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Nobel Prize-Winner Peter Diamond Talks Jobs

The country’s finances are in disarray and the unemployment rate is north of 9 percent. MIT economics professor Peter Diamond has some ideas on what to do about it.

An unidentified job seeker looks for an auto mechanic job opportunity at the Verdugo Job Center in Glendale, Calif. The unemployment rate is now above 9 percent. (AP)

An unidentified job seeker looks for an auto mechanic job opportunity at the Verdugo Job Center in Glendale, Calif. The unemployment rate is now above 9 percent. (AP)

Peter Diamond won the 2010 Nobel Prize for economics. Peter Diamond couldn’t get Republican sign-off to serve on the Federal Reserve Bank’s board of governors.

Last week, the Nobel Prize-winner withdrew his name from consideration for the Fed board. But not before delivering a blast at the senators who had blocked the way.

We’ve got sky-high unemployment. Employment and labor economics are Diamond’s Nobel prize-winning specialty.

But ideology, he says, got in the way. Diamond’s with us today.

This hour On Point: Nobel Prize winner Peter Diamond, on jobs in America.

- Tom Ashbrook

Guests:

Peter Diamond, Nobel Prize winning economist and professor at the Massachusetts Institute of Technology.

Michael Hirsh, is chief correspondent for National Journal. His most recent cover story can be found here. He also has a book detailing Washington’s relationship with Wall Street. He previously served as the senior editor and national economics correspondent for Newsweek, based in its Washington bureau.

More:

Nobel Prize winning economist Peter Diamond talks in the studio with Tom Ashbrook. (Jesse Costa/WBUR)

Nobel Prize winning economist Peter Diamond talks in the studio with Tom Ashbrook. (Jesse Costa/WBUR)

  • Here’s the Nobel Prize committee’s official description of Peter Diamond’s work.
  • Diamond penned this New York Times op-ed describing his experiences during a failed nomination to the Federal Reserve board.
  • For all things jobs related, the Bureau of Labor Statistics is one-stop shopping. Check out their site for detailed information about the American economy and the jobs situation.
Please follow our community rules when engaging in comment discussion on this site.
  • Zane from Salt Lake City

    Very, very excited for this program. You can’t get a better labor economist than Peter Diamond!

    Considering the dismal chances of another fiscal stimulus and a depreciated dollar, I wonder if Dr. Diamond sees any possibility of an export-led employment recovery? 

    Thanks,
    Zane, SLC 

  • Anonymous

    I wonder if Dr. Diamond will address the nonsense he went through for the nomination for Federal Reserve governor which he withdrew after he came into contact with dysfunctional congressional nomination system in which score setting is more important than doing what’s good for the nation. 

    “The top Republican on the Senate Banking Committee, Richard Shelby, has
    criticized Diamond, saying he lacks monetary policy experience.”

    You know we are in trouble when an MIT Nobel Prize winning economist and professor is told he lacks monetary policy experience.

    • Anonymous

      It would seem that no one is qualified for an important government post UNLESS that person is a hack. Then the country can have a government that does not work, which is what Republicans claim is its nature. And the country can suffer its next Great Recession, as Dodd-Frank is either gutted by lack of funding or stripped of enforcement power, or simply removed from the books. Every American should ask, “Will a world without the rule of law for everyone BUT the RICH be in our interest?”

      [Hobbes did make the statement that the rich and powerful established government to protect themselves from themselves. That did not mean that the less rich had any protections.]

    • g, Buffalo, NY

      Gathering up a bunch of random people off the street and putting them up in congress and senate, I think, could not possibly make things any worse!

      At least they won’t have the egos and a$$ holeness that these senators (some that were BOUGHT) to deal with.

  • Sam Wilson

    Unless we have a substantial replacement of the manufacturing and construction job, I cant imagine how all the people who worked in those sectors will ever be able to find jobs.

    Adding insult to the injury our corporations are actively displacing jobs (accounting, HR Process, Auto mobile manufcatring etc) overseas, thanks to the technology.

    All these factors, combined with the reluctance of US to adopt agrresively new technology  ”green jobs”, any major public or private construction project like Hoover Dam or any new Interstate or any new rail line etc.

    I fail to imagine where the jobs would come from in the above given situation.

    • Anonymous

      @bd1dec04910c346cfcf818c1dc48d663:disqus For all that the Republicans mock Obama’s “Yes, We Can,” their own “unvocalized” chant is “No, We Can’t.” We cannot do the great things that “The Greatest Generation” did (except fight wars, and that is getting an unfavorable review, these days, as just winning battles, which we still do superbly, is seen as not winning the war).

      But there actually are good green jobs for the currently unemployed construction workers, insulating homes, offices and factories, and trained power generation plant workers in the new sustainable power plants. Such power plants are less capital intensive and so provide more jobs than fossil-fuel systems do (coal mining is highly capital intensive and so provides fewer jobs for the equivalent power production).

  • Cory

     I sure hope a distinction is made between jobs and good jobs.  Texas creates alot of jobs…  Low paying jobs with lousy benefits and lousier prospects for a decent future.  Don’t buy into the jingoistic republican shout about jobs.  It has to be good jobs, or it doesn’t mean much.

    Around 50% of you will disagree, but we need UNIONS!  Who else will stand up for the poor slob punching the time clock?  The owners?  The managers?  The stockholders and shareholders?  The beholden politicians?  The multinational capitalists?  DON’T BE DUMB!  We need unions!

    The so-called “Arab Spring” has taught us at least one thing.  The poor and oppressed around the world are starting to learn and communicate with each other.  They are learning that they outnumber their wealthy masters 95-1, and need only utilize this strength to change things.  This will come to America, but not until we are a little hungrier and more desperate.  Believe it or not, we are still a little too comfortable and well fed.  More republicans in office will speed this change though.  That’s why I say VOTE PALIN IN ’12.  SPEED THE CHANGE WE ALL WANT AND NEED (at least 95% of us).

    • Steve

      paraphrase

      …standing in the unemployment line, talkin’ about revolution…

      • Cory

        Haven’t you heard?  Unemployment benefits are starting to run out for lots of people.   I guess I challenge your paraphrase as well.  I’d prefer to speak for myself, Steve-O. 

        • Steve

          Sorry Cory,

          paraphrase is of Tracy Chapman, should have quoted directly. 

    • Heidideidi in Burlington, VT

      Republicans?! Their track record on creating jobs is dismal if not a complete bust. They believe tax breaks to the wealthy will create jobs, but this has proved to be entirely false.

      Republicans will not support any policy to create jobs because if that happens they loose the support of their sponsors and Obama will be given credit for improving the economy which they can’t bear. They’d rather let people suffer than see their top rival receive any credit. 

      • Cory

        Don’t misunderstand me.  I’m suggesting voting for the dullard from Wasilla because we may need to drive the train off the tracks in order to finally do what is right.

        • Heidideidi in Burlington, VT

          I prefer we do what’s right now to a revolution.

      • Terry Tree Tree

        Heidideidi,  Keep spreading the word!  Especially ask those that repeat this fallacy “Where are the jobs?”!  Try to encourage them to think, and verify their response.

    • Terry Tree Tree

      Cory, I presume that you say Palin in ’12, because the bad policies she would promulgate, and the good policies she would ‘refudiate’, would lipstick a pig, or a lot of pigs?  This policy slant, would cause a U.S. ‘Arab Spring’ type backlash against the RICH ogliarchs, that are telling the working class to “Eat Cake”?

      • Cory

        BULLSEYE!

  • bob

    Can we please get somebody to talk about our jobs (including jobs that require education) being outsourced. I trained people to do my job at 1/5th the cost and was laid off. Doesn’t anyone realize this is killing us American workers? It’s God awful. Govt. Gives tax breaks to ship jobs and assets out of the country.

    • Cory

      The people who realize it are the people profiting from it.  I only hope it isn’t long before “Charlie Lunchpail” and “Joe Sixpack” realize and do something about it.  

      • Sally

        Do something? Like what? I’ve written to my congressmen and they deny they can do anything about outsourcing. Michael Capuano actually wrote to me telling me we needed to import more high-tech workers. (High-tech unemployment was above 11% at the time according to the Boston Globe). I’m a member of a dying middleclass. We spend tens-of-thousands on advanced degrees and are denied a chance at a middle-class wage — if we can get a job at all.

