The transitional economy

The New York Times reports today on one of the more important issues facing the nation — and one being ignored by policymakers at the state and federal level obsessed with spending.

Nearly five million Americans out of work for more than six months are left to wonder what kind of help might be coming, as the Federal Reserve, the International Monetary Fund and a bipartisan swath of policy experts implore Washington to act — both to alleviate human misery and to ensure the strength of the economy.

The pain of the long-term unemployed has persisted even as the overall jobs picture has brightened a bit and the unemployment rate has fallen to 7.8 percent. The new government report for October was due to be released Friday morning.

“The problem is incredibly urgent,” said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute and an adviser to Mitt Romney’s campaign. “Spain had a financial crisis in the late 1970s and has never seen its unemployment rate drop back to where it was before that crisis. The unemployed become discouraged, and ultimately the employment to population ratio might take a permanent hit.”

The potential drag on the economy is great, as is the likelihood of hardship — hunger, homelessness, etc. This will have a much greater long-term impact on the national debt than spending on food stamps, unemployment insurance, welfare payments and other general assistance.

We need to address the transitional nature of the current economy and our priorities and begin focusing our resources on the shifts that are occurring. That means looking for new ways of working and being honest about the costs of our current way of doing business. Right now, we are more focused on turning a dollar into two or 10, than in using that dollar to create something tangible and useful or in finding ways to function in a sustainable manner.

The goal, always, is economic growth, to exclusion and at the expense of everything else. In the wake of Hurricane Sandy, that just seems like a misplaced priority.

 

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