Since January the economy has shed 760,000 jobs, and state governments are facing a revenue shortfall of roughly $100 billion in the next fiscal year, 15 percent of their budgets. The recession is certainly here, so the question now is how to diminish its length and severity. In this article in The Nation, Robert Pollin describes the only action that can possibly do the job--a large-scale federal government stimulus program.  

President-elect Obama himself, as well as most of the newly elected Democratic-controlled Congress, recognize the urgency of a large-scale stimulus program. Even Bernanke has offered his endorsement. But despite the near consensus, questions remain: How should the stimulus funds be spent? How large does the stimulus need to be? Where do we find the money to pay for it?  

Pollin describes a stimulus that meets three fundamental criteria: First, we have to generate the largest possible employment boost for a given level of government spending. Second, the spending should be in areas that strengthen the economy in the long run. And finally, we do not have the luxury of delaying the fight against global warming.   

>> Download “How to End the Recession” (The Nation, November 24, 2008)
>> Read more about PERI’s Green Economics program

As the most severe financial crisis since the 1930s Depression has unfolded over the past eighteen months, the ideas of the late economist Hyman Minsky have suddenly come into fashion. In the summer of 2007, the Wall Street Journal ran a front-page article describing the emerging crisis as the financial market’s “Minsky moment.”

In this article for The Nation, Robert Pollin explores Minsky's "Wall Street paradigm," which explains how financial instability and crises emerge through the normal operations of an unregulated capitalist economy. Pollin argues that Minsky's work provides the most powerful lens for understanding the roots of financial instability and developing an effective regulatory system.

>> Download "We're All Minskyites Now" (The Nation, October 29, 2008)
>> Read Robert Pollin's Working Paper, "The Relevance of Hyman Minsky"

In the face of the current crisis, federal policymakers are considering how to structure a second economic stimulus package. In this testimony for the House Committee on Education and Labor, Robert Pollin recommends for a program focused on three areas: educational services, public infrastructure, and green investments.  A program that combines these areas will have the capacity to generate nearly 3 million new jobs in the short run in response to an increased outlay of government spending of $150 billion. Over the longer term, at least another 400,000 jobs should be created because public infrastructure and green investments will create an enhanced climate for private business investment.

>> Download the full written testimony
>> Watch the video of the hearing
>> Read commentary on the hearing in the Huffington Post

It is now clear that we are in the midst of the worst financial crisis since the Great Depression. This crisis is the latest phase of the evolution of financial markets under the radical financial deregulation process that began in the late 1970s. This evolution has taken the form of cycles in which deregulation, accompanied by rapid financial innovation, stimulates powerful financial booms that end in crises. Governments respond to crises with bailouts that allow new expansions to begin. As a result, financial markets have become ever larger and financial crises have become more threatening to society, which forces governments to enact ever larger bailouts. In this Working Paper, James Crotty and Gerald Epstein analyze a series of structural flaws in the current financial system that helped bring on the current crisis, and propose a nine point regulation policy designed to end this destructive dynamic.

>> Download "Proposals for Effectively Regulating the U.S. Financial System to Avoid Yet Another Meltdown"