Paul Krugman’s Sunday column about the Depression he believes we are experiencing the early stages of made me think about the state of affairs here in Obama’s home state of Illinois. The whole column is worth a read, but it was this part that caught my attention:

The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

As states go, I think I can make the case that Illinois is at the forefront in already having achieved “premature fiscal austerity” and the effects on actual individuals, particularly in the area of job loss, are worth looking at, for we are in the unique position of being the bellwether for the nation in this area.

You don’t have to take my word about Illinois’ status as the poster child for premature austerity, inadvertent as that austerity may be; you can check in with some free-market “vultures” instead:

A Georgia company entering the debt brokering business is hoping to profit from the state of Illinois’ failure to pay its bills for months at a time by arranging for struggling vendors to sell their overdue paper at a discount….Other states suffering from severe fiscal problems in the recession have taken a variety of austerity measures but have not stopped paying bills as Illinois has. Across the state, agencies ranging from schools and local health departments to day-care centers and homes for the disabled have been waiting months for checks with no sign when they will arrive.

If you do check out this article you will learn that this Georgia-based company is hoping to do business nationwide, offering the equivalent of payday loans to struggling not-for-profits that are awaiting checks that are “in the mail,” but are at the moment focusing on Illinois.

Why Illinois?

…partly because the state’s bookkeeping system is automated enough that Alpharetta can easily work with it, but it’s also because the state’s awful financial condition creates plenty of potential customers.

“We’re going to the places where the need is greatest,” said Marianne Spraggins, chief operating officer for Alpharetta.

There isn’t enough time left in my lifespan to write about the individual fates of those most at-risk Illinoisans who are being systematically devastated by the failure of social services across the board. I will urge you to go check it out if you are interested, as there is certainly no shortage of articles here in the Illinois press about it.

But what I’m thinking about today is jobs. Specifically the domino effect the current inadvertent austerity is causing by means of job loss, and is likely to continue causing over the long term in local communities here in Illinois, statewide, nationwide and globally. I’m no economist, good, bad or otherwise, but I remember reading a Krugman essay once about economists engaging in “what-if” thought experiments and being struck at the time by the idea that any person of reasonable intelligence can infer some of the more obvious cause-and-effect at work in economies large and small. So while I’m perfectly willing to be corrected by someone who really is an economist (i.e. knows what they hell they are talking about) and wants to come along and take issue with my conclusions, I want to talk about where I think continually leaking jobs because our state is broke is likely to take us.

Take Krugman’s Sunday column as a starting point. He spends some time talking about Europe and the increasingly active movement toward austerity (I’ll just draw on my Catholic childhood and call this a “sin of commission”) as opposed to the continued inaction that is creating an environment of austerity here in America (and I’ll call this a “sin of omission”). And he spends some time talking about the jobless recovery, ties austerity – whether achieved by omission or commission – to continued job loss and deflationary cycles, and well…here we are back in Illinois.

And here in Illinois it doesn’t take long to discover that not only are the individuals being served by social service agencies in trouble, so too are the employees who are delivering those services – they are in fact losing their jobs. Although I know some are heroically working for nothing in between filing for unemployment, there it is, more job loss.

You may be thinking that that can’t be good, but how big can it be? Maybe bigger than you think. Take library systems in Illinois. Not something you might normally think of as a “social service,” but anyone working in libraries (as I do part-time) can tell you that libraries are incredibly stressed during economic downturns. In recessions libraries become a refuge of choice for entertainment purposes – checkouts of fiction, dvds and cds go up, up, up. But when you hit an economic downturn they also become a refuge of last resort for the unemployed. People who’ve never held a library card before are suddenly joining hold lists for non-fiction items ranging from how to write a resume to how to raise chickens in their suburban back yard.

And then there are the want ads in the periodicals, the online databases, the internet access, the job coaching workshops, you name it, libraries are an essential resource for the unemployed. And since library systems in Illinois are also on the list of agencies whose check from the state is “in the mail” they are folding or have already folded. This is a dangerous state of affairs for the already unemployed, but also has had the effect of adding many library professionals in Illinois to the ranks of the newly unemployed.

What about the private market then? Short of keeping payday loan business employees in Georgia in a job, I can’t think of much that is positive here either. I had occasion recently to attend a “Doing Business with the Federal Government” workshop sponsored by my congresscritter – ConservaDem Bill Foster – wherein small business owners and managers were invited to learn how to work through the layers of red tape involved in getting a government contract.

Representatives from the Small Business Administration, the General Services Administration and the Procurement Technical Assistance Center conducted the workshop and did an excellent job. Right up front in the intro one of them pointed out that most of us were there because our revenue streams in the private sector had dried up and we were looking for new revenues. No one in the room was going to dispute that. So much for the private market.

But beyond that I found it highly interesting that all the representatives there were of one voice regarding doing business with the State of Illinois, although I think it was the representative from PTAC who said it best. “Don’t call me,” she said, “and say ‘I won, I won’ if you got a contract with the State of Illinois, because you didn’t win, you lost.”

Also not news to many in that room that the representatives of all these groups were unashamedly warning us not to do business with our state government, because you know what? Those of us in the room who’ve done business with them know that the State of Illinois does not pay its bills. If you work for them you do not get paid. Not surprisingly businesses who have long been in the business of servicing state contracts are laying off workers, because it’s hard to pay your employees if your customers take your products and services then do not pay.

So there it is. The State of Illinois is not, and most probably will not be, paying its bills. Not to charities, not to organizations, and certainly not to private businesses. And lots of people are losing jobs because of it.

I don’t need to be Krugman – or any kind of economist – to understand the ripple effect already in motion here. I know unemployed library professionals, owners of failing small businesses, and social workers who don’t even have time to worry about the fact that they are not getting paid because they are still desperately seeking ways to help their clients. They are my neighbors here in Illinois. And just in case there are any supply-siders lurking out there who need this spelled out for them, they aren’t going to be “doing their part” by spending us into an economic upturn, because they have no dollars to spend.

I could keep going with this state-based job loss extravaganza thought experiment but I won’t. I’m sure anyone of reasonable intelligence can see where this is going.

It’s just all so depressing.

Tags: depression, economy, Illinois, jobs, Paul Krugman

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