Where Women’s Studies Meets Economics

Remember the mean, lean years of 1982 and 1983? Unemployment hit 11% in November 1982 and remained at or above 10% for most of 1983.

In fiscal year 1983, the federal government budget deficit of 209 billion dollars was 6 per cent of GDP. The sky did not fall.

Today’s GDP is close to 14 trillion dollars, which means that a deficit of 6 per cent of GDP would be 840 billion dollars. The sky will not fall.

Of the 103 million people in the 1983 labor force 10 million were without work. Today’s labor force is far larger, roughly 144 million people. If unemployment rates hit the levels of 1982/1983—and most economists agree it will—the number of people out of work will exceed 14 million!

Think of it this way. Because today’s labor force is so much larger, the current unemployment rate of just under 7 per cent means the same number of people are out of work now as there were in 1982/1983 when the unemployment rate hit 10 per cent.

Economists know that federal budget deficits reduce unemployment. But faith-based economists want you to believe that helping people by creating jobs via spending programs violates sacrosanct principles. According to their cult, fighting unemployment through deficit spending is sure to call down the wrath of the Market. For market-worshipping true believers the suffering of 14 million unemployed people and their families is necessary to appease The Market. Maybe the next time there is a drought we should throw a couple hundred infants off a cliff.

Obama administration proposals for expanded federal spending will not bankrupt the nation, kick off inflation, or cause any other economic malady. In fact, the proposed spending programs are quite modest.

After 30 years of neglect, deficits exceeding 6 per cent of GDP are warranted. Many of our most important public goods are in life-threatening disrepair—closing schools and libraries, selling off parks and highways, letting bridges and levees collapse—does not improve national well being.

Deficit-hawks are freaking out about the trillions this will cost. Yes, we are talking about huge sums of money. Fortunately, fiscal policy research at the award-winning Levy Economics Institute put these numbers in historical perspective.

In FDR’s New Deal, the Resolution Finance Corporation injected $50 billion to rescue the nation’s banks. If we adjust the $50 billion spent in the 1930s (for the inflation which has occurred since then) we’d be looking at close to $800 billion in today’s dollars. If we further adjust New Deal spending to take account of GDP growth (our economy is much larger today, so the problem is much bigger in absolute terms), that figure rises to $12 trillion, or 85 per cent of GDP! (http://www.levy.org/vdoc.aspx?docid=1101 accessed December 6, 2008)

It’s time to send faith based economists packing. A1.4 trillion-dollar deficit—around 10 per of GDP—is puny in light of New Deal fiscal activism.

The Federal Government must immediately assure the states that revenue from federal sources will be available to enable the states to meet rising local needs. Environmental problems require huge investments in green technologies. As millions lose their jobs—and their health insurance—developing universal, single payer health care becomes even more urgent. Equally as important, programs financed by federal deficits must follow the best principles of affirmative action to combat work-force segregation and discrimination.

14 million unemployed Americans is too awful to contemplate. “Deficits be damned, full speed ahead!”

The Economic Double Whammy to Women

Mass layoff events hit a record high in August. On Sept. 23, the Bureau of Labor Statistics recorded 1,777 firms laying off 50 or more workers. The three job categories most seriously affected were temporary service workers, school and employee bus drivers, and professional association workers. These three occupations employ far more women than they do men. Unfortunately for women, the usual policy response to rising unemployment won’t help them much because this spending does not create jobs in the sectors where women work.

Fiscal stimulus to rev up the economic engine works. But the labor market is drastically different than it was in the 30 years following WWII. Fiscal policies during the so-called golden age of capitalism were responsible for the increases in men’s wages, rising productivity and rapid economic growth. Today, in contrast, most women work for pay outside the home. So attention must be paid to crafting a stimulus package that will directly increase jobs for women.

Reality-based economists have long argued that financial regulation is necessary for stability in the economic sectors where goods and services are actually produced and where the vast majority of jobs are located. Reality does not seem to extend to gender, however, as economists still offer policy responses that take no notice of gender differences in economic behaviors and/or outcomes. We must demand fiscal policies relevant to women’s economic positions.

