In this election cycle, economic uncertainty, delivered to the poor and the middle class, has roiled the two major political parties in the United States–Democrats and Republicans. The 2008 economic crisis and its aftermath robbed the majority of people of stability. The rush to completely rescue the financial sector, that caused the mess in the first place, at the cost of the rest of the population, was horrible to witness.
The abandonment of those afflicted with long-term unemployment, with the termination of the long-term unemployment assistance at the end of 2013, left innocent, hard-working Americans to face financial ruin while the rest of the nation moved on. The politicians abandoned people who were victims of the economic crisis. The politicians, of both parties (many of them millionaires), sowed the wind and are now reaping the whirlwind.
Economists have been the drivers of this system behind the curtain. The chair of the Federal Reserve, Janet Yellen, in a response to Senator Robert Melendez (D-N.J.) at the hearing for the Monetary Policy Report (at about 1:22:00 in the video), said unemotionally that people unemployed longer than 26 weeks have “lost skills” and that fiscal policy would be best to handle it.
Meanwhile, the monetary policy assumes that the current level of 26-week unemployment is the best situation and has returned to raising interest rates (that is, the Phillips Curve). This was the cruelest statement that Chair Yellen could have uttered; she, the economic profession consensus, and the Federal Reserve System have abandoned the unemployed people of the United States! Notably, this so-called normalcy includes the doubled percentage rate of unemployment for African Americans and Latino Americans. Such “normal” expectations reflect the failure of both monetary and fiscal policy.
This result, where it appears that he people of this country accept such casually dispensed cruelty perplexes me. Perhaps, it is the action of economists promoting this immoral position, covering such an unacceptable result with confounding calculus and statistical formulae, that prevents necessary critique. Such a situation cannot stand any longer.
This blog covered the paper of Economist Alan Krueger, who proposed the abandonment of the long-term unemployed because he concluded that they lost skills and were destined to persistent unemployment. This paper was published shortly after the Congress decided to let the long-term unemployment program lapse. Krueger, a millionaire, could afford to be unconcerned. Alas, he is financially secure. Frankly, I am sickened by an economics profession that has no tie to humanity or any concern for human beings.
Also, some Fed economists dared to suggest that a burst of hiring accompanied the abandonment of the long-term unemployed. Yet, still to the date of the post of this blog, there are still lots of long-term unemployed people (and people who work who worry about their friends and relatives as well as the instability of their own positions.)
Economic stability is the bedrock of a society. Once that is gone, chaos can only take its place.