Jamie Galbraith on the economy and political anger

Bill Moyers recently interviewed economist Jamie Galbraith, whose book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too (2008) has been one my favorite books to refer to on the large questions of economic policy over the last year. The transcript of the 10/30/09 interview is available on the Bill Moyers Journal Web site.

Which reminds me, Galbraith would be a great speaker for next year's Netroots Nation conference. He wouldn't have the rock star status that Paul Krugman does for the crowd, but I'm sure he would be very well received.

Anyway, he's calling for more federal stimulus, because without it the economy could very well fall back into recession:

We have a stimulus package, which is helping now, but it will be over with at the end of next year. Will there be a basis for another strong, privately financed expansion at that point? I don't see the evidence for that now. And that seems to me to be something we should be worrying about. ...

We need to find another path for economic expansion. We need to set a strategic direction.

Our problem now, our big social and environmental problem, is energy. It's climate change. It's the greenhouse gas emission issue. If we built a set of institutions that could deal with that problem effectively, you could employ a large part of the labor force for a generation, dealing with that. And you'd then make that profitable for private enterprise to get into in a serious way. [my emphasis]

He also describes how the lop-sided benefits that have gone to Wall Street creates a situation that will wind up with the Democrats squandering an enormous political opportunity unless they start focusing on job creation:

JAMES GALBRAITH: ... you really have to think about, do you want to have a financial sector dominated by a small number of very large institutions, very difficult to manage, practically impossible to regulate, and ruled by, essentially, the same people and the same culture that caused the crisis in the first place.

BILL MOYERS: Well, that's what we're getting, because after all of the mergers, shakedowns, losses of the last year, you have five monster financial institutions really driving the system, right?

JAMES GALBRAITH: And they're highly profitable, and they are already paying, in some cases, extraordinary bonuses. And you have an enormous problem, as the public sees very clearly that a very small number of people really have been kept afloat by public action. And yet there is no visible benefit to people who are looking for jobs or people who are looking to try and save their houses or to somehow get out of a catastrophic personal debt situation that they're in. [my emphasis]

The tough economic times in 1980 were key to the Reagan Republicans being able to win the White House that year. If the Obama administration and the Democratic Congress don't get a solid health care reform passed, and fix their orientation toward bailing out billionaires while neglecting the job issue, they could wind up derailing a very hopeful political moment.

And they return to the issue again:

BILL MOYERS: So you can understand that anger on the streets, outside the American Bankers Association's meeting in Chicago this week.

JAMES GALBRAITH: Of course. It's entirely justified.

BILL MOYERS: Where do you think that anger might go? It could go either direction.

JAMES GALBRAITH: Well, of course. I mean, that's the great danger, is that if there is not a constructive program that people can identify with, there will be a destructive program that they will identify with. And it will come along quite soon. And what form it will take, and it's anybody's guess, but the result will be, very well could be disastrous.

BILL MOYERS: So we're not out of the woods yet.

JAMES GALBRAITH: No, not by any means. I think we're in an extremely dangerous period. And which, as I said, everybody can see that a few, very small number of people have come out of this. And they cannot see how this is bringing any benefit to their own lives. It's not saving their houses. It's not providing them with jobs.

Tags: james galbraith, us economy