Go to Broad Bytes, the blog of Women’s Enews to continue reading this piece.

Yesterday’s congressional approval of the bailout bill fails women. Why?

Because its focus is almost entirely on financial difficulties while the deepest, most serious economic problems relate to unemployment.

Sure, it’s important to get the banks in order. But was this the emergency it was cracked up to be? Nope. It was shock and awe Wall Street style.

The Bureau of Labor Statistics reported a record 1,777 mass layoff events in August. The three most severly affected industries—temporary help services, school and employee bus transportation, and professional employer organizations—employ far more women than men.

True, the Wall Street mess is making the recession worse, and women do struggle as a result. But the best way to help would be to send $100 billion in emergency aid to the States so they don’t have to cut essential spending on health, education, heating, and housing. Such spending helps women far more than billions to swashbuckling Wall Street gamblers.

Unpaid household labor, growing food in the garden, repairing your own car, or even painting your apartment are all activities that add too wellbeing, but they are not counted in GDP. By the same token, every time someone is treated for cancer GDP goes up.

This is a serious flaw in the accounting process. There is actually a lot of research on ways to change the way we do national income accounts. The Genuine Progess Indicator is one approach that tries to get around some of these problems.

Economists measure the “value” of things by adding up their prices. That’s how we can add sweaters + apples + cars + … + zinc. To add things up they need to be in common units. Economists add in currency units (dollars, euros, yen).

Problem is, a whole lot of things that have prices are actually “bads,” and many things that don’t have a price are “goods.” By standard reasoning the Exxon Valdez was a great succcess. The fact that it spilled thousands of gallons of oil is not counted as bad … Valdez bay has no price. The millions of dollars spent cleaning up are counted as good, because everything usesd in the clean up had a price.

There isn’t much justification for the way we currently add things up to get GDP. It’s just the way it’s done.

Household labor is left out because it doesn’t have a price, it isn’t paid. Ditto for the veggies in your garden.

Because GDP tracks the level of monetized exchanges … things are in GDP when goods trade for money, and money trades for goods … anything that is not monetized gets left out.

This is one of the ways that women’s economic contributions are erased from the record. The accountants don’t have an column for it. Nobody bothers to monitor household labor, so policy makers ignore the impact of changes in government programs on families.

For example, the structural adjustment policies imposed by the World Bank often called for cuts in health and education. But the social need for health care and education did not go away. Rather than being performed by professionals in public settings, the work was pushed back onto private household.

This policy change increases the demand for women’s domestic labor. More work at home left less time for paid work.

The accounting/statistical invisibility of women’s unpaid labor is a problem. But adding this back into national accounting systems won’t change women’s work experiences at all. Public awareness would likely change, and that would be a good thing. But not good enough to make changes in national income accounting central to a feminist economic agenda.

The current credit crunch is totally predictable. In fact, any number of progressive economists have been predicting both the bust of the housing bubble and a deep recession to follow.

One of the best places to follow as-it-happens news on financial markets is the Center for Economic Policy Research especially the news briefs by Dean Baker.

A major part of the rationale for regulating the financial sector is that banks, left to their own devices, act in ways that make business cycles worse: the booms are larger, the busts are bigger. When times are good bankers get swept up in the optimism, so they make loans. Even loans that are not so smart. This feeds the boom. When the tide turns, as it always does, bankers stop making new loans, and often call otherwise sound loans. This pulls spending power out of the economy and pushes the economy into a recession (or worse).

Two cool vocabulary words: Pro-Cyclic Behavior (refers to institutions or individuals who act in ways that accentuate the boom/bust cycle of capitalist economies).
Counter-Cyclic Behavior (refers to institutions or individuals who act in ways that damp down, or moderate the boom/bust cycle of capitalist economies).

