Explaining Southern California's economy

Massive hurricane: We're on it! Massive unemployment…um, we'll get back to you on that

Arianna Huffington is ticked off that politicians can leap into action when a hurricane is bearing down on the East Coast but stall, stall, stall when it comes to attacking the dull, grinding crisis that is U.S. unemployment. A taste:

With the toll that the job crisis is taking on the lives of millions of people in this country -- from college graduates who can't get jobs to middle class families being thrown out of their homes -- this is a Category 5 disaster. In extreme cases, financial desperation has even been a reported cause in suicides. "We have noticed many more people mentioning the economy," said Eve Meyer, executive director of the nonprofit San Francisco Suicide Prevention, which has seen an increase in suicides on the Golden Gate Bridge. "We constantly hear, 'I'm going to be homeless; I would rather be dead than be homeless.'"

Arianna goes on to pit the aggressive, all-hands-on-deck response to Irene against the sluggish-to-nonexistent response to persistent joblessness:

This past weekend, we saw the parade of governors and mayors -- Christie, Bloomberg, Cuomo, O'Malley, Corbett, Perdue -- in the now familiar Emergency Press Conference Protocol: sporting windbreakers, standing in front of a temporary podium, flanked by emergency personnel and the heads of relevant agencies, all with looks of grim determination and resolve. It's the look of action. It's the look that says, "This is not going to be easy but we are up to the task and will do everything in our power." And they did to great effect.

Contrast that with the dominant message about the jobs crisis: paralysis, acquiescence, resignation. Not a lot of windbreaker moments.

Not a lot of windbreaker moments. Great line and an indictment of what a dubious job the country is doing…on jobs. Now, you can always argue that a hurricane represents an imminent threat and that while it's no party, it's a challenge that we can rise to. Unemployment on the other hand...

But think about it this way: high unemployment is a lot like a slow, steady rain that erodes the foundations of society. We wake up every day as we have since the onset of the financial crisis…and it's still raining. We know that this is eventually going to cause the ground to liquify beneath our homes and business and various major institutions…but because it's not very dramatic weather, we postpone the hard work of shoring everything up.

But we have to bolster the foundations because, frankly, it's not going to stop raining. The unemployment crisis was caused by big, macro-economic events that will take years to settle down. And the bottom line is that many unemployed people can't get a job because there's no job for them to get. With you have extremely slow GDP growth, you don't have a jobs-creating engine in the economy.

This is where the social contract gets strained. In the U.S., the government tries to maintain near-full-employment because we lack a comprehensive social safety net. The idea is that if you become unemployed, the duration of that joblessness will be brief. 

But that's when the situation is normal and the Federal Reserve can tune the economy by making modest monetary adjustments. We're not in a normal situation -- remember, it's been raining since fall of 2008 -- so additional measures are required. In Southern California, things are particularly dire: our unemployment rate at 12 percent is far higher than the national average of 9.1 percent.

It's not going to be pretty when the foundation of just about everything gives way. You could call it the windbreaker moment to end all windbreaker moments. But in this case I'm not sure that a lousy windbreaker is all I'd want for protection. A suit of armor, perhaps...

blog comments powered by Disqus