The nation is in an economic 'depression', says economist Pat Choate, the prominent Washington, D.C.-based author and former Tennessee government official.
While some call the recent slump a "severe recession," Choate insisted in interviews with VNC this week that the U.S. is "absolutely" experiencing a contraction more severe than even the worst recession. Choate said he bases his pronouncement on such factors as unemployment figures for the past two quarters.
Choate emphasized the "small d" situation does not at this point match the proportions of the Great Depression of the pre-World War II era.
The National Bureau of Economic Research neither defines nor reports "depressions," if any. For that and other reasons it is difficult to estimate how much support or resistance might greet Choate's declaration of depression.
Asked this morning for his opinion on the matter, Vanderbilt University Associate Prof. Malcolm Getz (at left) told VNC he believes that a depression "hasn't happened yet." Getz also noted that the nation has not yet "turned the corner" on its current contraction. An economist, Getz joined Vanderbilt in 1973, after earning his Ph.D. at Yale University.
In that same year, during the term of former Gov. Winfield Dunn, Choate became the first commissioner of Tennessee's then-newly formed department of economic and community development (TNECD), in which he served, 1973-75.
During Choate's ECD tenure, the nation suffered the first Oil Shock of what proved a troubled decade, and he sparked criticism by launching a campaign for recruitment of foreign investment in Tennessee. Choate noted that Volkswagen was one early target of that effort. TNECD's efforts to recruit foreign investment soon became institutionalized and are today highly valued by most Tennesseans with an opinion.
Choate, now 68, has over the years written a number of provocative books and served as running mate to presidential candidate Ross Perot, in 1996.
Since 1992, Choate has also operated the Manufacturing Policy Project, a think tank that focuses on U.S. policy regarding manufacturing, patent rights and other intellectual property issues. Earlier this month, he was appointed to the board of directors of the American Innovators for Patent Reform (AIPR).
On Sept. 8, Choate may further sharpen debate of national economic policy with publication of Saving Capitalism: Keeping America Strong (VINTAGE Series, Knopf Doubleday).
No mere bombshell, Choate's new book also provides what the author views as "game-changing solutions" to the nation's economic decline. Choate provided VNC this description of his recommendations (quoting):
► Impose strict federal supervision of all financial institutions of any form doing business in the United States and provide for an adequate, honestly valued, and sound currency.
► Replace the federal income and corporate taxes with either a value-added, flat, or fair tax, balance the federal budget and then begin paying down the national debt.
► Balance U.S. trade accounts with the rest of the world in a way that is neither protectionist nor mercantilist and deals with state capitalism pragmatically.
► Strengthen the American social net so every American worker has the opportunity for education, training, health care, a job, minimal income, and pension sufficient for a dignified retirement.
► Develop a national capital budget of public works investments and then launch a massive infrastructure construction program that will create millions of new jobs for workers who will build the domestic facilities America needs now and for its future.
► Create a national innovation strategy that will facilitate decades of creativity, investment, and the generation of more and better jobs in America.
Choate told VNC he suspects the most incendiary of his forthcoming proposals will be his argument that the "Doomsday machine" of computer-crafted and -driven financial products – derivatives, and others – should be essentially outlawed, and the traditional role of banking restored. He sees that role as primarily one of custodian for individuals' savings, with lesser roles including "prudent allocation" of resources to other purposes.
Choate began his economics career after earning his doctorate at the University of Oklahoma. He has regularly caught the attention of policymakers and Main Street, through his broadcast commentary and his published works, which include an anti-NAFTA book penned with Perot, as well as Agents of Influence, which focused on the influence of lobbyists for foreign interests (publication of which may have cost him the Washington job he held at TRW Inc., until then).
Other Choate books include Hot Property: The Stealing of Ideas in an Age of Globalization, The High-Flex Society, America In Ruins, and Being Number One: Rebuilding the U.S. Economy, which respectively addressed protecting intellectual property, competitiveness, infrastructure and U.S. manufacturing. ♦