Keynsian contributions to economics include the tools governments need to act COUNTER-CYCLICALLY! And if one compares a graph of business cycles before 1940 and after 1945 one can really see the difference.

Stay tuned and I will be posting a chart that shows exactly what I’m talking about. (Visualize: before 1940 is like a patient’s ekg when they are having a heart attack — all sharp peaks, and sharp downturns, really zig-zag up and down. After 1945 the egk is much smoother, the waves of a healthy person’s heart while resting.)

Back from my travels and starting to blog again. Thanks to all the readers who’ve made comments and asked questions.

Given the attention in the press, and among political candidates, it’s no wonder that deficits get so much attention … that they don’t deserve!

Here’s a blurb from a recently published book titled The Great Deficit Debacle, by Joëlle LeClair. “Over the entire post-war period the federal government has consistently run budget deficits, with one major exception, the surpluses from 1998 to 2001. … Despite the fact that in the US, a federal budget deficit is the normal situation, Presidents and Congresses typically aim for surpluses. This misguided policy goal increases the financial fragility of our economy, and recession is the natural result. This book clears up common misconceptions about what policymakers should be doing to … improve the economy’s capacity to create jobs, wealth and prosperity.”

OK. How do deficits affect women’s economic positions?

The federal budget can be in deficit, it can be balanced, or it can be in surplus. The budget position depends on the relationship between government spending (revenues being spent) and government receipts (tax revenue coming in).

Fiscal policies are those that affect the level of government spending and the level of tax receipts, so fiscal policy is always associated with either deficits, surpluses or balanced budgets. But as LeClair notes, the normal state of affairs is one of budget deficits. Before turning to why politicians get their knickers in a twist over deficits, let’s walk through the interaction of fiscal policy and economic activity.

Hang on.

Fiscal policy decisions about spending and taxation change the level of economic activity, chiefly the number of jobs available, consumer spending, and how much firms are investing in new plant and equipment so they can produce more stuff in the future.

Imagine a bathtub filled to just the level you like. In the analogy that follows the level of water in the tub represents the level of economic activity. Water flowing into the tub matches up to the idea of aggregate spending, water flowing out of the tub matches up to the idea of aggregate “not-spending.”

If we open the drain too much, the level of water in the tub will fall: this is akin to a recession or depression.

If the water level is falling, can we open the taps of spending to counteract the draining? Yes we can … and government deficits are the principle mechanism for doing this.

If political leaders sit on their hands during an economic downturn the level of water in the tub will fall. President Hoover was willing to let the economy fall and fall and fall … he was not willing to use government spending power to try to counteract the depression. FDR, within some pretty cautious limits, was willing to use federal spending, financed by borrowing, to try to counteract the depression.

The New Deal and the post World War II prosperity that followed showed us that we can use the economic muscle of government to counteract the boom-bust business cycle, an enduring feature of capitalist economies.

This leaves two questions: what causes water to drain out of the tub? What are the sources of water flowing into the tub?

There are three economic behaviors that cause the overall level of economic activity to fall. When households, businesses and governments “save” water drains out of the tub. When governments collect taxes water drains out of the tub. When imports (what we buy from other nations) exceed exports (what we sell to other nations) water drains out of the tub.

SAVINGS: DRAIN NUMBER 1

Here is one of the first counter-intuitives of modern economics. Savings by households and firms are important, and are a good measure of the economic health of a household or business. But sometimes the volume of savings is too large. When people and firms save too much the level of economic activity falls. Say what? How can this be?

Savings are the portion of income that is not spent, this part of income does not circulate through the economy, it is water leaking out of the tub. When households save they sock part of their income away in 401k plans, buy shares in mutual funds, or make deposits into their savings accounts. But they are not usingthe income they’ve saved to buy stuff at the mall or the grocery store. They are not going to the movies nor are they going out to dinner.