    • Will H

      To get out of the trap of innovating the best that we can to create jobs in China, we need to be able to keep some unique elite products Made in the USA only.  You don’t see the Germans making Mercedes in China.  Every one knows Mercedes are German and made only in Germany.  It’s expensive, but people are willing to pay for a superior product. 

  • Banicki

    It was almost a depression! It takes longer to recover from pneumonia than it does from a mild cold. It takes longer to recover from a near depression than it does a mild recession. It not only takes more time, it requires stronger medicine and bolder cures. Furthermore, after recovering from a near fatal illness, the memories of the pain and fears linger for a long time and the patient takes a long time before he drifts back to his old habits of slacking off preventive measures to avoid a relapse of pneumonia.

    Our politicians tend to hide the bad news from the citizens. They also use the bad news against their political opponent by blaming him for the lack of recovery. They hope the voters will buy into an argument that things will improve much faster and with more vigor if they were in charge. The truth is we all are at fault and things are not going to get better overnight. http://goo.gl/qXN1T

  • Anonymous

    Here’s a scary observation: CEOs & CTOs seem to be on some drug for which there appears to be no recognized therapy: outsourcing. According to Bill Maher one CEO told him that 4 out of 5 jobs he’s created in this recovery are overseas because foreign engineers are smarter.
     
    As an engineer who’s job has been outsourced twice, I’d like to share the following.
    From one long term employer I’ve heard this for 6 years now: “everything they touch, they break”.
    As a contractor in financial IT, half of my engagement was to unravel and clean up the mess they created; and that was not what I was contracted for! My employer was unaware of the problems, or how serious they were until I explained them. They could sure make pretty documents, but their functional work product was so flawed that it literally put the business directly at risk.  
     
    They are neither smarter nor cheaper when you take into account the real costs and impact on  business. The turn-over rate in overseas organizations has been atrocious for years. Why exchange loyal proven employees for cheap labor that views their job as a stepping stone to a better paying job?
     
    Why are executives getting bonuses for outsourcing jobs, destroying highly evolved teams, systems and infrastructure, degrading the capability of their organizations, lowering the quality of their products and services, undermining their customer satisfaction and undermining their future competitiveness?
     
    We need an intervention on a national scale.

    • g, Buffalo, NY

      Ditto. I had exactly the same experience.

      Foreign programmers suck! I used to spend more than half my time cleaning up their code. They just don’t give a damn about the quality of product that they produce – they don’t have to maintain it, why should they! They don’t get to deal with customers who can’t use it! Why should they care?

      Different culture – different set of values and morals!

      Companies who have tried working with India and learned their lessons and are now moving away from outsourcing, are going to make it. Others who are still pushing for it, aren’t.

      Look at Sprint’s customer service. They were rated one of the worst  companies in US in customer service!! And they listened to criticism and switched their call centers back here to US. Now, you don’t wait long to talk to someone, and you can understand the people on the other end and they resolve things!

      • Miss B

        To G & Mad Mark – you have hit the nail on the head.  The company I work for is outsourcing IT to India as fast as they can sign contracts.   It’s a joke.  100 people last week alone.
        No one in any of the decision Go/No Go meetings asked “hey, is this good for our community? what about America?” They only focus on the short term savings.  
        Tea Partier’s need to know – Corporations don’t care about America – they only care about the bottom line, one quarter at a time.

  • Terry Tree Tree

    I CHALLENGE EVERYONE to CHALLENGE ALL  the people that have received “TAX CUTS FOR THE RICH, TO CREATE JOBS”,  the words of George W. Bush in 2000, to publish proof to all the public, that they have CREATED jobs for U.S Citizens, that exceed the amount of the tax cuts they have received.  Exceed, because the proponents of TAX CUTS FOR THE RICH, called for sacrafice.  What sacrafice have they made, if they haven’t spent more on jobs, than they received? More in other posts, as it is near air time.

    Terry, in Brewstertown, Tenn.

  • Anonymous

    Maybe Mr. Diamond could discuss the graphic that was shown at the beginning of the “economics discussion” on ABC’s This Week with Christiane Amanpour yesterday. The graphic shows how deep and slow to recover the employment is/will be.

  • Cory

    A politician from Alabama questioning the qualifications of a Nobel Laureate…  God bless America!

    • Anonymous

      @e533c71f78b04b5363a41d402415bf87:disqus An old style (CCC member?) “Southern Democratic Party member” turned Republican with a safe seat in “subtly racist” Alabama.

  • http://twitter.com/planetirving Irving Steinberg

    The GOP is not really serious about economic recovery because a recovery plays against them politically. Both parties have done this in the past but it becomes even more nakedly blatant in circumstances like this.

  • joachim111

    Senators like Shelby are a sign of our times, zealots driven by partisan agenda and unable to intelligent thought processes. It is a shame that these guys can hold up the country and keep us in recession in hope of their political gains.

  • Terry Tree Tree

    TAX CUTS FOR THE RICH, TO CREATE JOBS, was the cry of George W. Bush in 2000.  Unemployment Compensation was HELD HOSTAGE, by John Boenhner, and Mitch McConnell, to extend TAX CUTS FOR THE RICH, TO CREATE JOBS!, in early 2011.  They, and ALL their Administrations, their funders, and proponents, SHOULD do the HONEST, MORAL, JUST thing, and publish in the most public manner, ALL the U.S. Citizen jobs they have created since 2000, at least.  Names of employees, amount paid, date of hire, date of dismissal, should be public, so people can verify their job, and pay.  ALL pertinent employment information, linked to SSAN, shall be provided to the IRS, for verification.  Anyone that cannot PROVE they have created U.S. Citizen jobs, or PAY it ALL back, plus interest, plus penalties, and face fraud charges!

  • ThresherK

    Can’t wait for Robert Bork to whine about how he got done dirt by the Senate. ToMAYto, toMAYto, no?

  • gt

    My question to Prof Diamond: Has manufacturing become sufficiently global and efficient, that there are simply not enough jobs to go around unless people buy a bunch of stuff they don’t really need, and from an environmental point of view we cannot afford.  How can we count on “growth” beyond population change to employ everyone. If everyone around the world spent and polluted like Americansdo won’t we destroy the planet?
    thank you

  • Heidideidi in Burlington, VT

    The number one goal of the Right is to make sure Obama has only one term. That means they will do anything and everything to squash any improvement in the economy, especially the return of jobs. Their rebuttal of this nomination is directly related to the goal of keeping the economy and the return of jobs in the tank.

    We are still in a depression. We do need more stimulus in order to keep the jobs that are being lost at state and municipal levels and to create jobs elsewhere. We need another Great Depression era jobs creation plan. That’s what government’s job is; to empower and protect its people by creating economic stimulus.

  • Brad

    Tom, it seems clear that the Republican’s are making tactical choices to obstruct policies that may stimulate growth and jobs.  

    Once they can remove Obama from office they can then deploy their versions of stimulative policies (targeted at business and the rich).

  • Bobl1234

    Things to do to turn around the US economy:; 

    1. Help people accept implications of relative decline of US power, which was not occurring when US was “riding high”, and adjusting their expectations accordingly

    2. Help people understand implications of Mancur Olson’s “logic”

    3. Help people learn practice of civil discourse.

  • Alan

    Mr. Diamond:

    With corporations seeking cheap labor elsewhere, with investors seeking higher returns elsewhere, how can you see a long term positive economic future?

  • Anonymous

    In an economy where 70% of GDP is generated by consumer spending, when 10-17% of citizens are either unemployed or underemployed, a more aggressive unemployment payments program combined with retraining education would have sustained both commerce and tax income long enough to re-set the economy.

    Republicans know less about small business and job creation than Democrats. The last thing small business worries about is tax rate. We pay taxes only on profits – no sales, no profits.

    When considering the possibilities of success for a new high tech company, the last thing entrepreneurs worry about is tax rate.

    We need more teachers, better paid – and yet politicians are cutting teachers. We need to support unemployed while we train them, and encourage with support the entrepreneurs who are trying to start businesses with a future.

    How do we get those simple facts through the heads of politicians who care only for their big corporate contributors? – the only ones who benefit from their mantra of tax cuts.

