"Needed: A Drastic Economic Transition"-- by Robert Kuttner

[KoKo]

Published on Monday, June 30, 2014 by Huffington Post
Needed: A Drastic Economic Transition
by Robert Kuttner

The shocking thing about the financial collapse of 2008 is not that Wall Street excesses pushed us into the worst economy crisis since the Depression. It's that the same financial system has been propped back up and that elites are getting richer than ever, while the effects of that collapse are continuing to sandbag the rest of the economy. Oh, and most of this aftermath happened while a Democrat was in the White House.

Consider:

The biggest banks are bigger and more concentrated than ever.

Subprime (subprime!) is making a comeback with interest rates of 8 to 13 percent.

Despite Michael Lewis's devastating expose of how high speed trading is nothing but a technological scam that allows insiders to profit at the expense of small investors, regulators are not moving to abolish it.

The usual suspects are declaring the housing crisis over, even though default and foreclosure rates in the hardest hit cities and states are upwards of 25 percent.

The deficit is falling, now just 2.8 percent of GDP, thanks to massive cuts in social spending. Isn't that reassuring?

Meanwhile, back in the real economy, good jobs are far too scarce, incomes are stagnant, while 95 percent of the gains go to the top one percent.

Last month, President Obama belatedly decided that the global climate crisis necessitated action to reduce carbon emission caused by coal. He authorized the EPA to issue draft regulations requiring utilities to cut carbon dioxide emissions from existing coal plants by up to 30 percent by 2030.

With climate change and coal's inherent dirtiness not exactly state secrets, I wondered why the president had waited until a difficult election year, when Democrats in coal states face difficult elections. But Obama's unerring sense of timing is a subject for another day. And these proposed regulations, though an improvement, only scratch the surface of what needs to be done.

The thought occurred: Wouldn't the economic dislocations of a serious effort on climate change be more bearable if the economy were at full employment?

And also: What would it take to finally get us out of the aftermath of the financial collapse?

The answer is pretty straightforward. We need massive public investment in both basic infrastructure and in a transition to a sustainable economy.

We need to finance all of that partially by larger deficits -- which will be recovered by improved economy performance -- and partially by higher taxes on those billionaires whose activities cause financial collapses.

CONTINUED AT:

http://www.commondreams.org/view/2014/06/30-7