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Contraction Nation

How bad is the economy? We’re halfway to a lost



How bad is this economy? Former Treasury Secretary Lawrence

Summers wrote in The Financial Times this week that the United

States is now halfway to a lost economic decade (similar to Japan’s)

and that the number of working Americans has dropped from 63.1

percent to 58.4 percent. A net loss of more than 10 million jobs.

Summers defines the problem brilliantly. He writes in the FT: “After

bubbles burst there is no pent-up desire to invest. Instead there

is a glut of capital caused by over-investment during the period of

confidence – vacant houses, malls without tenants and factories

without customers. At the same time consumers discover they have

less wealth than they expected, less collateral to borrow against and

are under more pressure than they expected from their creditors.”

Last week I wrote about how this economic crisis will impact Indian

Country through the loss of government-funded jobs. Indeed, readers

reacted to my commentary with two basic reactions. One group said

it’s time for Native Americans to get off the dole; another asked why

tribes aren’t solving this problem on their own?

But Indian Country is not unique when it comes to government as

a source of jobs. The whole idea of “dole” is pretty funny when it

comes from readers living in the rural American West. We live in a

subsidized region. We Westerners have an odd birthright, historically

receiving far more in federal support than we pay in taxes. Our

water delivery, our power, our roads, our way of life were funded in

part by taxpayers. In fact, you don’t really need to go beyond water

to understand this scheme. It takes massive amounts of federal

spending to keep water flowing in a dry land.

The late great author Wallace Stegner wrote about the idea of a

West populated by federal employees in Salt Lake City and Boise or

any city where government agencies have regional offices. He once

told historian Richard Etulain that states “get an awful lot in federal

payrolls and an awful lot of jobs and homes and everything else from

the federal government.” The West, he said, should acknowledge

the federal government is not only a “permanent partner in that

collaboration, but a very essential one, absolutely essential.”

Yet as we in the reddest of red states demand federal contraction, we

forgot how many of our neighbors actually work for the government.

Of course government is already shrinking — and as that trend grows

it will impact everyone because when those workers lose their jobs,

they will not have money to spend as consumers. That’s essential

in a consumer-driven economy such as ours. On top of that, state,

cities, schools, and other governments are trimming jobs making the

contraction that much deeper.

Oh, yeah, I know the counter argument, the private sector will hire

those soon-to-be displaced workers.

The problem is the math involved. Without a boost in consumer

spending (and that’s not going to happen with smaller payrolls from

federal, state and local governments) there is no way the private

sector will create enough jobs to hire those already out of work, let

alone those who will be laid off in the contraction ahead.

The United States does have a structural deficit problem and it must

be fixed. But much of that deficit is related to health care spending,

not basic services. That’s why health care reform was so important

and just a baby step towards where we need to go. But that’s a long

term problem that requires a long term solution.

But right now we need jobs. Even government jobs. Especially if we

hope to avoid a lost decade or two.

Mark Trahant is a writer, speaker and Twitter poet. He is a member of

the Shoshone-Bannock Tribes and lives in Fort Hall, Idaho. Trahant’s

recent book, “The Last Great Battle of the Indian Wars,” is the story of

Sen. Henry Jackson and Forrest Gerard.


About CRG

Editor in Chief of the Voice of the Indigenous, Writer.


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