  • Stillin

    Yes, people ARE working longer, yes people are LIVING longer, HOWEVER, everything is much,much more expensive now that ever, things that were easily affordable years ago are now, not. So when the discussion includes the above 2 things, how are you going to accomadate the rate of inflation? Also, WHY does my husband get to collect unemployment half the year, while he clears 3G a week take home in big money construction, when he DOESN’T PAY PROP/SCHOOL TAXES AS HE DOESN’T OWN A HOME. He also owes me a TON OF BACK CHILD SUPPORT.

    • quadraticus

      Your husband is homeless? Because I rent and I definitely pay property/school tax: my rent is paying them. I don’t write the check directly to the city, but I’m definitely paying them.

    • Guest from up north

      if he rents, he pays Property taxes via his landlord.  Seasonal folks pay into unemploy during the “rich months” and get some it back in the “lean months” — depends on the state as to how much that is.

    • Terry Tree Tree

      Having worked with this type of deadbeat dad on many jobs, He’s probably ‘shacked up’ with another woman that he gave a sob story to, and will leave her with another child, or more, that he will also not support, while he ‘spends’ his money on tobbacco, booze, and drugs.  As a custodial father that never recieved a cent of the Child Support awarded by the court, I wish you luck, Stillin, and advise you to do the best you can for your children. 

      • Stillin

        Money aside, I always do well for me and my kids and animals because that is my lifestyle. I take all credit for the balanced, responsible, happy kids they are turning out to be. I just want them to receive the money they are owed, and he rakes it, so he can easily pay it. Karma will balance the debt out eventually, I just want it now because the state agreeds with me so I am like ok PAY UP. Had him arrested for non payment, still , it can only sit in court due the divorce HE contests. eerrrr.

        • Terry Tree Tree

          Stillin,   You have evidently figured out, previously, what I was trying to encourage you to do.  Raising kids well-balanced, responsible, and happy is the main objective.  I hope they throw the book at him, when the court figures it all out.  Guys that don’t want to be responsible for their children, should responsibly decide to not start children.  Women are demonized by deadbeat dads, preachers, and ‘Christians’, who should be demonizing the guys that impregnate and run!  Too many of them are guilty of this sin (crime), for them to actively pursue it!

  • Robb

    The GOP loves to bash Obama over that early 2009 prediction that under the Stimulus plan unemployment would reach no higher than 8% . Because unemployment reached a peak of  around 10.2% the Right claims the Stimulus was a failure. Yet they also claim Reagan’s Voodoo Economics was a success.

    Yet in a February 18, 1981 Reagan report “White House Report on the Program for Economic Recovery” it was predicted The benefits to the average American will be striking. Inflation — which is now at double digit rates — will be cut in half by 1986. The American economy will produce 13 million new jobs by 1986, nearly 3 million more than if the status quo in government policy were to prevail. The economy itself should break out of its anemic growth patterns to a much more robust growth trend of 4 to 5 percent a year. These positive results will be accomplished simultaneously with reducing tax burdens, increasing private saving, and raising the living standard of the American family.
    Reagan’s economic team was so incompetent they didn’t even see a recession coming in his first term. The Reagan Recession It was so deep unemployment hit a peak of over 10.5% in early 1983.
    What were the actual Reagan job creation numbers? FOX says

    Under Reagan, 9.5 million jobs were created from January 1981 to December 1986.  http://www.foxnews.com/story/0,2933,242424,00.html

    That’s a 3.5 MILLION job error. Some “success”… even when Fox includes an extra year.

  • ThresherK

    Tom,

    Ask someone in the press why the debt ceiling is a big story now, but was utterly uninteresting when the press was ignoring it during the GWB years..

    Our Beltway Inbreds are filing 10x the number of stories on the debt ceiling compared to every time it was raised for Bush.

    And that’s even ignoring this point in the business cycle versus the years-long expansion Bush managed to increase the deficit during.

  • http://www.facebook.com/maryjframe Mary Frame

    Unbeivable program–straight answers to questions.  

    He is factual, to the point, candid, and speaking to us aboiut the 
    REAL issues we are facing as a Nation.  He’s giving each of us, as an educated citizen, that we are “big enough” to know all the ugly facts!! Run for the Presidency of the US.  We need people like, you, Peter Diamond–Realists who want to put politics aside and deal with what needs attention within our own borders.

  • Mike Adams

    How does Mr. Diamond feel about a transaction or sales tax on stocks and bonds, it would slow the churning in the markets and raise revenues.

  • quadraticus

    What makes Mr. Diamond think a third round of stimulus will do anything? As Chris Martenson, Bill Bonner, and many others have pointed out, the stimulus has had no measurable effect on job growth…but it certainly is exploding government debt!

  • quadraticus

    I want to know why Mr. Diamond thinks a third round of stimulus will do anything. As Chris Martenson, Bill Bonner, and others have pointed out, the stimulus has had no measurable effect on job growth… but it certainly has exploded government debt!

    • Heidideidi in Burlington, VT

      Look at the loss of jobs at the state and local levels now compared to the retention of jobs at those levels during the stimulus. That’s your answer.

      Government debt is a result of the tax cuts for the wealthy and 10 years of war, not government spending. When there’s no revenue and massive spending, you get debt. The best way to decrease the debt is to collect taxes from all earners and spend less on military exploits.

      • ThresherK

        An easy picture of how Obama’s presidency has had jobs created through 2 1/2 years, much in recession, than GWB did in 8 years.

    • Anonymous

      It’s kept some jobs from being lost as well as created some. It was not enough and it was not targeted well. It should have been more targeted to states to keep teachers, cops, and fire personnel from being laid off.
      Do some research before you make a comment that is more based on you’re conservative view point than reality.

    • Anonymous

      @0319eded9b3c884af5b66750d4ae692d:disqus You need to look at the post in James Fallows’ blog at the Atlantic:

      http://www.theatlantic.com/politics/archive/2011/05/the-chart-that-should-accompany-every-discussion-of-deficits/238786/

      where you will see that, yes, there was a boost to the deficit, but it is a SHORT-TERM boost, and its effects are actually nearly over, with that drop in “boost” to GDP being contractionary, actually, now (technical detail).

  • Cllllew99

    My company is still ‘off-shoring’ jobs to India and South America and when asked about any potential tax-penalty for this the reply was that the ratio was not enough.  Meaning the ratio of the penalty was not enough for them to keep jobs here.  What about the companies that are awash in cash and still, as I see it, selling out our economy for private gain?  What about implementing a bigger penalty?

  • Pam in China

    Can we continue to afford our military involvement with either “cold war relics” or unproductive wars in the face of indigenous guerilla warfare?

  • Joanwilliams57

    Please make programes like this available to the public. Put him on CNN and PBS. We need people like Peter Diamond on the major networks.

  • Cory

    More stimulus spending is politically impossible, no matter how much sense it might make.  There isn’t any point in suggesting it.

    • Heidideidi in Burlington, VT

      It seems to me you’ve bought into the frame. The way to counter a false frame is to build a new frame and push it to the hilt. We do need a stimulus and we should push for it. The debt and deficit are distractions to keep us from creating jobs and improving the economy.

    • Anonymous

      @e533c71f78b04b5363a41d402415bf87:disqus Without at least trying to make the case for what would really work to improve the employment level, how can the Democrats win the argument at the next election to prevent the Republicans selling more ineffective tax cuts and spending cuts which will do nothing for deficit reduction (job cuts will simply cut revenue from income taxes) or increased demand for what the private sector would like to sell?

  • g, Buffalo, NY

    How about govt sponsored green jobs?

    Building infrastructure for “fueling” stations for electric cars, more wind and water power production; training people to install solar panels on their homes, etc.

    Building high speed rails and improving our transportation systems.

    Thank you

  • g, Buffalo, NY

    Why did republicans block his nomination?

    • Anonymous

      Politics and payback.

    • ThresherK

      Because they could. Because the media can’t bring itself to criticize them for a record number of holds and filibusters. Because they don’t care about governance any longer.

      • Anonymous

        @fe91b576fa3c6878e4f0439bfec6bb1a:disqus A case can be made that Republicans have had a declining interest in effective government since Nixon or even Eisenhower. One of the drivers has been the coalescing on the “small government” mantra since Goldwater.

