Tuesday, September 18, 2012

The State of the Economy

Just as the Arab Spring attuned the collective imagination of the world to the possibilities of revolt and protest, the world slowed its tracks about a year ago to watch its economic institutions beset by masses of Guy Fawkes masks and discontented people bearing signs of the 99% vs. the 1%--the haves and have-nots. Even here in Athens-Clarke county, people in North Campus pitched their tents, rolled out their blankets and prepared to protest local and national economic conditions. But on the first anniversary of the Occupy Movement, the issues that incited the revolution still remain. The recession, though improved since recovery efforts began in 2008, has tightened purse strings and diminished prospects. Gas prices are rising with no sign of coming back down. Many recent graduates find themselves idling without a stable job prospect in sight. In Europe especially—as the fight to save the Euro rages on and the economies of several countries (e.g. Greece, Ireland, Spain) are still on the down and downs—it is apparent that the economic pressure America faces continues to be felt by the rest of the world as well.

The Fed released reports Monday saying that uncertainty over the economic outlook increased the unemployment rate by one or two points to where it is now, around 8 percent. According to an article from the Arizona Times, one of the job market’s main problems is a mismatch in skills and training, with jobs becoming increasingly technical. Others say that outsourcing has killed domestic tech and manufacturing fields. This bears bad news for Obama’s campaign as he struggles to relate his competency concerning the economy over this past term, but doesn’t bode much better for Romney, who, if elected, will inherit the same Sisyphean struggle of stimulating and maintaining economic growth.

Ben Bernanke, chairman of the Federal Reserve, was trending all over the web recently for his statements urging for increased intervention from the Fed to boost the economy. To his credit, by September 14, stock prices were already showing signs of improvement after the Fed stepped in again to aid the ailing economy.  The Fed's action followed a decision by the European Central Bank to support debt-ridden euro zone nations by purchasing their debt.

“Policies from Congress, not more short-term stimulus from the Fed, are the ingredients necessary for restoring growth in the American economy,” statement Senator Bob Corker (R-TN) after Bernanke’s speech.

In response to this statement, though, can we even overcome partisan politics to enact lasting economic change?

An article by the Christian Science Monitor compares ways the two presidential candidates differ on issues like the government’s role in job creation, outsourcing, labor unions, and the minimum wage. Obama proposed last September to set aside about $450 billion to cover funding for teachers and improving rundown schools (citing education as most important for job creation) but the bill was quickly shot down in the Senate, which couldn’t determine how to pay for this plan. Romney has said repeatedly that Washington is an impediment to economic growth, but for different reasons. Saying that government regulation only harms the job market, Romney has said he will instead cut the corporate tax rate by about 10%.

But what do tax cuts and budget cuts mean in the grand scheme of the national economy?

Last week’s Russell forum on national security highlighted just how complex the issue of the national budget can be for the American people. Economic figures are tricky. They are difficult to digest and it’s hard to get numbers in context even when they are understood.  Though forum participants were very certain that the defense budget needed to be cut, no one was sure by how much. The same could be said of other sectors of the budget—including education, labor, and industry. Which sectors would we taper to balance the budget? What are the tradeoffs of these cuts? How should we stimulate the economy while keeping our costs down? Should we change our international trade policies and put more investment into American industry?

There is no easy answer. However, if you think you have some answers to these tough questions and want a chance to weigh in on the discussion, come out to the Russell Library’s economic forum on Tuesday, September 18, to engage in balanced discussion with members of your local community.

Post by Lori Keong, Student Worker/Blogger, Russell Library

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