If consumers aren’t buying, firms aren’t selling. Are firms happy? Nope. The first thing a firm can do when faced with declining sales is lay off workers. Now these workers have no income. Can they buy anything? Nope. So sales by businesses will fall even more. You get the picture? A vicious downward cycle of layoffs, less spending, more layoffs can set in.

Business savings work pretty much the same way. The fancy name for business savings is “retained earnings,” these are the earnings that are not paid out as dividends or bonuses. Like household savings, business savings represent income earned but not spent. If the businesses are worried about the future which are they more likely to do: pay out their retained earnings or hold some back just “in case?” This could kick off a downward economic spiral.

Governments (federal, state and local) save (run a budget surplus) when the amount they spend (on schools, parks, libraries, health care, weapons, police, prisons, clean air, or summer recreation programs) is less than the amount they collect in taxes. If the taxes collected exceed the amount spent, then this fiscal decision is adding pressure to the flow out of the tub … government is, on net, taking spending out of the system.

Counterintuitive number 2: If there is a lot saving and banks are seeing lots of deposits then won’t the banks make more loans, and won’t this offset the drain of income out of our tub? Probably not.

Banks do not have to make loans. In fact bankers are notorious for their self-fulfilling prophecies. When times are bad (the level of income is falling, people are losing jobs, businesses are shutting down, bankruptcies are rising, and state governments are cutting programs because they no longer have the tax revenue needed to pay for things) banks become very conservative. They are less likely to make loans. This makes sense … aren’t loan riskier when the economy is tanking? As should be obvious from recent headlines, we can not look to the banking sector for relief when the economic tide is going out.

The bottom line: “too much” savings will trigger an economic downturn. Why? Because income has been earned, but not spent. The fancy name for this is “insufficient aggregate demand.” Taken together households, plus businesses, plus government (plus our foreign trading partners) are not spending enough to buy all the stuff that’s been produced. Firms can’t sell what they’ve already produced, so they slow down their rate of productioin. They lay off workers. Workers lose their incomes. They can’t buy stuff … so there is even less spending in the system and so on in a downward spiral until it stops.

When and why economies recover from recessions depends on government policies.

Take two aspirin, drink plenty of fluids and call me in the morning.

TAXES: DRAIN NUMBER 2

All levels of government impose taxes. No one likes paying taxes. Tax resistance goes back to biblical times, “render unto Ceasar that which is Ceaser’s.” When taxes are collected that money can’t be spent. Typically though, as soon as governments collect taxes, they turn around and spend them to buy things that we cannot buy as private citizens.

If no one in the US paid a penny in federal taxes, where would the spending power come from to maintain the national park system, clean up our rivers and lakes, rebuild bridges, provide public education, or inspect food, mines and workplaces for safety? Governments buy social goods, things that we all want and need, but which we can’t buy as individuals (either because the costs are prohibitively high or because there are no markets in which the goods are bought and sold). The spending would come from borrowing … this is how governments spend more than they take in in taxes.

It does matter how governments decide to spend: pyramids, wars, and espionage do not do much for citizens. Education, public health, parks, highways, police and fire protection, and dozens of other public programs are incredibly valuable to all of us. Many of the services provided by modern governments go a long way to improving women’s labor market opportunities.

I’m sure all of us are aware of how difficult it is for women to go out to work when there are young kids in the family. Absent affordable high quality childcare, women’s assumed (and instutionally reinforced) responsibility for children ties them to the home. Once kids are in school, women’s work options improve. Programs that provide care for the elderly or the chronically ill also improve women’s opportunities to advance their careers. Government subsidies for transportation and housing are also really important to women. Since women earn less than do men with comparable education and skills, government support for transportation helps women (and other lower income workers) afford their commutes to work. Housing supports work the same way.

Net Imports: Drain Number 3

If Americans buy more from the rest of the world than the rest of the world buys from us, than that spending can’t be recirculated through the US economy.Today the international sector is one of the largest flows out of the economic tub. (This is an important topic, and I’ll come back to it soon).

