Now, I'm no economist. But the power of Keynes in the public sphere in the '30s and '40s was precisely the recognition that not all business cycle downturns are self-correcting. They can become self-perpetuating. Or drag on for years to no economically efficient purpose. In other words, something like the situation we face right now and probably have not faced for more than 70 years.
So the Democrats are now saying they're going to pivot to jobs. But the only tools we have available that have any credible hope of moving the needle is fiscal policy, i.e., spending. (That and whatever substitute the Fed can do in the form of 'quantitative easing'.) But that's off-limits with Republicans having a de facto veto on new laws coming out of Congress. And they've spent the last 7 or 8 months pushing policies to short-circuit job growth and lay off people in the public sector. (Why they're doing that is another question -- depending on the lawmaker, I'd say a mix of misplaced ideological zeal and cynical effort to cue up a Republican victory in 2012.)
What's also the case, as one of our readers pointed out to me a couple days ago, is that Democrats need to confront the fact that over the course of 2009 and 2010 the public turned against the idea that government spending had a role in resolving the crisis. After all, that's why they lost the 2010 election. There are many reasons for that, some of which President Obama bears real responsibility for. And for my own part, I think the conclusion is wrong. But it's something that President Obama's critics on the left frequently take too little account of when they rail against him for not cranking up the WPA.
So in practice, we can pivot to talking about jobs, hoping for the best and perhaps using it as a political cudgel (though that seems quite dubious under the current conditions). But in practice, in reality, we appear to have no plan to do anything on the jobs front that has any prospect of passage in the Congress until 2013 at the earliest.
That's a fact that seems worth absorbing.