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 Ignoring Our Economic Achilles’ HeelPosted on Jan 22, 2008By Marie Cocco WASHINGTON—Whatever concoction President Bush and the Democratic-led Congress now cook up to minister to the ailing economy is likely to have a chicken-soup effect. Many people will feel better, and things might perk up. Still, the temporary boost will not cure an underlying disease that has been spreading for decades and which should be treated as a full-blown emergency. Depending on when—and if—a recession officially is declared, economic history seems as though it is about to be rewritten: The official start of a contraction will likely mark the end of an economic “recovery” during which the incomes of Americans in the middle never recovered from the last recession. In the typical ups and downs of the American business cycle, median household income falls during recessions, then in recovery climbs back up at least to where it was before the downturn. This has been the pattern since the government began publishing data on median household income in 1967, according to John Irons, research and policy director of the Economic Policy Institute. But since the current recovery began after the 2001 recession, wages and salaries have been largely stagnant, and so have overall household incomes. “With this recovery, we’re not going to make it back to where we were before the last recession,” Irons says. EPI analyst Jared Bernstein has noted that a typical family’s income in 2006, the last full year for which data are available, remained 1.7 percent below its 2000 peak. Wages and salaries, adjusted for inflation, fell in 2007, though the broader measure of household income won’t be available until August. Still, it hardly seems realistic to believe that incomes will suddenly spurt up now that unemployment is rising and businesses are retrenching. The current downturn may have been touched off by the mortgage crisis or the energy-price crisis or the resulting crisis in consumer confidence. So the political system will do what it typically does—respond to these most visible crises with treatments that are most visible to voters. Beneath the surface is the larger problem of stagnant incomes, more difficult to explain but with deeper and broader implications. What does it mean that the economy now performs so badly, for so many, that we cannot even climb back to where we were at the beginning of the decade? For one thing, we have to give up the prevailing political aversion to stating the obvious: Unfettered trade in its current form hasn’t just hurt factory workers. It seems to be depressing incomes more broadly. Among economists, at least, “there’s a growing realization that trade hurts people who are not laid off,” Irons says. “That textile worker is going to look for work as a nurse’s aide, and then nursing wages are going to be depressed.” The old solution of retraining workers in import-battered industries, still crucial in hard-hit manufacturing towns, won’t work as a bigger economic strategy. The mantra that education or technology skills somehow would shield white-collar Americans from the fate of blue-collar manufacturing workers is equally shopworn. Just ask one of the thousands of telecommunications and information technology workers who’ve been laid off since 2000—or, for that matter, any of the thousands soon to be given their pink slips at Sprint. It’s too glib to argue that for all the jobs destroyed during a slump or a longer period of economic change, new ones eventually emerge. This may be true in the abstract. But what if the new jobs don’t pay as much as the old? In the 1980s, the political class kept assuring the working class that we were not going to become a nation of “hamburger-flippers.” We haven’t. But something else has flipped. It’s the bargain under which most workers could once rely on skills, education, experience and diligence to get ahead financially. Six or more years of stagnating incomes can’t be called an aberration. It’s a trend, all the more abhorrent because the political system has for so long refused to even acknowledge it. We look again and again at the same discrete parts of the problem—staggering health care costs imposed on business and workers alike, for example—and overlook the fullness of the crisis. A short-term economic stimulus package is necessary to fill some empty pockets. But it can’t fill the void created by so many years of ignoring reality. Marie Cocco’s e-mail address is mariecocco(at)washpost.com. © 2008, Washington Post Writers Group Previous item: The Lessons of Violence Next item: What's Gotten Into Bill? Elsewhere: . CommentsAre you a Truthdig member yet? Login now, or register with Truthdig.
By tiredofitall, January 25 at 10:04 am # “The USA is not only still around, but is doing just fine thank you.” Obviously someone in the top 3 percent of income here.... “No such thing as permanent prosperity.” I don’t think anyone is expecting permanent prosperity except those who profit the most by it...sound familiar? “...hopefully they’ll be smarter about it next time, just as business has to learn from its mistakes.” Uh huh, just as those huge mega-corporations ‘learned’ from their mistakes. Also, maybe those people were just doing what the elite told them to. Maybe they were fed lines of crap and misinformation by these same businesses so people would not stop buying. Maybe they finally decided that the only way to save those HUGE incomes were to subvert the political process to their own ends. Maybe the were very successful at it, because the people were too busy spying on each other and worrying about pedophiles and terrorists, and these same items were inflamed and exaggerated by the media at the behest of these same lobbyists who control them and their political puppets with the promise of power and money. Enron is just one example of that ‘learning’ you mention. That hierarchy KNEW they were screwing their employees and investors....those same ‘people’ you mentioned before who should ‘learn’ from their mistakes. So, I hope they do learn. I hope they learn well. I hope they learn to stop giving money to people that are little more than money-sucking pondscum. I hope they stop allowing the military/industrial complex to run things. I hope they learn that people are the best investment in a society, since those people create ‘society’. I hope they learn to stop believing the sensationalist, hyped media that fuels their knee-jerk, emotionally charged reactions, reactions that were planned from the beginning to keep us at each others throats and not paying attention to the greedy, money loving scavengers that have been put on a pedestal as examples of how our country should operate as well as elected to our political processes, and are even now destroying our government and our country from the inside. I hope they learn to listen to the rhetoric so they can see crap for what it is. I hope they use their brains to evaluate the issues and come to a decision based on logic and facts, not emotions and bull hockey. I hope they see that their efforts, which create the massive wealth they are not allowed to get any but the tiniest fraction of, are wasted since they will never get to a point where they can stop making someone else rich and start trying to create their own ‘place in the sun’ I hope they learn that ‘We The People’ means ‘all of us’, not just the few who have enough money to flaunt their lifestyles and their greed in the face of the people who created it for them. (yes, FOR THEM..I have never met anyone who I would describe as wealthy who got to that point ENTIRELY by themselves. Nor is there such a person. Unless you created the building materials, cleared and prepped the land your business sits on, created the metals and the electronics you use in your vehicles, designed and built them....I can go on, but I hope you get the picture) I hope they do learn. But I am not holding my breath, since your comments prove that there are still people out there who are falling hook, line, and sinker for the crap spewing out of our politicians throats...crap fed them by their masters who want you to sit there and feel superior while the nation we had is subverted by greed and pompous self-importance.
By Mark, January 24 at 10:20 am # Independent InformationAs all of the economic measuring and reporting entities are basically controlled by the political machinery, what incentive is there to report anything but good news. After all, bad news does not get anyone (re)elected. Much of the reporting in the MSM is just a re-hash of government generated happy news.
By jbart, January 23 at 6:01 pm # Perhaps we "decide" to buyPerhaps we “decide” to buy anything we need from foreign-owned companies. Based on the “consumerism” economy of Americans, witholding revenues from American companies, might get them to realize that WE ARE the reason that they are where they are, economically speaking. What the saying again? He who giveth can also taketh away? (As an atheist, I inserted “he” for “God” call it poetic license).
By bg1, January 22 at 6:08 pm # The people who have theThe people who have the power to change things, are the ones benefiting from the way things are going now. They want worker pay to be lower, so they themselves can have more.
By laura anderson, January 22 at 9:41 pm # Re: debt, debt, debtFabulous. thank you from the bottom of my heart. Bush
By Sang Ze, January 22 at 5:40 am # In other circles, the tokenIn other circles, the token tax rebate would be called a bribe. The Republicans have given us war and made us poor. Gee, thanks a lot. Add Your Comment |
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