Introduction
This paper is looking into the case of the financial crisis, which results in an economic recession and the further sustained and recovery effects with the main references made to the case of the Great Recession of 2008 in America.
Unemployment, income, and other economic inequalities have been cited as the major causes that led to the Great Recession in 2008. According to Lerman, the rising numbers of the unutilized workforce had swelled because of increasing “gap by educational attainment” among the “college graduates and high school graduates” (Lerman 2016, 372). Consequently, this was caused by looking at policies that were brought by President George Bush and Barrack Obama that were aimed at fueling growth. Before the recession, America had a surge of home loan lending. Loans were endorsed out to inadequate borrowers with poor records to reimburse them.
Manifesto for Economic Sense
America’s economy has been marked by the effects of the 2008 recession up to the moment, with joblessness and underemployment widely spread in the present economy. These effects of economic recession are expected to persist among the Americans for some period.
The Manifesto expresses that a wrong move was made after the first phase of the crisis, concentrating on government deficiencies and contending that the general population area ought to endeavor to decrease its obligations pair with the private part. Therefore, the financial policy has wound up strengthening and intensifying the purifying impacts of private-segment spending cuts.
Lack of equality in the global economy presented in this manifesto corresponds well to the new economic structures and policies that seek to address these inequalities and stabilize the market system (Cassidy 2016, 1). According to Cassidy, in “A Structural Stagnation Policy”, Colander contends that the structural issues made by globalization and extensive exchange shortages will in the long run end, either in view of a fall in the U.S. conversion scale or descending movement in the total supply curve (Cassidy 2016, 2).
As indicated by Cassidy, the structural stagnation model and strengths can hold merchandise costs down so that increments in the cash supply prompt to resource cost builds, which can make irregular structural characteristics (Cassidy 2016, 5). Therefore, sluggishness will be experienced in the structural changes for them to retrain workers at a position relative to their perceived standard. Additionally, endeavors by the Legislature to stay away from the agony may well blowback and cause more torment over the long haul.
A Structural Stagnation Policy Dilemma
As per the structural stagnation theory, there are both long-run and short-run causes. The long-run cause brought about by the deficits in trade is linked to globalization, and trade rates. Consequently, the short-run cause is linked to the financial crisis results. The two connect in light of the fact that one of the reasons for the monetary crisis is that of the administration abstaining from managing the issues displayed by globalization. Managing structural stagnation, therefore, takes the potential of drawing attention in the coming years.
Cassidy considers the explanation of this theory not sufficient to warrant an understanding of the “failure of standard monetary and fiscal policy” to help foster growth of between 6–7 % as projected by the economists (Cassidy 2016, 7). This has given rise to new systems within the American economy that ensures the prevention of possible economic setbacks. Further, as indicated by this speculation, the structural stagnation issue started in the previous two decades. This has brought down the development drift for the U.S. economy to a lower rate than the earlier anticipated by economists.
Inequality and Unemployment
Lack of employment largely affects the “bargaining power” of other workers in an economy with the greatest impact felt in the proletariat class (Baker and Bernstein 2014, 6). In examinations of imbalance and low wages, many claims that what we need is a well-educated workforce. Their contention is that well-educated specialists are more productive and their compensation mirrors their efficiency. Other workers are also bound to win increasingly if they can go back to class and add on their education. Even so, while more knowledge is often the reason for higher wages, it is simply a part of the story.
In many employments, the estimation of specialists’ work depends on the interest in their work. A retail representative in a store or a server in an eatery is significantly more lucrative, which means they are creating much more income when business is strong than when it is weak. This implies, in a solid economy, bosses can bear to pay a specialist to a similar level of instruction and to prepare a higher wage.
Looking at the trend of unemployment in America, one can confirm that for a drawn-out stretch of time, the unemployment rate has been on the high end as opposed to the low of 4% in the year 1969 (Baker and Bernstein 2014, 8). This consequently, shows a long haul issue in the nation’s unemployment. Federal Reserve has since settled on policy choices to balance out the financial sector, end the recession, and realize economic recuperation. Reverberating these policy choices in their article, Baker and Bernstein state:
It is essential for reducing the income stagnation that has beset the middle class, reducing poverty rates among working-age families, pushing back against economic inequality, and improving the fiscal outlook. Economic anomalies often occur in weak labor markets. Full employment can be a regular feature of the policy landscape, with tremendous benefits for rising living standards, poverty reduction, the federal budget, and equitable economic growth. (Baker and Bernstein 2014, 16)
Government Spending
Hungerford notes a policy on government budget that gives blackout on the public investment and focuses on federal expenditure and ways to “raising the revenue to meet them” (Hungerford 2016, 279). Hungerford additionally notes that the individual decline in savings and investments is also part of the real problem, and cause to the “growing inequality” (Hungerford 2016, 279). Given these two views, it is important to note the role of government in encouraging investments by providing a favorable and safe environment. The federal government needs to work with its citizens in taking the right steps towards investing more as compared to expenditure.
This decline in public investment has led to an emerging of deplorable infrastructure that impacts negatively on private-sector productivity and economic growth. In addition, a decline in education spending by the government causes the widening of the disparity gap among children funding. In this regard, therefore, one can conclude that government spending impacts the school’s performance. It is essential to have the government regulate its expenditure so as not to affect other sectors of the economy.
Works Cited
Baker, Dean, and Jared Bernstein. “Want to Attack Inequality? Reduce Unemployment!.” Challenge, vol.57, no.5, 2014, pp. 6-16.
Cassidy, John. “The Demand Doctor.” ProQuest. 2016, pp.1-8.
Hungerford, Thomas L. “We’re Not Broke: America’s Real Spending Problem and How to Fix It.” Challenge, vol. 59, no.4, 2016, pp. 279-297.
Lerman, Robert I. “Reinvigorate Apprenticeships in America to Expand Good Jobs and Reduce Inequality.” Challenge, vol. 59, no.5, 2016, pp. 372-389.
Wisman, Jon, and Nicholas Reksten. “Rising Job Complexity and the Need for Government Guaranteed Work and Training.” The Job Guarantee: Toward True Full Employment, edited by Matthew Forstater and Michael Murray, Palgrave, 2013, pp. 5-38.