{"id":50662,"date":"2011-11-17T12:11:30","date_gmt":"2011-11-17T17:11:30","guid":{"rendered":"https:\/\/today.uconn.edu\/?p=50662"},"modified":"2011-11-22T09:41:27","modified_gmt":"2011-11-22T14:41:27","slug":"the-u-s-economy-how-do-we-get-out-of-this-mess","status":"publish","type":"post","link":"https:\/\/today.uconn.edu\/2011\/11\/the-u-s-economy-how-do-we-get-out-of-this-mess\/","title":{"rendered":"The U.S. Economy: How Do We Get Out of This Mess?"},"content":{"rendered":"
\"Steven<\/a>
A panel of five economics department faculty members held a public discussion, "How do we get out of this mess" on Nov. 16. From left are Steven Lanza, standing, Fred Carstensen, Stephen Ross, Alanson Minkler, and Arthur Wright. (Peter Morenus\/UConn Photo)<\/figcaption><\/figure>\n

In a panel discussion on \u201cWays Out of This Mess,\u201d five economists in the College of Liberal Arts and Sciences generally agreed that fiscal policies, not monetary moves by the Federal Reserve, will provide the path out of the nation\u2019s economic slump. Spurring economic growth is more important than worrying about the nation\u2019s debt and deficits, they said.<\/p>\n

Getting five economists to agree was itself unlikely, economics department head and professor Metin Cosgel, the moderator, warned at the start of the Nov. 16 public forum.<\/p>\n

He asked each of them what they would advise President Barack Obama to do about the economy if they had his undivided attention for 10 minutes.<\/p>\n

Infrastructure spending, investing in education, and restructuring mortgage debt were among the solutions that several of them offered.<\/p>\n

\"Arthur<\/a>
Arthur Wright, professor emeritus, called for spending on infrastructure and reducing mortgage debt in the short term, with higher taxes and cuts in benefits forming part of a long-term solution. (Peter Morenus\/UConn Photo)<\/figcaption><\/figure>\n

The way out of the economic mess will not be easy or short, said Arthur Wright, economics professor emeritus and co-editor of the department\u2019s Connecticut Economy<\/em> magazine.<\/p>\n

But he said that worrying about debt and deficits is \u201clooking at the problem from the wrong end.\u201d Short-term spending on infrastructure would encourage investors, and reducing a mountain of mortgage debt would allow people to move on with their lives, he said.<\/p>\n

Then, a long-term solution must be worked out for the deficit that will include higher taxes and cuts in benefits.<\/p>\n

\u201cThe longer we postpone it,\u201d said Wright, \u201cthe worse it will be.\u201d<\/p>\n

Restructuring mortgage debt \u201cwould be a huge game changer,\u201d said Steven Lanza, editor of The Connecticut Economy<\/em>. It would free people to spend more and businesses to invest and hire.<\/p>\n

\"Stephen<\/a>
Stephen Ross, professor of economics, warned against dissolving Fannie Mae and Freddie Mac, the government-sponsored private housing lenders. (Peter Morenus\/UConn Photo)<\/figcaption><\/figure>\n

Stephen Ross, professor of economics and an expert on the subprime mortgage market, said that financial reforms so far have fallen short in addressing the mortgage debt problem. There is still no mechanism for monitoring aggregate leveraging in the mortgage market, he noted.<\/p>\n

He suggested that a program to ease refinancing for people with negative equity in their homes would be \u201ca great macro-economic stimulus.\u201d It would not solve the foreclosure crisis, however \u2013 only time will take care of that, he said.<\/p>\n

He warned against dissolving Fannie Mae and Freddie Mac, the government-sponsored private housing lenders that are now in conservatorship. \u201cWho in the world is willing to take over their balance sheets? That would cause another Great Depression,\u201d he said.<\/p>\n

Lanza compared the nation\u2019s crumbling infrastructure with the Monteith and Arjona buildings, and said the government needs, in the short term, to \u201cspend like a drunken sailor\u201d on infrastructure and education, areas that will have long-term benefits and short-term stimulus.<\/p>\n

Giving everyone who has been unemployed long-term a federal job was the novel approach proposed by Lanse Minkler, associate professor of economics. He calculated the cost at $308 billion, based on 2009 employment figures, compared with $450 billion, the cost of Obama\u2019s recent stimulus plan, which was rejected by Congress.<\/p>\n

Not only would hiring everyone reduce unemployment, but it also would cut federal spending on housing programs and Medicaid, Minkler said: \u201cIt\u2019s at least somewhat feasible.\u201d<\/p>\n

\"Fred<\/a>
Fred Carstensen, professor of economics, said infrastructure spending, investments in education, and retraining of workers would lead to economic paybacks. (Peter Morenus\/UConn Photo)<\/figcaption><\/figure>\n

Fred Carstensen, professor of economics and director of the Connecticut Center for Economic Analysis, said it\u2019s essential to restore economic growth. Infrastructure spending on the nation\u2019s roads and ports would lead to economic paybacks, he said, as would investments in education and in retraining workers in the latest manufacturing technologies.<\/p>\n

He also suggested going back to a 1791 Hamiltonian idea, an 8 percent tariff on all imports.<\/p>\n

\u201cWe are basically back in the Great Depression, and we need policies to change that,\u201d he said.<\/p>\n

Minkler and Ross argued that despite the state of the economy, the situation of most Americans is not dire. The federal stimulus program was a huge success, Ross said, and standards of living have actually been rising for decades. While there are a lot of things that can be done to help people, \u201cIt\u2019s not that bad,\u201d he said.<\/p>\n

\u201cThere\u2019s a pretty robust world economy \u2013 it\u2019s amazing what we\u2019ve survived.\u201d<\/p>\n

\u201cAs Americans, most of us are very well off,\u201d added Minkler. \u201cForty percent of the world lives on $2 a day.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A panel of UConn economists generally agreed that fiscal policies, not monetary moves, will provide the way out of the nation’s economic slump.<\/p>\n","protected":false},"author":10,"featured_media":50686,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_crdt_document":"","wds_primary_category":0,"wds_primary_series":0,"wds_primary_attribution":0,"footnotes":""},"categories":[1],"tags":[],"magazine-issues":[],"coauthors":[43],"class_list":["post-50662","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-04-26 08:30:17","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/50662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/comments?post=50662"}],"version-history":[{"count":5,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/50662\/revisions"}],"predecessor-version":[{"id":50708,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/50662\/revisions\/50708"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/media\/50686"}],"wp:attachment":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/media?parent=50662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/categories?post=50662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/tags?post=50662"},{"taxonomy":"magazine-issue","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/magazine-issues?post=50662"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/coauthors?post=50662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}