Investing in Education Creates More Than Twice as Many Jobs as Military Spending
The following is a transcript originally published on the Real News Network.
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this week's edition of The PERI Report.
Now joining us is Bob Pollin. He's the founder and codirector of the PERI institute in Amherst, Massachusetts. His latest book is Back to Full Employment .
Thank you for joining us, Bob.
ROBERT POLLIN, CODIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: Thanks very much for having me on.
NOOR: So, Bob, the Labor Department just announced that productivity growth is going to be weaker than expected, and some are going to argue that this growth is temporary and that we need to focus on austerity measures. What's your response?
POLLIN: My response is austerity was not the right program a month ago, it wasn't the right program six months ago, and it certainly isn't the right program today and into the future.
As we've talked about in a lot of previous instalments of this, we now know from our own research here in PERI that the single most important piece of research in support of the austerity agenda, by Carmen Reinhart and Kenneth Rogoff of Harvard, was wrong. It's just wrong as a piece of research, this notion that when government's public debt exceeds 90 percent of the country's GDP, that we are going to experience precipitous declines in economic growth. Our own paper showed that to be wrong, and so that the argument for austerity based on public debt coming up against that threshold is no longer valid.
Now, at the same time, we have other kinds of evidence in both Europe and the United States now that also weakens the argument for austerity. For example, we have the evidence from both the U.S. Social Security Trust Fund and the Medicare Trust Fund that the finances in both cases are not facing the kind of dire straits that have been described over and over and over again by the austerity hawks.
So, for example, in the case of U.S. Social Security, the security hawks have been arguing that Social Security is unsustainable. Even the Obama administration itself has proposed this provision to reduce the cost-of-living payments for Social Security through this so-called technical fix. What it really [incompr.] cuts in Social Security, most especially for the long-term aged in the population. So the arguments for that have weakened because we now know that the Social Security Trust Fund is more solvent than previous estimates.
On top of that, we have the case, the situation in Europe where the European commission just last week announced that it was relaxing its austerity conditions in some of its main member countries, such as France and Spain and Norway. Why? Because the unemployment crisis is not going away. It's stuck or getting worse. The overall European Union, Eurozone unemployment is at 12.2 percent. It's not going down. It's going up. So the arguments that austerity was somehow necessary because the debt levels were too high or austerity was necessary because austerity could actually be a solution to mass unemployment, those arguments have evaporated.
Now the argument should be: we don't believe in austerity economics, so what are we going to put in its place? And what I would argue, what we've discussed on The Real News on previous occasions, is a full-force program to fight for employment, to fight mass unemployment, promote decent employment, higher wages, and to invest in the public sector, invest in infrastructure, invest in the green economy, invest in education. These are all good sources of job creation. These are all things that are necessary. Of course, we heard about the collapse of the bridge in northern Washington last week. You know, that was emblematic of the deterioration of our general basic public infrastructure. So invest in infrastructure. You can't lose by investing in infrastructure. It raises productivity and it creates jobs.