Feminism and Fiscal Policy: the punch line

In a recession economic activity is falling off and the tub is draining. The Federal Government has a legal responsibility to use fiscal policy to maintain the level of employment. (This is codified in the Humphry-Hawkins FullEmployment Act). It is important to protect citizens from the economic consequences of job losses that have nothing to do with their job performance.

When the economy is on a downswing workers are—by definition—losing their jobs. This is precisely when governments should run budget deficits. If government spending causes more income to flow into the tub than is leaking out (via taxes, saving, and imports), this fiscal policy decision will have major positive effects on women’s economic wellbeing.

If the federal government does not step in to slow the leakages out of the economic bathtub, women lose jobs and their incomes fall. For a variety of reasons women tend to be in jobs where they have few protections: they are not unionized, they work part time, and they work in smaller businesses that are very sensitive to economic downturns. (More on this later).

Part time workers are not eligible for unemployment benefits. Since many women work part time the income they lose when they are laid off is not replaced by unemployment compensation. Since women earn less than men, they save less than men. When they lose their jobs they don’t have much of a protective cushion.

Budget deficits are essential to women’s economic wellbeing. Federal deficits support the level of economic activity by offsetting the drains of savings, taxes, and net imports. Federal budget deficits are all that prevent permanent recession and economic stagnation. The most robust period of growth in recent US history is precisely when federal deficits were used most aggressively to maintain full employment.

Why are conservatives against deficits? It’s that power thing. When working people have jobs with some security, they are more willing to confront the power of bosses. Collective bargaining becomes stronger. During periods of high to full employment workers—including women—are usually able to get better wages and more control over working conditions.

Conservatives dress this up in all sorts of fancy argumentation. They are especially keen on comparing government deficits to household borrowing. They love to say, “We have to balance our budgets,” “We have to live within our means,” “When the government borrows we are mortgaging the future.”

The federal government is not a household. Nor is it a business. It can and must deficit finance. The most successful business enterprises in the world all borrow to pay for big ticket items, you don’t seriously think factories are built with cash? Well, the public has big ticket needs too: schools, roads, airports all have to be financed by borrowing. No big deal.

Is deficit financing all we need to get us out of the current economic mess? No. But a strong stimulus package based—estimates from several think tanks put the minimum amount at ±40 billion dollars—is one way we can protect women’s economic wellbeing.

From the department of shameless self promotion …

A must read for anyone interested in Feminist Economics is Choice Award Winning Academic Title Liberating Economics: feminist perspectives on families, work and globalization. (Barker and Feiner, University of Michigan Press, 2004).

Reviews

From the Publisher
Liberating Economics connects the key concepts and concerns of feminists to the central problems analyzed by economists. Liberating Economics presents a global, comparative perspective on the social, economic, and political status of women. Liberating Economics is accessible, presuming no specialized knowledge of either feminist theory or economics. Key topics include the changing roles of families, the relationship between household organization and commodity production, the private costs and social benefits of caring labor, women’s employment, national policies on gender equity, globalization and social reproduction, and a feminist policy framework for evaluating economic performance.

From the Inside Flap

“This imaginatively written volume is essential reading for all who want to learn about the feminist revolution in economic thought. Accessible to nonspecialists and students from all fields, this book shows how gender, race, nation, and class interact in economic systems to influence human well-being.” — Diana Strassman, Editor of the award winning journal, Feminist Economics

“This book is a must-read for every future economist, undergraduate and graduate, and for every women’s studies student. It is a great read for the rest of us. It should be required reading for every policy-maker at the World Bank, the International Monetary Fund, and the World Trade Organization.” — Sandra Harding, Graduate School of Education and Information Studies UCLA

“Feminism teaches us to think of the person in context: family, social and global. The atomism beloved of economics from the man’s perspective melts away when you do that — and it’s about time, too. ” — James Galbraith, LBJ School of Public Affairs, University of Texas at Austin

Head to your nearest book store and order Liberating Economics today … Susan and Drue are standing by to answer your questions!