        • ThresherK

          But this isn’t about small govt and effective governance being part of the same goal. Ike didn’t frak up school desegregation or the Interstate Highway System; once these things were decided on, he got some knowledge-based advice, and acted on it for real.

          Now Americans can’t even depend on the GOP trying worth a sh!t.

          Of course there were mistakes. Nobody knew what putting an interstate highway through Elizabeth NJ (for example) would do. Hard lesson to take, but it was learned over time, and now we don’t routinely destroy neighborhoods like that.

    • Cory

      Cuz he had too much fancy book lernin’.

    • Anonymous

      @8882a9dfaf4dff633aaf7a7211a658d5:disqus Much of Mr. Diamond’s work has been on employment and the economy, which is one of the two areas that the Fed are supposed to monitor and configure the economy to improve: 1) Moderate inflation and maximize employment within what is consistent with a strong economy. The Republicans have decided that the second requirement should be abandoned in favor of full bore concentration on preserving capital (income to the rentier class). See Robert Kuttner’s post:

      http://www.creditslips.org/files/kuttner-on-past-future-bkcy.pdf

      and a further discussion at:

      http://krugman.blogs.nytimes.com/2011/06/06/the-rentier-regime/

      There is a wide discussion of this on a number of blogs (google it).

      The upshot is that the Republicans do not want ANYONE, particularly a competent person, on the FED with any expertise on employment, since they do not want the FED to do anything about employment. The only thing they want is that the 400 with the highest incomes in the U.S., which comes almost exclusively from capital rent, to continue to get the maximum without making ANY contribution to the recovery of the U.S. economy, which THEY effectively ruined with their unremitting search for maximum income, at the time available only through such Ponzi schemes as over-leveraged derivatives.

  • http://twitter.com/Real_Dr_Roy eapr9

    I am a Canadian Conservative. I think more stimulus for your country will be a disaster.  Canada is cutting its much smaller deficit already. You need to cut the US deficit. The GOP and particularly Paul Ryan are completely right. I am glad your guest did not make it to the federal reserve.

    • Anonymous

      Paul Ryan is right? Well the CBC does not think so.
      His budget plans will ruin the economy, supply side does not work.
      I don’t tell you folks in Canada how to run your country but Canada also has a national health system and spends about 5% of GDP less than we do on health care and everyone is covered.

    • ThresherK

      So out of touch. Can’t stop laughing.

      For example, you do know that 1/3 of the stimulus was tax cuts, right? And the rough trend (bit of a generalization) that many big banks and companies are sitting on piles of money, whereas small companies who wish to expand can’t find reasonable rates, if any money to borrow at all? Or that those folks who’ve paid for decades into the unemployment insurance pool, and have collected 99 weeks of it, are running out of money, but the GOP doesn’t give a sh!t about them or that if people in those straits, the first thing they’ll do is put it back into the economy?

      Does Nobel-Prize-winner Diamon need to explain “multiplier effect” or “business cycle” to you?

    • Terry Tree Tree

      eapr9,   Paul Ryan is completely right? His proposed replacement for Medicare and Medicaid will be just like the health care coverage that Congress and the Senate have?  Even though many dis-similiarities, that are egregious, have been exposed, it’s JUST like theirs?  How are the GOP, which are blocking government on so many levels, right?  Maybe you think these “Do as I SAY, not as I do”, religious hypocrites, are the MORAL COMPASS to follow, but I do not!

    • Anonymous

      @twitter-15333188:disqus Be careful what you wish for. The U.K. is seeing its “austerity” efforts starting to tank its economy. Canada has done better in many areas, but enough of its economy depends on that of the U.S. that our troubles can spread to it even when Canada does not deserve it. So it seems even people who are more rational than many Americans can be stampeded to “taste the kool-aid.”

  • Judith Abrams

    Shouldn’t we be discussing defense budget and US expenditures of enormous sums in wars in Afghanistan, Iraq, Libya and Yemen?
    Thank you
    Judith Abrams

    • Anonymous

      I agree.  You will know we have turned a corner in the fate of our country when even one prominent political leader forthrightly challenges the HUGE amount of money we waste in these unwinnable military operations.  Don’t hold your breath.

      And, as Mr. Diamond pointed out, even though miltary spending is stimulative to the economy, it would be of much greater benefit if those dollars were spent on paying people located in the USA to provide a service of value to our citizens.  E.g. building infrastructure; providing flood/tornado/fire relief or rebuilding; taking Medicare patients to their appointments.  Anything but what they are wasting their time and lives, and our money, currently doing.

  • Peter D

    A number of years ago I made a statement to a Sr. VP of the corporation I was
    working for (this had to do with the consistent downsizing of my department). I
    told him that the fundemental requirement for consumers is that they must have
    jobs to consume. [He told me I thought too much.]

     

    In the US, where consumerism was/is responsible for 70% of the economy, it is
    a requirement that there be good jobs for consumers. (THIS IS NOT A SECRET!) 
    Yet, Wall Street seems oblivious to this fact: They are holding on to their
    cash, lobbying for retainment – if not decreases – in their tax base and
    wondering why the S&P index has been falling for weeks.  We cannot and will
    not see our economy rebound until the non-elites of our country can be vested in
    its success.  That is not going to happen in a country where those with the ca$h
    heavily influence policies that only benefit themselves.

    • Bgpa

      Peter D,
      Several phrases come to mind like cutting off your nose to spite your face, or can’t see the forest for the trees.  I absolutley agree with all your statements and I am a business owner.  But if you don’t have customers with money to spend (their earnings) you don’t have a business!

  • Hitt_roy_e

    In Prof. Diamond’s backyard (Cambridge, Boston) some big firms, flush with cash, are hiring only at barely above minimum wage for positions previously considered ‘careers’ – these are ofter private, for-profit companies engaged in aggressive wage arbitrage – so MBA’s, other college grads end up working for $10.00 an hour, 50-60 hour weeks doing technical support, web design – Any solutions? 

  • L R Dunn

    Where’s the modern version of the WPA and CPA?

    • Terry Tree Tree

      L.R., do you mean the CCC, the Civilian Conservation Corps, that made the National , and some State parks far more accessible, and enjoyable than they would have been, with works that still stand eighty years later?  I’m not familiar with the CPA?

      • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

        CPA are the guys and gals with calculators and spreadsheets…..  You are correct the agency was CCC as you indicate.

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      Yes indeed.  What happened to all of the “shovel ready” projects? Terry Tree Tree (below) correctly changed your term…

    • http://www.jobwaltz.com JobWaltz.com

      Yeah, let’s dig some holes and fill them back in again. Great idea!

  • Bobl1234

    I notice that most of the comments through #47 are long on ideology and assertion, and short on substantive action.

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      This site is for comments, which means just that. Not a strategic planning session for national economic policy. DUH

      • Bobl1234

        Thank you for responding to my comment.  To the extent that this site might “not [be] a strategic planning session for national economic policy”, i would say that that is unfortunate.  To the extent that “this site is for comments, which means just that”, i would say that that is even more unfortunate.  I think that it should be a place for comments backed by reasons, not bald assertions.

  • Guest

    I’m so tired of hearing that illegal immigrants are taking jobs that “americans don’t want”. The reason American’s don’t want these jobs is that they cannot live on the wages that they pay. Because illegal immigrants are okay (which is unfortunate) with being exploited doesn’t mean that our citizens should be. 

    • denis

      Why are you not blaming the corporations that are sitting on approx. 2 trillion in cash and not hiring and not paying a fair wage?

    • Will H

      Not to defend illegal immigration, but there will always be jobs with which earnings do not and should not support the average American lifestyle. The solution is not to pay people what they don’t deserve, but rather to 1. allow legal workers who will help to raise America’s productivity and 2. create more jobs that pay well. 

  • g, Buffalo, NY

    I feel for Elizabeth Warren. One person who is fighting for the people and gets muddled up in politics and bureaucracy. I wish there was something that we, the people, can do to help her get her job done.
    Stay strong Elizabeth! There are people who believe in your and your goals!

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      Excellent point!

  • joachim111

    Why don’t we have Military Spending on the top agenda? We have 130 billion a year to gun away in foreign wars when the checkbook is empty. Where are the Democrats to put a hold on defense bills and create a bill for infrastructure development and the Jobs associated with it. Stop financing other countries defense that is the way to bring the bill down.

