Posted by: Joshua Green on September 8, 2011
It’s becoming clear that Barack Obama’s biggest mistake as president was not having paid more attention to the jobs crisis. It’s not that he lacked a plan - his move to recapitalize ailing banks in 2009 was meant to spur growth and lead the country out of recession; two rounds of stimulus aimed to help.
But this has proved insufficient. Last week, his budget office revised its forecast to project a decline in growth and a rise in unemployment. Three years after the financial collapse, things aren’t looking much better. And if it isn’t already, Obama’s presidency will soon be imperiled.
Some supporters argue that there’s little more he can do: Republican intransigence and a public weary of government spending will not allow it. But the problem has become so acute - for the country and its leader - that Obama has felt compelled to address the nation about it tonight.
One way to convey the problem’s sheer urgency and jar his audience to attention would be to ditch the hopeful platitudes and deliver an unvarnished lesson on how the failure to address the aftereffects of a severe economic shock like the one we’ve endured can permanently weaken a country and it citizens. An invaluable resource is a new book by journalist Don Peck, “Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It.”
Peck’s book offers a bracing alternative history of the recession and its implications from that laid out in presidential speeches to date - it’s what Obama might say if he were to cut loose from the politesse and sunny outlook required of those in the Oval Office.
“Pinched” carries three major messages. The first is that the Great Recession is no temporary setback, but a sweeping force that is accelerating and intensifying deep economic shifts already underway.
Income inequality is widening. The nonprofessional middle class is thinning out. Industries like construction and manufacturing are declining, and in the process blighting whole cities and regions that depended on them. Many of these changes won’t be reversed when the economy recovers, and that will have national consequences. Peck writes, “[Recessions] allow us to see, with rare and brutal clarity, exactly where a society is heading - and what sorts of people and places it is leaving behind.”
The alarming scope of these dislocations, and the cultural and societal damage that will follow them, forms the second part of Peck’s message. An entire class of less-educated, blue-collar men, concentrated in dying industries and ill-suited to growing ones, is in danger of falling out of the workforce altogether. Beyond the loss of human capital and earning potential, this will set off surges in divorce, alcoholism, depression, and domestic violence.
And the generation just now reaching working age is also in danger.
While millennials may appear well-positioned to weather hard times - most are not yet subject to the obligations of family or mortgage - they will be among the hardest hit and suffer the longest.
Longitudinal data show that people unemployed for long periods in their teens and twenties earn significantly less over their lifetimes - “they don’t catch up,” as one economist put it in “Pinched” - and go on to display less ambition, direction, and self-esteem than those generations who avoid recession. They also experience higher rates of depression, alcoholism, and mortality.
Peck’s third message is somewhat more hopeful: while no silver bullet is available, there are ways to recover faster and limit the fallout.
These include infrastructure investment; aid to states (whose budget woes are driving layoffs of teachers, policemen, and other public workers); retraining programs; mortgage reform to free those trapped in underwater mortgages; and relocation assistance to help them move to areas with jobs. All of these measures are critical to faster recovery. “Historically,” Peck writes, “we have tended to underestimate the true cost of remaining in periods like this one, and to overestimate the risks of aggressive action to try to hasten the recovery.”
This is exactly the message Obama needs to deliver to have any hope of breaking the Washington stalemate. Early indications suggest that his speech will include many of these ideas. But what he has lacked so far - and what he urgently needs to impress upon the country- is the full magnitude of the problem, while there is still time to address it.
Joshua Green writes a weekly column for the Boston Globe.