Posted Online: Feb. 03, 2013, 6:00 am

Economic slump won't end by ignoring it; creative fixes needed

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By Don Wooten

President Obama's inaugural address highlighted three contentious subjects: global warming, immigration, and gun control. While we have a steep climb to get out of our current fiscal slump, that topic merited but a passing remark.

But, like an irritating house guest who won't leave, the subject isn't going away. News that the stock market is pushing against the 14,000 mark isn't much help: that's catnip for investors, but doesn't mean much to working folks.

Of more general concern is that a significant drop in 2012, fourth quarter, federal spending brought a halt to what had been a steady, but painfully slow improvement in the national economy. A steeper drop set for March first could prove as unsettling as the crazy turnaround we've seen in our weather last week.

Federal spending arouses fury among doctrinaire conservatives, but government workers aren't the only ones counting on it; many private businesses, large and small, depend on government contracts. Cutting the budget eliminates jobs, adds to unemployment, takes money out of circulation, and increases the deficit.

I fear that we may never solve the serious imbalance that has developed in our economy over the past three decades. Yes, the Bush years were catastrophic, but some things had been in decline a generation in advance of that joy ride to the abyss.

The deficit is a problem, but, as I have insisted in previous columns, not THE problem. That's unemployment and underemployment. We rose to the heights after World War II on assembly line jobs which have largely evaporated.

It doesn't make one a Luddite to worry about the way robots have replaced humans in manufacturing. There is also the fact that thousands of jobs have been shipped overseas. Those changes were made to cut labor costs, which made sense if you were a manager or investor working to increase your income, regardless of the social cost. But it left millions with declining -- or no -- jobs.

OK, you can't turn the clock back; but neither can you ignore that profit at the top has produced diminishing income at the bottom and middle of the economic scale. Seventy percent of our economy is based on citizens buying goods. Now that they are becoming less able to do so, what is the answer?

We speak disparagingly of the welfare state. Everyone ought to earn his or her living. But how is that possible, if the only good paying jobs available are in high tech positions for which most workers are not prepared?

We can retrain folks, but that will take a heavy investment -- most likely by the government. But what will sustain individuals and families in the meantime?
This is not an argument for the welfare state. Indeed, it is not an argument for anything specific; merely an acknowledgment that our economic problems are complex and severe, and that it is going to take something other than ideological head-banging to understand and address them.

I have lived long enough to see the power of labor to counter management rise and fall in this country; to witness the collapse of communism as a rebuke to capitalism. It is only natural for unchecked capitalism to run to extremes. Adam Smith worried about this and assumed that government and society would serve as a brake on capitalism's excesses, but government has given the major players a pass.

It is true that state and federal governments legislate and regulate, and what they do is often intrusive, fussy, and unnecessary. Such activity can be burdensome, especially for small- and medium-sized enterprises. But, as we have seen in recent years, government seems unwilling or unable to curb the reckless greed of our financial giants.

For some years now, Washington has been dominated by a swarm of propagandists and lobbyists; shaping public opinion, formulating legislation, maneuvering to undercut regulations, and smothering needed reforms by effectively buying off legislators with campaign contributions.

After the Great Recession and the economic explosion of the Second World War, Congress and the country seemed to find a balance and rhythm that kept us in harmony for fifty years. What worked then may not be adequate to these complicated, perplexing times. But we can't just keep adding patch to patch.

Congress seems ready to work on immigration, may sober up a bit on our addiction to guns, and at last understands that we have a climate problem. But what kind of creative compromises can our leaders apply to heal our damaged economy?
Don Wooten of Rock Island is a former state senator and veteran broadcaster; donwooten@qconline.com.