In this cover article for In These Times, James Crotty asks, “How is it that a right-wing coalition is closer to destroying social democracy in America than at any time since its emergence in the 1930s?” He questions the popular wisdom that the right-wing has a history of fiscal conservatism, and the media narrative that has resulted from that assumption, and places the roots of the crisis back in the 1920s. Crotty looks ahead at political and policy routes to stability and growth that don’t rely on a war of austerity against the poor, the middle class, the sick and the elderly.

>> Download “The Austerians Attack!”
>> Download James Crotty’s more complete version of these arguments, “The Great Austerity War”
>> Go to the In These Times website

Jeannette Wicks-Lim explores how the Great Recession has created the largest setback in wealth equality in the U.S. in the last quarter century, leaving the typical black household with less wealth than at any time since 1984. With fewer assets than whites, black households are more vulnerable to financial stresses, such as layoffs or medical crises, and less able to access the stepping stones of economic advancement — such as college or home ownership. Wicks-Lim explores the policies and practices that have led to this reality, and recommends policies that could be targeted specifically to building wealth among black households. 

>> Read “The Great Recession in Black Wealth”

Azizur Khan explores the causes behind the growth in both inequality and the social tolerance of that inequality over the last seven decades. He argues that these trends were not determined by inevitable technological, economic or historical forces, but were shaped by policy choices. Khan maintains that the demise of socialist systems and the quest for non-capitalist development in the Third World, alongside the emergence of capitalism as the only economic system, do not signal the end of the pursuit of equality. Khan concludes that plenty of paths remain available to societies that are serious in their pursuit of the goal. 

>> Download "Inequality in Our Age"

To inform debates on the most effective ways to design financial transaction taxes, Robert Pollin and James Heintz review evidence on trading costs and elasticities in U.S. financial markets and elsewhere. They examine the potential impact of a proposed FTT rate of 0.03 percent on all financial market trades currently being discussed in Congress. This low figure contrasts with the existing 0.5 percent rate on the UK stock market, for example. The authors show that there is no reasonable scenario in which this low rate could generate more revenues than a 0.5 percent FTT. They find that a 0.5 percent FTT generates between 3 and 17 times more revenue than the tax under consideration. 

>> Download “Transaction Costs, Trading Elasticities and the Revenue Potential of Financial Transaction Taxes for the United States” 

Robert Pollin, James Heintz, Heidi Garrett-Peltier and Jeannette Wicks-Lim show that since 2009, U.S. commercial banks and large nonfinancial corporations have been carrying huge cash hoards and other liquid assets, totaling $1.4 trillion. Small businesses, by contrast, have been locked out of credit markets. The authors examine the impact on job creation of mobilizing these excess liquid assets into productive investments, finding that U.S. employment could expand by about 19 million jobs by the end of 2014, with unemployment falling below 5 percent. The paper discusses policies to transform these hoards into job-generating investments, both for the national economy and, specifically, the Los Angeles and Seattle regions. 

>> Download "19 Million Jobs For U.S. Workers: The Impact Of Channeling $1.4 Trillion In Excess Liquid Asset Holdings Into Productive Investments"

Mina Baliamoune-Lutz, Zuzana Brixiová, and Léonce Ndikumana examine how small and medium enterprises in Africa struggle to access credit, due to unclear property rights and the lack of assets that can be used as collateral. They present a model in which firm creation and growth hinge on matching potential entrepreneurs with productive technologies, while firm growth depends on acquired capital. They test it using a sample of twenty African countries over the period 2005-09, and find that policies aimed at easing credit constraints would stimulate productive entrepreneurship and private sector employment in Africa. 

>> Download “Credit Constraints and Productive Entrepreneurship in Africa” 

Given the recent attention to potential cuts to the federal defense budget, Robert Pollin and Heidi Garrett-Peltier revisit their assessment of the employment-creation potential of military spending. As in the previous editions of this study (2007 and 2009), they find, unequivocally, that government spending on the military is a far weaker engine of job growth than are investments in clean energy, health care, or education, and is even weaker than spending the same amount on household consumption. Pollin and Garrett-Peltier also find that alternative productive investments create a much larger number of jobs across all pay ranges. 

>> Download “The U.S. Employment Effects of Military and Domestic Spending Priorities: 2011 Update”