As we are watching the US economy decelerate and unemployment remain high, American fiscal policy has emerged front and center in the public debate, including on these pages.

I have come to re-evaluate my justification, but not my desire, for a stronger fiscal policy than the US has been pursing over the course of the past two years.

I have identified over several posts that the US, since China entered the WTO, on Sept. 17, 2001, has shed approximately six
million manufacturing jobs that were mainly held by low skilled workers. The plight of these workers, 10 years ago, is effectively chronicled in the second season of HBO's award winning series "The Wire". These job losses are structural; the economy is never going to replace them under the current competitive regime. These losses were temporarily masked by overemployment in the construction industry due to a real estate bubble.

In the past, I have advocated for a greater fiscal policy response on the basis of a demand shortfall and even cited unemployment of the unskilled as a justification. Since this unemployment is structural and permanent, Keynesian stimulus will not be effective, but instead only provide temporary relief. IE, for these jobs there is no demand shortfall, since they are not going to be brought back by the private sector economy.

As I look to my previous analysis, I can see only the public sector jobs that are yet to be cut, by states wrestling with budget crises, as a possible justification for Keynesian stimulus. Yet some of those cuts most certainly will be structural as well. What's more, as much of these cuts are likely to come from education, it is likely that structural problems for the low skilled will be exacerbated.

Therefore, while my  policy prescription remains the same for short term US policy; I now believe on balance the appropriate justification is redistributionist reform and that the Keynesian stimulus rationale is less compelling than I once thought.

 It has been a long held personal view, that the most challenging problem confronting the US is how to bring the uneducated poor and lower middle class along as the global economy is developing. Even healthcare reform is not as threatening to the US economy. Society needs to work for most of its members or the system will  become increasingly unstable. The rich and elites need to enact reform for their own benefit, not solely for the benefit of the underclass; otherwise the country their children will inherit will become much less hospitable than the one they live in today.

 Incarceration of the poor, as they turn to crime is not an option; as the US has already exhausted that policy option. At year-end 2007, the United  States had less than 5% of the world's population and 23.4% of the world's prison and jail population (adult
inmates).

This is why Jeffrey Sachs is advocating economic development policies for the United States. Unfortunately, prophets are
rarely accepted in their own country. After years of talking about these issues to my students, colleagues and friends, I am no longer wandering alone in the wilderness on this issue.

For those interested in a peek into the future, that has already arrived and is growing like a cancer everday, in America, check out "The Wire".