So, What Kind of Economic Crisis Is It? VIEWPOINTS UNF Professors Can't Agree on What's to Blame for the Situation
Turner, Kevin, The Florida Times Union
Byline: KEVIN TURNER
Economists disagree on what President Barack Obama will have to do to solve the economic meltdown because they disagree on what kind of crisis it is, a panel of three University of North Florida professors said Thursday night.
Is it a crisis of American businesses and financial institutions - the supply side? Or is it the American people at large - the demand side?
If it's demand side, like during the Great Depression the panelists said, then it could require a President Franklin D. Roosevelt-style New Deal bevy of programs. In the 1930s, those programs stimulated the economy through government programs that provided jobs for the unemployed, relief for workers and banking reform laws.
If it's a supply-side crisis like during 1970s "stagflation," then it might be time to use President Ronald Reagan's approach to controlling money and reducing government spending, regulation and income taxes.
Panelist David Jaffee, UNF sociology professor and assistant vice president for undergraduate studies, said the crisis is a demand-side predicament caused by 28 years of Reaganomics.
"This is not your father's economy, it is your grandfather's economy," Jaffee said. He suggested an FDR New Deal approach. He said efforts to stabilize the economy could necessitate temporary nationalization of financial institutions paralyzed by bad loans, and blamed the current downturn on an under-regulated economic boom and decades of policies favoring the financial sector and businesses.
"You need to jump-start the economy with a stimulus," he said. "In order to have growth, people have to have money to spend."
Panelist Paul Mason, UNF professor of economics and chairman of economics and geography, said the crisis is supply side, triggered last year in the wake of the historically high run-up of the price of crude oil. He characterized the economy in 2006 as "the good," the economy in early 2008 as "the bad," and the economic phase that began in late 2008 and continues today as "the ugly. …