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Op-Ed Columnist

1938 in 2010

By PAUL KRUGMAN

Published: September 5, 2010

Here’s the situation: The U.S. economy has been crippled by a financial crisis. The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high. More action is clearly needed. Yet the public has soured on government activism, and seems poised to deal Democrats a severe defeat in the midterm elections.

The president in question is Franklin Delano Roosevelt; the year is 1938. Within a few years, of course, the Great Depression was over. But it’s both instructive and discouraging to look at the state of America circa 1938 — instructive because the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again.

Now, we weren’t supposed to find ourselves replaying the late 1930s. President Obama’s economists promised not to repeat the mistakes of 1937, when F.D.R. pulled back fiscal stimulus too soon. But by making his program too small and too short-lived, Mr. Obama did just that: the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out.

And just as some of us feared, the inadequacy of the administration’s initial economic plan has landed it — and the nation — in a political trap. More stimulus is desperately needed, but in the public’s eyes the failure of the initial program to deliver a convincing recovery has discredited government action to create jobs.

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I'm afraid this article is quite on the button.  Unfortunately, we may be at the "too late" point already.

A fundamental folly in the article is discounting the imbalances in the global economic framework within which we are experiencing the slump.  We can no longer assume that things will correct with injection of more capital into the economy. The imbalances result in price differentials that are too difficult for the market to sustain.  US goods are stuffed in the pipeline while the "Made in China" lower priced goods are off the shelf like hotcakes in Walmart.  Just take a closer look at which companies are doing well and which companies are going out of business.

What might help is a greater awakening at the grassroots to such an extent that people boycott Walmart and buy local.  Buying local has tremendous impact on the economy at every level. It is a quiet economic war that can revive this economy.

Why does the WH not encourage buying local? I dont mean Buy made in US.. I mean buy made locally.  It is easy, it is meaningful and it has low carbon print.   Go to the local store rather than the chain store. It is easy.  And they carry more labor per dollar of turnover than the chain store. You just spurred the economy.  It is the quickest way to rejuvenate the economy... yet it is not happening.  That's because there are less taxes in the game... and less carbon credits in the game... and less political influence in the game in "buy local".  So, we need to start a grassroots campaign to buy local.