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      Military spending is not on the agenda because defense corporations pay off too many members of Congress.  Congress has been bought and paid for my corporate money.

  • ThresherK

    Elizabeth Warren might be appointed in recess. Of course, the most famous recess appointment during the last decade was John Bolton.

    It’d be hard to find anyone Obama would appoint that’s a greater embarrassment than ol’ Yosemite Sam was.

  • g, Buffalo, NY

    Ditto to Guest’s comment on illegal immigration.
    That angry construction worker who called is probably looking for the old kind of construction jobs that we had pre-recession and he is not going to find it. And he is not flexible enough to change with the times.

    Either change his career path, or figure out a way to make his skills relevant. Learn new things, try different things, in different places.

    All these MEN that lost construction jobs sit on their butts and EXPECT a job to appear in front of them.

  • Terry Tree Tree

    The CRAP answer of the illegals only doing jobs that U.S. citizens wouldn’t do, is a misdirection fostered by the employers.  It’s their lie to justify hiring people that they can CONTROL, MOLEST, ABUSE, and otherwise mistreat!  Go over their employment records, investigate, and interview past employees, and you’ll find a record of violating safety standards, cheating workers on pay in several ways, forcing sexual conduct, and a host of other violations of law, and moral conduct.  The horror stories of sub-standard workmanship, worker and public endangerment, and a lot of other damages, have resulted from this disinformation campaign, as have damages from giving obscene ‘bonuses’ to executives, for running a business into ruin!

    • denis

      And specifically where are these examples of “Go over their employment records, investigate, and interview past employees, and you’ll find a record of violating safety standards, cheating workers on pay in several ways, forcing sexual conduct, and a host of other violations of law, and moral conduct.” Not just urban legend but concrete examples in numbers that affect the millions that are unemployed.

  • Sally

    Peter Diamond’s view that massive illegal immigration does not affect jobs in the US
    causes me  to think that he lives in a bubble shielded from reality. Has he ever even eaten in a local diner? I fail to see who benefits from living in this denial. Mega-corporations benefit because they never have to give any raises. Mr Diamond sounds like a paid lobbyist for big business. On Point listeners should dismiss his views and listen to the callers who report from the real world.

    • denis

      Having lived and worked in “the real world” all my life and having lived in the Midwest, the Southwest, the South, and the East I would have to agree with Dr. Diamond. Those of you that want to blame all of the problems on that pesky illegal really have no clue who in the workforce is in fact illegal – oh, he/she looks illegal so he/she must be illegal. I know of an individual how always gets that illegal crap when his family is a seventh generation American in Texas. My sister has been job searching for approx. one year – never have I heard her blame the “illegal” for her lack of opportunity. The problem seems to be far more two problems: 1) corporations are sitting on approx. 2 trillion dollars in cash, refusing to hire while paying top executives extravagant salaries and 2) the conscious effort of many politicians to reduce revenue and therefor reduce spending in the public sector [in her case specifically education at the University level]. In close, unless you can give specific fact based examples of this wave of illegal workers don’t embarrass yourself.

  • Jtaylorvt, Williamstown, VT

    Just to correct Mr. Diamond on one thing. Immigrants are NOT just looking for jobs Americans won’t do.  They are looking for jobs at rates that Americans won’t take.

    In effect they are undercutting working Americans and depressing wage rates, thus, making these jobs even more unappealing to the existing worker pool.

    • denis

      examples please

  • Markus

    Mr. Diamond’s showed himself to be just another idealogue when he dismissed the issue of illegal immigration. 12 or 15 million in this country illegally who will work for peanuts, has to have an impact. My cousin is a general contractor that has to hire illegals in order to provide competitive bids. That Mr. Diamond used the progressive talking point of they’re taking jobs others won’t take is, shows how far he’s willing to bend truth. Even if it were true that only illegals would take these low paying jobs, an economist knows (actually everyone knows) that if there’s lots of supply for labor, pay will decrease. After this, I suspect everything he says is driven by his idealogy.
     
    I used to think a Nobel prize was a big deal.

    • denis

      So are you saying your cousin is willing to break the law to maintain his/her profit margin?  What does your cousin pay himself /herself?

      • Markus

        I think he’d love to make a profit. These days, it’s more a matter of survival. He’s a decent guy and is very uncomfortable with breaking the law. But he sees the bids of others and knows what things cost. It’s either hire illegals to do the work to make his bids competitive, or get out of the business. He’d rather not have to hire illegals, not because of their work ethic or quality (both are good), but because there’s little to any enforcement of the law, so “everyone does it”.

        • denis

          I know when my kids were teenagers the excuse of “everyone does it” was not acceptable.Having said that I know contractors that are making a good living not hiring illegal immigrants. However, if I thought the only way to survive was to hire those from other countries that are willing and able to work at a wage that made my product more affordable for my customer while allowing me to live the lifestyle I wished to live I would strongly advocate for a better immigration system and green card program. Additionally, as I posted above this discussion has little to do with creating jobs – it has to do with who is doing the jobs. With trillions in corporate cash there seems to be little reason for corporations’ lack of hiring. I have heard the argument that there is not enough demand to increase the labor force. However, one only needs to remember Henry Ford’s philosophy that said you pay your workers enough to by your product and sales of your product will increase. I have rambled on long enough, just hope you and your cousin are out there working to improve all peoples access to the workforce and in turn working to increase the number of jobs available.

    • Anonymous

      Agreed Markus— except that your cousin has no right to break the law.  If he cannot comply with the law he and the other lawbreakers should not be in business in the frist place!

  • Anonymous

    My enthusiasm for Mr. Diamond is somewhat deflated after hearing him expound the conventional supply/demand  explanation for unemployment.  We’re now in a global economy where other nation states strategize on employment and economic development in the same way the U.S operates the department of defense. He believes unemployment is all cyclical and will eventually readjust. It may do just that with the bulk of Americans stuck in low pay, low skill jobs.

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      Low pay, and no benefits will indeed prevail if CEOs have their way. And if the Republican party, minions of corporate power, drag us back 150 years.

  • Steve

    This is madness. The guest is trying to engage us in a thoughtful discussion/exploration of boredom, and several people are calling/writing in to challenge and condemn the very idea of boredom. Give contentiousness a rest, people, please. We’re not talking about Bigfoot here. Let the man talk.

  • Bobl1234

    After Aboriginal People’s saved these lands for ten-thousand years, just so that European could ??discover it?? and over the course of four centuries effectively steel so that those ??Savages?? couldn’t ruin, I wonder whether this ??New World?? would be a different sort of place, had those ??Indians”" adopted an anti-immigrant policy similar to the ones seemingly being promoted by some commenters.

    Of course, it didn’t end with loathing ??Redskins??, either.  Andrew Carnegie’s anti-immigrant policy called for admitting Europeans, but only in nation-based waves, so he could use tension over lack of language sharing to hold up union organizing.  Some melting pot, if there ever was one!

    • Anonymous

      Bob—

      There is no one here who is “anti-immigrant”, as you falsely assert.  We are against ILLEGAL IMMIGRATION, which is catastrophic for our country including the devasting effect on the wages of American citizens and LEGAL IMMIGRANTS and upon the law-abiding businssess that must compete with the lawbreakers!  We have a right to determine who can come, and the current scheme of lawbreaking en masse is unsustainable and unacceptable!

      • Bobl1234

        AngelicaUNC1 — thanks for pointing this out to me.  I hope you will permit me to clarify my comment, in two ways.  First, so as to focus on my main point, let me focus on aboriginal peoples of this land: suppose they decided not to allow any immigrants at all, as a matter of THEIR law.  That would construct all non-aboriginal people as ILLEGAL; also as INVADERS.  That’s unlikely, owing to their “no ONE owns it” approach to land.  Bt suppose that they did. Also, suppose they had also developed weaponry superior to European technology and an ethic that allowed them to use it.  If all these counterfactuals were true, there would presumably be fewer — as in, NO — Europeans, Africans and others living here still, including both you and me.
              My second point is that “legal” is a constructed notion, with its substantive sense and its normative validity seemingly fitting into the premises central to making a culture be what it is, and differ from other cultures in ways that it does.  It’s not difficult at all for me to think of three different differences that could have arisen: [1] both aboriginal peoples and “outsiders” could approach land as being communally held, [2] both groups could have been influence by John Locke, and [3] one of each type, as was the case, the legacy of which we are all now struggling.
              I welcome reactions from you and others.

