Thoma raises the important issue of low wages and lack of middle-income jobs brought on by the recession. However he vilifies Republican efforts to decrease the debt by decreasing government. The partisanship hurts his argument; as we've talked about in class, these aren't issues of "Republican vs. Democrat" but rather "how the model works vs. wrong".While I agree that increasing jobs is a higher priority in the short term, decreasing the debt is still a long-term problem. Decreasing the size of government could potentially help solve both problems. Could privatizing some of the bloated government programs create jobs? It's certainly possible. Will decreasing welfare programs hurt the average worker? At the moment, with so many out of work, yes, but doing the opposite will leave us with an expensive bloated program when the recession ends and people are going back to work.There's hardly an easy solution, but the sharp partisanship of Thoma's article is definitely the wrong attitude for finding solutions.
I was not too fond of this article. It seems ridiculous to me to say that "all of the hand wringing over the debt and the future of our children is a ruse by Republicans that diverts our attention from the plight of the working class". Thoma discusses that one of our problems is all the politics surrounding the economy, yet this article is very political. Rather than presenting a solid argument about how to create more jobs and why the debt is not our biggest issue at the moment, Thoma attacks the republican party and their efforts to decrease the debt. Of course creating jobs is important, but there are other aspects of the economy, especially the debt, that do need to be addressed. This article seemed to have the goal of stimulating political arguments rather than presenting a well thought out theory on how to improve the state of the economy.
I found this article to be very interesting. I think get gets a little bit caught up in partisan rhetoric, and his attempts to be bipartisan fall short in many ways (leading us to the obvious conclusion of which side of the fence he falls on) however the validity of his argument, in my eyes, stands. This was an opinion piece, not a researched economic plan. His intention, at least as I see it, WAS to start a political discussion about a shortcoming he has recognized within our political system, that he feels is negatively affecting our economy. I think it is very fair to say that while the debt is important, absolutely nothing will change if conditions don't change for middle and lower class workers. The numbers that many of us learned in micro about wage increases over the last 40 years are shocking... It boils down to the middle/lower classes seeing negligible increases while the upper class sees massive increases in average annual income. If people are hurting financially, we cannot have any kind of economic recovery. The debt is very important, but reducing the debt won't be good enough is the aspects of the economy that rest on the backs of the American people do not see growth.
Although this article gets a little too wrapped up in political discussions, I think Thoma presents an important overall message that our policymakers are way too caught up in reducing the debt and not concerned enough about the problem of unemployment. In the beginning of the article he brings up a concept that we discussed in class when he explains that many workers who lost their jobs during the recession are having to take serious pay cuts when they find a new job. In order to address this problem, we must work towards improving our economy by job creation and this may require government spending. Policy that is determined to cut government spending does not promote job growth. Instead of trying to reduce our debt, we need to be willing to pay money so we can create jobs and worry about debt reduction later on. This article illustrates the idea that we have these models to give us an idea of what is going on in the economy, but we must pay attention to current conditions when using these models. Because our economy is in a recessionary gap it makes no sense to cut government spending and further contract our economy. Policymakers seem to be so focused on reducing the debt and this will not help the economy in a way that will benefit the majority of American people.
The main goal of Thoma's article was to suggest that instead of focusing on national debt, the government should be primarily concerned with lowering unemployment and building up the middle class. I agree that unemployment rates need to be lowered, but I oppose Thoma's approach. He attributed the lack of attention on unemployment to the Republicans, and blamed the Democrats for helping the Republicans. An interesting point Thoma brought up was the interest rate, he mentioned there are some Democrats who feel the interest rate will skyrocket if the government does not take care of the debt first. We have discussed this idea many times in class. We know that the interest rate has been very low for the past couple of years, and the Fed has promised to keep interest low until unemployment rate starts to go down. Interest rate will rise as a function of supply and demand of loanable funds. The demand for loanable funds is pretty constant, but the supply of loanable funds is increasing as more people from Europe stores their money in the U.S. The interest rate will not go up with those conditions. Politicians should try to decrease unemployment instead of worrying about interest rates.
