Structural or Cyclical, It's bad

Krugman has been screaming at the top of his lungs that our problem, right now, at this very moment, is cyclical and not structural.  What he means is that our pressing concern is that some absurdly large portion of our human and physical capitol is sitting idle, doing nothing of use but instead slowly growing rusty.  He is right, the prolonged depression of the economy is both eminently fixable with policy solutions that I learned about in intro Economics (EC5 at Tufts), and inflicting enormous human suffering that will reverberate for the next 30 years.

Many instead argue that the issue is fundamentally structural, and they are too right.  While the current unemployment is not structural, it is true that:

1. Our Infrastructure is abysmal
• Our roads and bridges are breaking down
• Our water supply system is actively failing (my water has been shut off twice this year due to broken pipes)
• Our education system is sub-par, and we should collectively be ashamed of what passes for a high school diploma
2. Our regulatory structure needs an overhaul to prevent the sort of volatility and over-leverage that we saw in 2008

This divide is a foolish one.  Rather than argue structural vs cyclical, we should be making the argument that labor and capitol is on sale (the former is desperate for jobs, the latter can be borrowed at negative real interest rates), and hey, a couple of good infrastructure projects might get employment back up, too.  The macro arguments for deficit spending are both totally valid and virtually useless rhetorically. If you know and understand macroeconomics, countercyclical spending is obviously a good idea to you.

The people that need to be convinced are not the ones who are inclined to understand the broad strokes of aggregate demand and macroeconomics--those folks already do.  The ones we need to convince will not be bludgened with a textbook, they must instead be appealed to with arguments that work with common sense.  Even if countercylcical spending sounds a bit dodgey, "labor and capitol is on sale, lets go buy us a new water-system while it's cheap" makes plenty of sense.

And number two on the list? Yup, very true.  But just because the better building codes would have stopped a fire doens't mean you don't call the fire department to put it out.  We can fix the cyclical problem as well as the regulatory one.