back to Post WW-II. This period was aided by Depression Era economic policies and regulations. The use of modernized economic instruments and banking reform created a 70 year period of financial stability that was innovative, risk managed and empowering for economic development when conditions were trending towards expansion. In short - it was successful.
This post war stability can be easily measured in the counting of financial crises in the whole, real economy (until 2008). Let's try it - start counting - none!
Then Bush-o-nomics - BAMM!!
Those effective measures (regulations) and balances (deficit to revenue ratio's to GDP) were stripped out of government policy in the late Clinton and early Bush years. A fantasy "efficiency" model was allowed to undermine and DESTROY $7 Trillion in real estate equity (the backbone of middle-class wealth). and other "radical economic behavior" like unregulated derivatives trading, predatory lending in banking, tax policies; like allowing hedge fund managers to withhold fair payment of taxes, and lots of nonfeasance on the part of regulators. This radical shift was a death march to upheaval and wealth destruction.
In short - the regulation-free zone has been tried and it is a huge failure.
That failure can be seen and measured everyday in the form of unemployment. The slow growth is not an outcome of government policies alone. In fact, the Obama model, it can be argued, allows too much private behavior with public money. Obama looks to the private sector to remedy the growth rate. There is no huge institutional jobs program(s) involved with this current stimulus. It is directed at private sector job creation and very little toward municipal support.
The recession of 1983 - as bad or worse than this one - asserted the role of the central banking system as the multiplier of "crowding out" and "crowding in" the private sector, the government and the money supply. It was closer to a planned recession - because the fed refused to change the monetary policy to combat unemployment. It was a blood-letting and did a fair bit of damage to working class and emerging middle-class employment. It was, and is, different than this recession.
Prior recessions had the hedge of expanded credit backed by real estate equity to capitalize new spending and create capital. That prospect has largely been stripped away by the false (not as yet illegal) securitization of high risk lending.
The credit crunch and the new banking activities let banks use capital somewhere else now that they are largely free to cross over to less lending and more investment (risky) behavior.
Blaming the unemployed - even in Barro's case - is the last refuge of a failed New Classical (Barro's-like) Economic pretender!! This Randian hybrid of supply-side, psuedo-economics has failed in process and in substance across the spectrum of development. Civil, economic, social, and community institutions are all suffering from the cascade of failure that grips our institutional framework. We are adrift without a certainty of trust in the integrity of our institutions and social contract. That is the waste that is left behind - not weak-willed losers looking for easy street as Barro seems to suggest,
Get off it so we can get on it - and resolve the unresolvable. Mainly, how to stop the impoverishment of millions in the richest place on earth.
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