This article makes it appear as though the intertwining of Thoma’s political fervor with the current economic state of the US has culminated in a general ignorance of what is necessary to heal the economy. Rather than making the focus of the article on potential solutions to the economic crisis, Thoma goes in circles blaming both political parties for the stagnant high unemployment and low wages, with emphasis on berating the Republicans for their “indifference” to the middle class and their plight. Instead of blaming Republicans for fighting against tax increases on the wealthy, Thoma should assess both the positive and negative outcomes of keeping taxes as they are and should shed light on each side of the issue to gain insight on how to best combat this economic crisis. Thoma is dwarfing his own intellect with his one-sidedness and needs to be reminded that an increase in private investment (which works to raise GDP) is inversely related to the tax rate on the wealthy.
The six comments above have pretty much covered every point I wanted to make. As pretty much everyone has said, politics plays way too big of a role in Thoma's argument. It has been made pretty clear in class that this is a no-no in macroeconomic discussions (at least in Econ 102). I agree with what Yishu said regarding interest rates. It has been pretty well established that they will stay low for at least a few more years so that shouldn't really be a high priority right now. Clearly Thoma's biggest issue with the current economy is the state of the middle class (unemployment). I don't think he is thinking about combatting this issue in the right way though. He needs to take a step back and take the politics out of the situation to assess some more practical solutions.
I agree with Christina's first comment about how Thomas and his strong Democratic sentiments hurt his argument. However, I do not think this totally negates the point he is trying to make. The United States is clearly facing two major problems: unemployment and the debt crisis. However, these two issues seem to have opposite solutions. To help unemployment, the government should increase spending, as this would create new job opportunities. Unfortunately, increased government spending raises the debt ceiling even higher, as we increase our deficit further. From a Republican's point of view, the United States cannot slip any further into debt, as it will greatly burden future generations. I think the solution lies somewhere in the middle. We have talked in class about how the United States budget does not accurately portray the deficit because it takes into account loans without looking at their benefits down the road. While I agree that we should not increase the deficit, borrowing at a low interest rate when there are higher returns does not actually add to the debt. If this is the case, then the government should likely increase spending to help unemployment as long as the return is higher than the interest rate.
As a politics major, this article really appeals to me. The article says that in order to be successful we must make jobs a top priority. I don’t think anyone would discount the importance of job creation, however economics and politics are not the same thing and job creation is not that easy. The two subjects are intertwined and affect one another. However because of the way the system of government is set up, laws cannot be made as easily as making a model. This is one of the reasons economists tend to disagree with policy makers, they have different ways of getting things done. The author of this article complains that the working class is not important to the Republicans and the Democrats allowed this to happen. He seems to be pointing a finger at both parties. He also dismisses the effectiveness of the government and says that they are failing to take any action to help the middle class. The economics points this article makes are reasonable but you must account for the gridlock that inevitably accompanies our society.
As noted by many people above, Thoma hurts his own argument by speaking so partisanly. His bias clouds his actually notable points about the problems in our economy. He ignores what the most pragmatic solution may be, and instead criticizes Republicans for their possible ulterior motives for wanting to reduce the debt. The one point he seems to recognize that both parties can agree on is that we have very high unemployment and a large deficit. He offers no solution though, except that "we must make jobs our top priority." He may be correct in that we must use government spending to increase jobs for the working class, but he focuses his argument on blaming the Republicans and the Democrats. His argument loans itself to the AD-AS model we have always discussed in class, but he does not make clear how this can be achieved. One thing he is correct about is that the two opposing forces of Democrats and Republicans has led to a complete lack of collective action. Little will be done without compromise, and it is no one parties fault.
It's nice to see an ignorant article that tries to present purely partisan conspiracy theory under the guise of economics- but from the other side. Instead of going off on a rant, Thoma would have done better to try to provide some real analysis and solutions to the problem he identifies. How can we improve unemployment in the lower class? Perhaps by moving government spending towards infrastructure- which would not only create jobs today but also invest in our future (hopefully at the same time decreasing government spending on welfare services and unemployment to make up the difference). The debate about our current economic situation is heated enough already without people like Thoma, it's time to stop pointing fingers and start doing.