      • Bobl1234

        AngelicaUNC1 — thanks for pointing this out to me.  I hope you will permit me to clarify my comment, in two ways.  First, so as to focus on my main point, let me focus on aboriginal peoples of this land: suppose they decided not to allow any immigrants at all, as a matter of THEIR law.  That would construct all non-aboriginal people as ILLEGAL; also as INVADERS.  That’s unlikely, owing to their “no ONE owns it” approach to land.  Bt suppose that they did. Also, suppose they had also developed weaponry superior to European technology and an ethic that allowed them to use it.  If all these counterfactuals were true, there would presumably be fewer — as in, NO — Europeans, Africans and others living here still, including both you and me.
              My second point is that “legal” is a constructed notion, with its substantive sense and its normative validity seemingly fitting into the premises central to making a culture be what it is, and differ from other cultures in ways that it does.  It’s not difficult at all for me to think of three different differences that could have arisen: [1] both aboriginal peoples and “outsiders” could approach land as being communally held, [2] both groups could have been influence by John Locke, and [3] one of each type, as was the case, the legacy of which we are all now struggling.
              I welcome reactions from you and others.

  • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

    Excellent show as always. Sad that Mr. Diamond was sabotaged by one stupid Republican.

  • Jpnoon

    Re the Peter Diamond appearance, almost from the beginning of time, the dismal science has proven to have disappointing prognosticative powers.  None of the laws of economics, even the vaunted law of supply and demand, has proven to be reliable or even universally applicable.  Why do we pay such rapt attention to economists like Peter Diamond or Paul Krugman?

  • denis

    I am currently reading In the Garden of Beasts by Erik Larson. It is a history book dealing with Germany stating in 1933. The Nazis were able to blame their economic problems on ‘the other.” In their case “the other” was the Jew. It seems to me in modern 2011 USA “the other” is the illegal. It also occurs to me that all of this ‘he said she said’ discussion about all of the jobs stolen by illegal immigrants or not stolen by illegal immigrants does not discuss the central issue of job creation. If we had full employment there would be little discussion of who is filling the jobs – in fact I am old enough to remember a time when the discussion was where are we going to go to get workers.   

  • Pete D

    No one will discuss the effect of the high disparity of income between the high earners and the middle and low income worker. None of the high earners, that is the million dollar and above salaried people, add the equivalent value to the economy as their compensation warrants. This wasteful distribution is like paying $100 for a $2 loaf of bread. What is happening is that the worker  adds value to the economy with his work but the money earned (value added to the GNP) is distributed to a few celebrity people like celebrity tv performers, movie stars, pro-athletes, executives, and lots of others who are overpaid for the services they render to the economy. What happens is they dilute the exchange of money that occurs when people buys stuff. The economist keep telling us that thes high salaries are all disposable income and therefore is doesn’t affect the economy but I say different. When a low income person gets a dollar it is spent within a week. When that same dollar is in the hands of a high income person, it will return to the economy in the form of spending, investment or saving in a bank for potential loan; but it may take months before that whole dollar returns to the economy. The net effect is that the dollar in the hands of the poor folks has a multiple effect to the economy. That dollar is exchanged 6 to 10 times more before the rich returns the dollar to the economy (GNP).
    Why isn’t something being done to change this condition. Communism is equal pay for whatever you do, I’m calling for paying fairly for value added. How do we go about doing this. The continual drain of money from the worker who really adds value to the economy cost jobs because the market place is be decimated.

    • Bobl1234

      Hi Pete D.  When you make strong assertions, please make sure that you gt your definitions right.  For example, “communism”: it’s defined in my dictionary as follows:  

      “communism |ˈkämyəˌnizəm| (often Communism)nouna political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. See also Marxism .”  Sort of like Saint Francis of Assisi,centuries before Marx.  Or, like the #1 (if i’m not mistaken) recipient of USC foreign aid, Israel, and its communes (known as Kibbutzes).

      • Pete D

        The only reason for mentioning ‘communism’ was to rebuff anyone who would think I was promoting equal pay or sharing the wealth. I’m for high taxes for ultra high salaries because those salaries are collected for little value contributed. I speak of salaries and other compwensation for employment. Investment income of any comes from risks and valuable creativity and should not be taxed or taxed lightly.

  • Anonymous

    So much for the Republicans’ promise at the beginning of the present Congress not to filibuster Mr. Obama’s nominations to the federal bench, much less other offices requiring Senate confirmation.

    It is more than obvious that the “Right” does not give a damn about fair play, much less the outcome of fair elections. If the Democrats had filibustered Alito or Roberts to the SCOTUS, the “Right” would have squealed like stuck pigs. Let a Democratic president try to appoint eminently well qualified people, and they go apeshit. Whether Dr. Diamond, Goodwin Liu or Elizabeth Warren, the “Right” use the tyranny of the minority to get their way – the ONLY way that they will permit.  After all, what’s theirs is theirs and what might belong to anyone else is at best negotiable – maybe.

    By continually blocking Obama’s nominees to various positions, not to mention practicing the politics of NO in general, they are essentially kicking the administration in the face with their shiny black boots, then criticizing them for mumbling.

    Sadly, nearly a century after he made the observation, the Democrats are still described all too accurately by Will Rogers’ famous quip, “I don’t belong to an organized political party — I’m a Democrat;” that would also include a complete lack of backbone.

  • Ellen Dibble

    I didn’t hear anything about the shift in America from corporate focus on production to corporate focus on profits — quarterly profits to support stockholders (no mention of tinkering with capital gains taxes either, actually).  Our view of GDP has subtly shifted to APPARENT ballooning versus actual progress.  It bothers me that we seem to think the more gas we burn, the further we drive, the more successful we are.  Looking out about 20 years, this perspective is lunatic, suicidal, lemming-style short-sighted.
         Somewhere in an appraisal of  China’s history I heard that under Deng Chou Ping (sp?), a realization came that “some people would have to be allowed to get rich” in order to stimulate growth.  And I’m thinking, yeah, right, and you get some capitalist-rich so rich that they in effect “become” the government, a by-definition-corrupt shadow government.  Instead of the Communist party being in charge, you have the Titans of Wealth (The Capitalist Party?) being actually in charge.
        What this means to jobs?  The creators of wealth measure success by stockholder benefit, not benefit to citizens and communities.  The government seems to be interested in stockholder benefit too, which is to say, they have two tracks:  (a) the well-being of Big Business (funders of political campaigns and lobbyists) and (b) the well-being of citizens who might otherwise work (or be disgruntled and all the more easily manipulated as voters).  
       If Big Business is finding more profit without public benefit, this begins to remind me of the Antebellum South.  People begin to be expendable, except as voters, maybe.

  • Anonymous

    What struck me about this show was the reality that for the past 30+ years the top 1% of the population has 42% of the wealth and that number growing. We can’t have growth without a middle-class that has spending power and is able to grow. Even if the number was 10% that’s not enough to have a decent society built on good solid civil foundations and growth. 

    The American Dream is just that, a dream because you have to be dreaming to believe it. I’m paraphrasing George Carlin.

  • Paul Lindauer

    Don’t you think the Republican threats to throw the United States into bankruptcy has a significant effect on the reluctance of business to make new inventory and thus create new jobs.

  • http://www.jobwaltz.com JobWaltz.com

    What happens to government jobs that created with spending? How do we pay for more stimulus? Why should we stimulate when stimulus so far has proven ineffective? 

    • Anonymous

      It’s called revenue. 

    • Pete D

      It doesn’t matter how many jobs are created. The value that those jobs create is trasnsfered to those already making lots of money. Look who is getting raises from the added jobs. It is those who are contributing. So no wonder the new low paying jobs aren’t having any affect.

  • Major Bolex

    Unfortunately all these solutions prove one thing, the Fed needs to be decommissioned. They have no idea about creating wealth, only debt.

    • Anonymous

      So what your saying is that a central bank is a bad idea.
      What if your wrong. What if this libertarian ideology is so off base with the rest of the world in economic sense that it creates a huge downward spiral that makes the one that hit Argentina look like a walk in the park. 