A few days ago economist and NYT columnist Paul Krugman voiced concern for the transport needs of suburbanites. Trapped between high gas prices and no alternatives to private autos it will take a generation to undo the mess.

Why? Because homes are people’s largest asset. Take away a family’s home equity and the majority of American’s have zero (or even negative) net worth.

45 years ago American feminist Betty Friedan saw how suburban isolation undermined women’s health and restricted women’s choices. In a now classic essay, “The Problem That Has No Name” Friedan successfully linked the repressive domesticity of the 1950s to suburbanization.

Friedan’s analysis was pooh-poohed as a “women’s” issue.

Coming soon to a station near you: $5.00/gallon gas. VOILLA!

Sprawling suburbs are a national (and therefore not gendered) problem.

Feminist ways of thinking reveal new sides of way more issues than equal pay, child care, and reproductive choice. 10 minutes ago would you have realized how critically women’s lives are affected by the supply of mass transit?

Until we expand, upgrade and diversify the nation’s transportation network women will be stuck in isolated homes, far from shops, schools, and workplaces.

Soaring gas prices reveal the gendered perversity of our dependence on private autos.

Connect the dots … subsidizing mass transit and reinvesting in our urban centers has a strong upside for women.

SF: Welcome back everyone, glad you are continuing to tune it.

SF: As we finish up today’s conversation I’m going to steer the conversation toward some questions of economic policy. In preparation for this dialog I asked WS to check with WS faculty and students for economic issues relevant too this election season. WS, what do your colleagues want to hear about?

WS: There’s a long list of questions, but here’s one that kept coming up. Seems like everyone agrees that the US economy is now in a recession, one that will get worse before it gets better. How can action by the federal government help the millions of people who are losing their jobs and their houses?

E: Another great question. First and unequivocally, the federal government can and should act to counter this recession. In fact, if economists and politicians were willing to admit that “free market fundamentalism” of the sort unleashed during the so-called Reagan revolution has been a disaster we could get on with doing what’s right.

Here’s the basic idea. In a recession, people are losing their jobs, businesses are cutting back, and the level of private spending is falling off. The government can step in and replace some of the purchasing power that’s disappead. People without jobs have no income so their spending goes down, a lot! In today’s world of highly indebted consumers the loss of a job is even more disastrous, since people have so little put aside in savings.
In the face of a recession government can, for starters, extend unemployment insurance. This puts spendable income directly in the hands of people who’ve lost jobs.

But, and here’s a critically important point for women: part-time workers are not eligible for unemployment compensation. Most part time workers are adult women. So extending unemployment insurance is not going to be much help. Congress could enact changes in the program that would make part time workers eligible.

WS: I didn’t know that. I can just see the debate now. If Congress can’t even approve equal pay laws I can just see them rallying to extend unemployment benefits to women workers. There must be other things the government can do?

E: Sure. Another little known fact is that women and people of color working in the public sector are better paid, and have better chances for career advancement than do their peers in the private sector. So expanding public sector employment is an important option.
Historically economic stimulus to fight recessions has led to federal spending projects that overwhelmingly favor male employment. I’m thinking of the hundreds of thousands of construction jobs created by spending on highways, municipal improvements, airports and that sort of thing. Because work in this country is still highly segregated by gender, these jobs are predominantly male.
Education, public health, and recreation programs are generally provided at state and local levels. The federal government could make substantial revenue grants to states to support these programs. This would boost women’s employment.
Revenue sharing is a powerful way to fight rising unemployment. Right now 22 states are planning to cut key education, health, and other social programs s. You see state constitutions don’t allow states to borrow to pay for current expenditures. So when a recession hits, states face a big problem. The revenue they collects from sales taxes falls because people are spending less. As foreclosures mount, property tax collections fall. As income falls, state income tax revenue also goes down. This puts states in a tight squeeze: just as the needs of citizens are becoming more and more pronounced, states are less able to meet those needs because their revenues are shrinking.

