The Senators Who Gave Us 15 Million Unemployed Want to Deny Them Benefits

By Dean Baker, Co-Director of the Center for Economic and Policy Research

It is amazing how people in Washington are so forgiving -- of each other. We have close to 15 million people unemployed and more than 8 million people under-employed because the folks managing our economy were incompetent.

In spite of the efforts of economists and policy types to portray the cause of the economic collapse as being complicated, it wasn't. It was really really simple. Prior to the downturn the economy was being driven by an $8 trillion housing bubble. This led to a boom in residential construction. (A separate bubble in commercial real estate led to a boom in non-residential construction.) The equity generated by the housing bubble also led to a surge in consumption, with the saving rate falling to almost zero at the peak of the bubble.

It was inevitable that the bubble burst. Bubbles do that. They lead to an over-supply and eventually we run out of suckers willing or able to pay bubble-inflated prices for houses. The collapse caused the economy to lose $1.2 trillion in annual demand from the private sector. Annual construction spending fell back by close to $600 billion and consumption fell by roughly the same amount as a result of the loss of housing wealth.

There is no mechanism that allows the economy to easily replace this much demand. Hence we were guaranteed a severe downturn, without massive amounts of spending by the government.

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Never stop questioning

The important thing is not to stop questioning. Curiosity has its own reason for existing. One cannot help but be in awe when he contemplates the mysteries of eternity, of life, of the marvelous structure of reality. It is enough if one tries merely to comprehend a little of this mystery every day. Never lose a holy curiosity.

-Albert Einstein

TheGreat Leaders Conference is coming together! 10.7.2010

The Great Leaders Conference will honor well-known CEOs as Great Leaders in Corporate Social Responsibility, Social Advocacy, Social Media, and Innovation. The event will raise awareness for CSR, and demonstrate how business leaders use their social influence to give back. The Conference will shine a light on the accomplishments of these great CEOs, and inspire other business leaders to initiate socially responsible programs.

The Great Leaders Conference is a CSR event. Proceeds from the Conference will fund 15 libraries for Room to Read, providing books and learning environments for 50,000 children in some of the poorest regions of the world.

The GLC is an invitation-only event for C-Suite and Senior Executives from across all industries.

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