      • Kemolle

        ……..the downward spiral was CREATED by the easy money policies of the Fed……Credit default swaps, and the Madoff’s of the world would not have gotten away with a much nonsense if the real risk of the market were more transparent……..the Fed alleviates risk for the existing businesses, putting the long term real risk on the rest of us………look at who is suffering now……not the big banks, which were bailed out, but the small town banks and small businesses and many individuals who are unemployed.   Fiat money emboldens inefficient risk taking, while honest money allows for honest savings providing the real risk takers to develop real businesses, that stand up to scrutiny

    • Economist

       You have no idea what you are talking about.  The Federal Reserve doesn’t create debt.  It is an independent government agency.  The debt of the United States is created by the spending and tax policies of Congress and the President.  In terms of creating wealth — the Fed’s policies that promote inflation stability and which moderate the recession phase of the business cycle have cut the average length of U.S. recessions and increased the length of economic expansions.  That creates wealth!

      • InActionMan

        The Fed is not a government agency. It is a private bank. Fed Governors  and the Chairman are appointed by the President and Approved by Congress but this is not a government agency.

        That does not mean that the Fed is an evil cabal however the it should be made more clear to the American people that the Federal Reserve bank is not part of the U.S. government.

      • Pete D

        NIce explanation but their policy sure as h… did. Lower rates. Lower bank regs. Lower income people induced to borrow to bolster the construction market. The banks sell their paper at 1 to1 with the carrot that the interest rates are better then the present rates. The derivitaves fail. The market fails. Jobs go down the tube. The low and middle income folks lose jobs. The private sector is in trouble. The government has more folks requiring assistance. The debt climbs. Those folks collecting the high salaries demand lower taxes because they are paying much more of their share of government spending even though they haven’t earned nearly as much as they have collected. Because they got big pachecks, there was no money available to give raises to those really added value to the economy.

        Yeah! the FED screwed making a bad situation grow only to expolde up by extending the easy money.

    • Kemolle

      You have hit on the core problem……..the Federal Reserve system……

      1.It “maintains” business through its policies……!!! Wrong….   Business should maintain business.. through its own legitimate existence!

      2.  It violates the ethic of saving by depreciating the money you save…..forcing you to play “Inflation” protection games…encouraging you to buy things you don’t really need or even want……

      3.  It creates cynicism in all of us about the process, breaking us up into various “classes”, causing us to look out only for ourselves and destroying the Social ethic that made our country great.

      4.  The process of inflation, or dollar “fraud,allowsthe bigger of us to take advantage of the inflation game process, while the lesser of us fall further and further behind……..the difference between the pay of management vs the ordinary worker has gone out of sight in the last two decades.

  • Rodom32

    As long as the Republicans front for the multi- nationals, and the multi nationals favor the cheapest labor market, the U.S. comes out near the bottom when it comes to making policy for creating jobs in this country.

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  • Anonymous

    Tom—

    Your caller Ike was absolutely correct— ILLEGAL IMMIGRATION is a catastropic problem for our country (including both the ILLEGAL FOREIGN NATIONALS and the LAWBREAKING BUSINESS PROFITEERS that hire them).  Your guest (THANK G-D HE WASN’T ELECTED TO THE FED) was positively dishonest in responding to Ike’s comments.  Notwithstanding that the construction industry has been hit hard, there is not legitimate basis for your guest to have contested the fact that ILLEGAL FOREIGN NATIONALS were hired TO DO THESE CONSTRUCTION JOBS WHICH AMERICANS LIKE IKE WILL DO.

    ILLEGAL immigration is a CRIME and it is CATASTROPHIC for our country–  it depresses wages; it results in billions of social welfare costs forced on the backs of the unwilling American taxpayers; it results in higher crime; it is devastating to the law-abiding businesses who are unable to compete with those that choose to break the law; it robs the U.S. treasury of billions of dollars!!!  The continuation of this ILLEGAL IMMIGRATION SCHEME (by whomever is promoting it), is UNACCEPTABLE and AMERICANS ARE SICK OF IT (including this life-long Democrat)!

    • Anonymous

      yawn… see this in every recession. Blame the poor and the foreign for everything that ails us. The irony is that these are the same folks who maintain your standard of living by keeping grocery and produce prices low.

      • Anonymous

        It’s your post that is a “yawn”.  Blame is attributable to those at fault for breaking the law and encouraging lawbreaking:  the ILLEGAL FOREIGN NATIONALS, the LAWBREAKING BUSINESSES that hire them, and OUR INSUFFERABLE ELECTED OFFICIALS who have refused to enforce U.S. law.  ILLEGAL immigraiton certainly not the only problems with our economy but it is a SUBSTANTIAL PROBLEM.  You, on the other hand, seek to ignore facts.  By, the way, it really has nothing to do with the rececession, because recession or not, ILLEGAL IMMIGRATION is a substantial problem for our country.  And please spare me your subterfuge— you clearly have no empathy for poor and middle class Americans or LEGAL immigrants, whose wages are devastated by ILLEGAL IMMIGRATION. 

        Let’s Stick to Facts Rather than Your Misrepresentations (3 examples):

        1.  The Miami Herald Editorial Board reported on February 14, 2010, and I quote:
        “Caring for undocumented residents cost Jackson $150 million last year, about as much as it received from the voter approved half-penny sales tax.” 2.   As posted on the LA County Mayor’s website $1.6 Billion to ILLEGAL IMMIGRANTS in LA County alone:

        January 19, 2011 — Supervisor Michael D. Antonovich released figures from the Department of Public Social Services showing that . . . ‘When you add this to $550 million for public safety and nearly $500 million for healthcare, the total cost for illegal immigrants to County taxpayers exceeds $1.6 billion dollars a year – not including the hundreds of millions of dollars for education,’ said Antonovich.” 
        3.  The Seattle Times, By Andrew Garber, April 3, 2011:
        “. . . Washington state estimates it will spend more than $300 million over the next two years on services illegal immigrants can tap, not counting K-12 education. A breakdown:
        $125 million on health care for 7,400 pregnant women ineligible for Medicaid because they can’t prove they are here legally. This program can’t be changed, because of federal restrictions.
        $73 million on welfare for children. The federal government requires proof that the children are here legally, but not their parents. This program also can’t be changed.
        $59 million for medical and dental coverage for 25,000 children from low-income families ineligible for Medicaid because they can’t prove they are here legally.
        $24 million for kidney dialysis and cancer treatment for 1,300 low-income people ineligible for Medicaid because they can’t prove they are here legally.
        $15 million for in-state tuition subsidies for students who have lived in Washington for at least three years. The state does not check legal status.
        $5.6 million in nursing-home care for low-income undocumented residents.________________________

         Marc—

        You can continue to throw around your baseless and unpersuasive cheap shots, but the facts are facts.  And if you really cared about the poor, you wouldn’t be supportive of a system that takes advantage of people and devastates wages of the law-abiders!

        And, by the way, I am not kept in my standard of living because of ILLEGAL IMMIGRATION because I refuse to be a participant in that system.  I support FAIR TRADE and will not hire someone who is unauthorized to work.  Contrary to the illegal labor scheme for which you advocate, cheap labor is NOT ACTUALLY CHEAP!

        • Anonymous

          Folks distribute and re-distribute slices of the facts and figures — and you can make any issue seem as dire as you want by doing so. This is the wonder of the internet — you can find any “fact” you want, and I could also cherry pick a bunch of stats, but I am not going to bother. Instead, how about a comprehensive study by the Congressional Budget Office, whose mandate is to be nonpartisan? Here is the link
           
          http://www.cbo.gov/ftpdocs/87xx/doc8711/12-6-Immigration.pdf
           
          Their conclusion is that the impact of illegal immigration on local. state and federal budgets is small. They consider taxes collected as well as expenditures.
           
          I am hardly saying illegal immigration is OK. But on the scale of problems we face it is minor. It gets blown up in hard economic times because it is an easily identifiable target. Every generation does the same thing — whether it is the Irish, the Chinese, the Italians, etc. They are all hoardes of unwashed, crime-ridden parasites sapping our nations energies. Then of course their children grow up and become politicians etc. ready to take on the next group.
           
          Sorry, it bores the heck out of me, although I do enjoy the spectacle of people frothing at the mouth at the idea we are being overrun by vermin.
           