WS: Let me make sure I understand. I get the part about income going down in a recession. But if income is going down, and states — like New York, Kansas, California, right? — face huge revenue shortfalls, they have to cut programs because they don’t have the money to pay for them?

E: Exactly so.

WS: Well, if states can’t borrow to fund important programs, where will the money come from for these programs? How can the national government give money to the states if when federal tax receipts are falling too?

E: Magic? No, just joking.
The federal government can and does borrow. But it doesn’t just go the bank and say “Yo, banker, lend me 180 billion bucks.” Instead the federal government sells Treasury bonds. When the bonds are sold, the government has the money it needs. This is deficit financing.

WS: Wait a minute. If the economy is in a recession, who has the money to buy bonds?

E: That’s easy. The mega-rich are always looking for ways to earn interest and government bonds are the safest investment around. Pension fund managers also like government bonds, as do the Social Security Trustees. And then there are the foreign investors, like the Chinese, who absorb hundreds of billions in US debt. The United States is not going to default any time soon, or stop making interest payments. All of this makes holding US government bonds a quite attractive asset.

WS: “But how will the government pay interest on the treasury bonds? Isn’t government borrowing today a burden on our grandchildren in the future?”
E: “Nope. The whole point is that the deficit financing by the government creates jobs, people with jobs have incomes, as income and spending percolate through the economy we get economic growth that is several times larger than the initial increase in government spending. So ratio of debt/income actually falls. As income grows our ability to pay off our debts grows too.
I know this sounds crazy. It is certainly counter-intuitive. But it is, nevertheless, true.
One note of caution is in order: if borrowing by the government became “too large” relative to the overall size of the economy there would be financial consequences. But current borrowing is nowhere near this range. US deficits as a share of the economy are much smaller than are deficits in France, Germany and the rest of the European Union.”

SF: “Could I try to summarize as we are getting near the end of our time?”

WS, E: “yes, please.”

SF: “OK. Most of the economics people hear on the radio and TV or read in newspapers and magainzes is heavily biased toward maintaining the status quo of wealth, income and power. But alternatives do exist, and feminist economists are making important contributions to debates over economic policies that will improve women’s economic status.

E: So far, so good. Interested listeners should take a look at Dollars & Sense one of my favorite sources of alternative views on economics.

SF: Next thing we need to keep in mind is that women, every bit as much as men, depend on their jobs for their income. Economic downturns (recessions) hit them really hard, especially if they are the heads of lone-parent households.

E: Yep.

WS: Feminists have pushed for a long time for more government spending on social goods—like housing, education, health, recreation, and food assistance—that are provide essential aid to women trying to survive economic storms.

E: That’s right.

WS: And running deficits do pay for these programs is not the burden it’s made out to be. When government expands programs by borrowing money the economy grows, people are re-employed, much suffering is alleviated, and we are better off. Except maybe those who actually profit from misfortune.
SF: Economics, please, I’m confused. Explain again why conservatives—and even many Democrats—rail against deficits?

E: I’ll be very brief here because time is growing short. Recent big deficits come from two sources. First, massive tax cuts led to increased government borrowing. But these tax cuts were so heavily tilted to the rich that not many jobs were created. Instead, the rich used their higher income to build their private wealth portfolios. They built mega-mansions, bought private jets, hired butlers, and of course tax attorneys. They did not build factories, create green jobs, or make giant contributions that would help finance public education. Today an especially huge and ugly part of deficit comes from the war in Iraq. Billions are flowing to military contractors and private mercenaries. Again, this doesn’t do much for the rest of the economy, and it’s certainly not good for the Iraqi economy.
So Bush deficits are counter-productive. Deficits like these don’t help the economy. But that’s because of how the borrowed money is being used, not because of the deficits per se.

WS: Ah! I’ve got it. The problem comes from the tax cuts and the military spending. The ballooning deficits are the result not the cause.

E: Just so.

SF: Thank you WS and E for a most interesting conversation. Bye for now. (Applause)