The Reason for 15 Million Unemployed: Poor Thinking at the Top

By Dean Baker

The United States has more than 15 million people unemployed. This is not their fault. It is the fault of really bad policy decisions by people who get paid more than almost all of the unemployed ever did or ever will. The failure of economic policymakers to recognize and attack an $8 trillion housing bubble led to the downturn. The continuing failure of economic policymakers to think creatively is why 15 million people remain unemployed.

The basic problem of unemployment is in fact a very simple one; we don't have enough demand in the economy. The collapse of bubbles in both residential and nonresidential construction led to a falloff in annual construction of close to $700 billion. The disappearance of more than $6 trillion in housing bubble wealth has forced consumers to pare consumption by approximately $500 billion a year. This creates a total shortfall in annual demand of $1.2 trillion.


If politics makes it impossible to increase the demand for labor, an alternative way to create jobs is through decreasing the supply of labor. Specifically, employers can be given an incentive to cut the hours of their current workforce, while keeping their pay constant. This should then cause them to hire more workers. This is not an untested idea. Germany has used work sharing tax credits to keep its unemployment rate from rising in this downturn, even though its recession has been more severe than ours.


It is absolutely unacceptable to have 15 million people unemployed just because the people who call the shots are too dumb to figure out how to get them back to work. We got into this mess because the people on top didn't know what they were doing. We shouldn't have to stay here because they still can't figure things out.

In Germany, they are experiencing the recession through short workweeks and longer vacations, rather than mass unemployment. We should be doing the same here.

The Crushing Legacy of Bush and Cheney

By Joe Conason

Cheney, Rumsfeld and President Bush himself were distracted from the vital necessity of victory in Afghanistan - which meant not only driving out the Taliban but installing a real government in their place - by their obsession with Iraq.


The resulting neglect of Afghanistan - with all the corruption, disillusionment and anger that has ensued - had reached a critical stage when the Bush administration finally departed. Their own commanders were left behind to warn the new president that after eight years of war, the enemy had gained the upper hand.

No further recrimination is necessary - history will render sterner judgments than any that can be written now. But after eight years of incompetence and arrogance, how can the United States salvage what has become of the "good war"?

Escalation appears to be a self-defeating strategy. If the secretary of defense worried in 2001 that a few thousand Americans in Tora Bora would enrage the Afghan population, how will that population react to the presence of nearly 200,000 foreign troops next year? The U.S. occupation of Afghanistan further inflames suspicions of American domination not only in that country but across the Muslim world - as the war in Iraq also did - and especially in strategically vulnerable Pakistan.

As investigative reporter Aram Roston recently revealed in a cover story for The Nation, the Afghan countryside is already so deeply permeated by the Taliban that contractors shipping logistical supplies to our troops routinely bribe the enemy to allow safe passage. Military sources estimated that the payoffs amounted to as much as 10 percent of the cash value of those shipments. So if we spend another $30 billion a year to send in additional troops, roughly $3 billion will end up in the coffers of the Taliban, far more than they need to buy the ammunition and explosives that kill our soldiers.