          • AngelicaUNC1

            Yes you are absolutely saying ILLEGAL immigration is okay because you are arguing fervently against any effective enforcement of the law.  By doing so you are supporting the depression of wages for poor and middle class American citizens and LEGAL immigrants and you are incentivizing further lawbreaking en masse because you are in support of transmitting the outrageous message that enforcment of the law is inappropriate and that the U.S. will not enforce its own laws.  

            Second, you really don’t get it, I am not focusing on any particular national origin or ethnic group, and I am am not against or even talking about “immigration,” I am talking about ILLEGAL immigration.  The law must be enforced against whichever nationalities or ethnicities are violating it.  There is no special treatment for lawbreakers of whatever nationality.   The United States has the most generous immigration policies in the entire world, permitting over 700,000 LEGAL imimgrants into our country each year.  It is hardly fair to ask LEGAL immigrants to wait their turn and pay substantial fees and then to permit others to break the law with impunity and obtain rewards by virtue of their lawbreaking.

            Third, the figures that I have citied for you are:  (1) from liberal sources, and (2) are objectively substantial and disastrous for the well-being of the United States and its citizens. $150 Million for ILLEGAL IMMIGRANTS in 1 year at JUST ONE PUBLIC HOSPITAL in Miami; $1.6 Billion in LA County alone; at least $300 Million  in Washington state.  IN WHAT UNIVERSE ARE THESE INSIGNIFICANT FIGURES?????   Moreover, I hardlly think the liberal Miami Herald Editorial Board; LA County’s Department of Public Social Services; and The Seattle Times have any kind of right-wing agenda or a reason to lie about this issue— to the contrary. 

            It is evident that I don’t fit within your attempts to marginalize support for enforcement of our immigration laws into some right-wing xenophobic agenda.  I am a Democrat, and “08 Obama voter, and a civil libertarian. 

          • Anonymous

            Gosh, I am not arguing against effective enforcement — and I am certainly not arguing fervently — if anything I am casual and flippant. Sorry, but I do not take your feverent arguments or your particlar list of individual newspaper citings as seriously as I take a carefully done and comprehensive analysis by an institution such as the CBO. I think I am the one taking the balanced view here. I work in medicine, and believe me I can pull out 20 articles citing that coffee destroys your health and 20 more that say just the opposite.

            If you are focusing on the illegality per se, I agree with you. But I thought you were making an economic argument. The day I see Americans going to work picking grapes I will concede the point, but this has nothing to do with whether the workers are legal or illegal; the economic consequences would be roughly the same

            Sorry, I think the notion that illegal immigrants are A DISASTER FOR OUR COUNTRY!!!! is vastly overblown. But in any case I am glad to hear you are not a right-wing nut job.

          • Anonymous

            Thank you for your response.  Leaving town — Plan to respond more substantively when I have a chance to review the CBO report (although I have skimmed it, and based upon my overview, I disagree that the costs of ILLEGAL immigration are insubstantial (and I don’t believe the content of that report reveals that), but will review more closely when I have a chance.  Tx.

  • RickNYC

    Diamond’s insuperable obstacle gaining approval from Republicans is undoubtedly his New York accent.

  • Michael keshishian

    Diamond kept saying that the bond markets would not get nervous about the US debt for years to come.  But the Wall Street Journal has been reporting that two big rating agencies, S&P and Moody’s, are warning that the US is going to lose its triple A rating if it continues to rack up debt.  No wonder the Republicans didn’t want him at the helm, racking up more debt. 

    • Will H

      Wrong.  Their warning is about the game of chichen that the Republicans are playing holding raising the debt ceiling hostage in order to push their economic and social agenda.

      • Michael keshishian

        Incorrect. The
        article I’m referring to is from January, before anybody was talking about the
        debt ceiling. You can check it out at http://online.wsj.com/article/SB10001424052748703583404576079311379009904.html.

         

        Nobel
        Prize, shmobel prize; where were all these geniuses before the crisis?  How come none of the main stream economists saw
        it coming?  Excessive debt was a major
        reason for the crisis.  And now Keynesians
        like Diamond are saying that more debt will get us out of it?  Go  

        • Will H

          How do you pay back debt when you don’t have a job? 

          How do Americans pay back debt when they don’t have jobs?

          How does the US pay back debt when we produce squat and ideas and inventions simply turn into more jobs in China?

          How does the US pay back debt when those who can most afford it refuse to pay higher taxes?

          • Michael keshishian

            The answer to your
            three debt questions is certainly not to take on more debt. 

             

            And taxation
            should not be based on “those that can most afford it”, as you state.  That’s the Willie Sutton theory of taxation
            (robbing banks because “that’s where the money is”). 

  • West Michigan Listener

    Cutting funding for the government through tax cuts results in cutting jobs.  Government jobs are American jobs.  Tax cuts for private businesses too often leads to outsourcing work.  Extension of the Bush tax cuts was lauded by Republicans as an economic
    stimulus that would lead to job creation.  Instead job growth is still
    stalled. Should we raise taxes to stimulate the economy by providing funding for good American government jobs?

  • Pingback: Peter Diamond withdraws - Page 3 - U.S. Politics Online: A Political Discussion Forum

  • Eric Penman

    Damond is totally clueless as to what to do to create jobs, belief in markets is being undermined in fundamental ways by their confusion, currency is losing its magic, economic collapse is waiting in the wings but both parties are in denial. The truth is nothing can be done at this
    late date to avoid another meltdown. Wall Street derivatives
    will destroy capitalism and this came not from Communism but
    from inside the beast itself. Capitalism contains the seeds of its own destruction ( as Marx correctly observed a century ago)
    and It will die a very sad death and pull billions down with it.
    I feel sorry for the young will never own a house and have a
    middle class life. Diamond, Summers, Rubin, Greenspan, all these
    genius economic thinkers are filled with drivel and complicated
    speech with hides their true intent. This economic system is
    really just a sophisticated plantation slavery system the bankers
    and their flunkies the economic profession are whores to greed.
    That is why all the money power and influence are in a few hands
    they have turned the whole word into a banana republic
    congratulations

    • Pete D

      The real goal of capitalism is to grow into a mnopoly. That is what is happenning. TOO BIG TO FAIL. That is why the government needs to have reins on it.

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  • Wm. James from Missouri

    When price trends and cost trends are uncertain consumers and business will hold back on consumption and investment. This is being revealed by the fact that business are trillions of dollars flush with non performing cash, consumers, being scared of their jobs and the economy in general, are paying down debt when possible and cutting back in general.
    Government needs to set the direction of trends with progressive taxing policies and work rules. If the US were to penalize certain types of behavior, through tax policy, such as; NOT hiring employees and NOT expanding sales, business would be forced to make the decisions that they would normally make if good economic decisions had not been replaced with  political agendas .
    Secondly, the developed nations need to take a hard look at improving labor laws and worker’s hours. With millions unemployed in the US and billions unemployed or underemployed world wide, it would make sense to establish a 6 hour work day, and higher ( but variable under certain conditions) overtime rates.
    A 6 hour work day would allow for more education, less traffic congestion, more family time, more job flexibility ( many could take more than one job, as needed, and thereby acquire more skills and job security), and much, much more positive change.
    We need to create private unemployment investment accounts, similar to the retirement accounts created years ago. Any unused unemployment account money could be used to augment (earlier) retirement. This would be your money and could not be denied by your employer are confiscated by ANYONE, period.
    Everyone should now be aware that technology will continue to follow growth via Moore’s Law phenomena
    ( A possible greater phenomena involving powerful algorithms may dwarf Moore’s law, please see the P versus NP and other related items .) 
    which will lead to THE COMPLETE ELIMINATION OF ALL (meaningful) JOBS  in the not too distant future.The 6 hour work day will someday give way to a 4 hour day, etc.. This is just a partial and temporary restructuring. Our entire economic system will one day give way to the forces of the (so called) Singularity.  It has been said that the definition of insanity is doing the same thing over and over and expecting a different result. —–   Traditionalist take note.

  • Marka

    They would rather send our jobs to communist countries!! That’s how American they are!!

  • M80

    From M 80;  One job that cannot be replaced by outsourcing or robots involves tourism.  Referencing NPR story on Chinese Car Clubs a few months ago sugges campaign to attract them as groups to Experience America for 10 DAYS;  Example New York; San Franciso; Columbus OH. 

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