This economy stinks worse than you think
Too many top economic commentators are drawn from a pool of talking heads and economists who treat the welfare of corporations as a top priority.
By William A. Collins, OtherWords
David Kocieniewski just won the Pulitzer Prize for his in-depth reporting on the loopholes that the richest Americans and corporations routinely exploit to minimize their tax bills. Congratulations to him! But most of his counterparts covering economics and business are a bunch of lapdogs.
Do you get your economic news from TV or newspapers? Big mistake.
Their income derives heavily from corporations that need you to buy things. You're more likely to do so if you think (accurately or not) that the economy is OK. Increasingly, well-known journalists on the business and finance beats top off their earnings with speaking fees from Wall Street outfits, according to a recent Columbia Journalism Review article appropriately headlined "Money Talks."
With notable exceptions like Paul Krugman, most of the prominent commentators who tackle the economy are drawn from a pool of talking heads and economists who treat the welfare of corporations as a top priority. This claque includes business journalists who understand that their continued employment depends on making the economy sound chipper.
Trapped in the middle of this artifice is Fox News. While it too prefers to sound upbeat about the economy for the benefit of its advertisers, it simultaneously prefers to sound downbeat so as to drive President Barack Obama from office. What a dilemma.
At any rate, the bushy-tailed economists on TV (and even those on NPR) emphasize the expanding economy and declining unemployment rate. Hallelujah! Salient questions of whether those new jobs are part-time or full-time and how much they pay are often shoved aside. The news on that front isn't good. Too many Americans are taking any crummy job they can find just to keep up with the mortgage or to hold off the landlord.
Perhaps the most telling benchmark for America's economic debacle is median family income, which has shrunk by 6.4 percent since 2007, the year before the Great Recession began. No wonder the middle class is disappearing at apocalyptic speed.
Then there's the fact that another 2.6 million folks drifted out of the painful "near poor" world down into real poverty in 2010. In addition, devastating "extreme poverty" has also mushroomed to 6.7 percent of the population, a new record. (Extreme poverty is when you earn less than half of a poverty-line income. In 2010, the income for the poorest poor totaled $5,570 or less for an individual and $11,157 for a family of four.)
Looked at from another angle, the bottom line on pay rates in 2010 was very scary. The median annual wage per employee was only $26,364, meaning that half of all workers made less. Inflation adjusted, that's the lowest income since 1999. And those are just the folks who are working. If you add together those who are officially unemployed, those who have given up, and those who are part-time but seek to be full-time, it comes out to around 27 million Americans. And besides that, prices are still going up.
So is there a cure? You bet. John Maynard Keynes figured it out back in the 1930s. Then President Franklin D. Roosevelt implemented it. What you do is have the government hire poor people to build stuff. You know, schools, bridges, parks, ports, works of art, and all those wonderful projects that date back to the WPA. I attended just such a great high school which still serves as our city hall today, complete with enough original murals to be a tourist attraction. Yes, the country went way into debt, but when the Depression and World War II ended, we paid it off.
Today's Republicans "just say no" to similar plans. Obama's stimulus package got us off to a good start, but the GOP soon squelched it. They want the recession to last at least until November so that the public will vote out you-know-who. And why not? Corporations are doing OK.
Plus there's no danger that it will all be explained on TV.
OtherWords columnist William A. Collins is a former state representative, and a former mayor of Norwalk, Connecticut.
how about we start by having all those on gov't assistance, doing public trash pick-up, along our roads, parks, lakes, , and other open areas.
then they can move on to other manual labor issues, that need attention, then back again, to trash pick-up.
we have a paid 'work' force that is getting paid for not working......lets start 'fixing things' by changing this 'endless, going no where' process.
This article tries to say that economists can't be trusted unless they are the shifty-eyed Paul Krugman. Krugman views the austerity in Europe as a failure. He wants governments to spend more. The issue there is that they've spent all they could and in trying to borrow more encountered increased interest rates. If Greece wasn't in the EURO it would just print more Drachmas and inflate itself to avert a crisis. Lenders would get deflated drachmas and pay the price for lending foolishly. Krugman is right that our government could spend more, it does, constantly. And what does that get you...ask Detroit. That was a "model city" where the federal government pumped money. It will eventually be a vast sinkhole for all our federal largesse. The government tells us that they bailed out GM (not really) they bailed out the UNION. If GM had gone through bankruptcy it would have had the opportunity to redo the union contracts and reorganize. Instead the union got to keep itself whole and we now have the Volt. We (taxpayers)own GM at something around $50 per share. GM is trading around $25. Why doesn't Krugman buy some GM stock from us at $50? Does Krugman drive a Volt?
This is not a macroeconomic issue. It's about putting capital to work in the right places. Generally speaking, the market figures this out with lots of small bets here and there. Government doesn't know what a small bet is. They give $500 million to Solyndra which then builds a state of the art plant built on a flawed business plan. Ooops. No worries, we'll tax the rich. Or somebody didn't pay their fare share. But government never makes even a little mistake. Unfortunately they are always big mistakes. When was the last time Krugman talked about a successful government program?
2015 USA unfunded liabilities = $$ 145 TRILLION
That being said, the republicans are doing the right thing by saying no, not only no but hell no, not only hell no but F**k no.
Only idiots throw money at bad investments which is what O'bama's policies have done. I HAD great hopes for O'bama on his message of Hope and Change. It is a shame for us and his race that he couldn't pull it off. Guess thats what you get from a community organizer.
Hope and Change needs to come from the Tea Party who has a fiscal plan to save America!!
As a career economist, I totally agree with Collins sentiments. There are many well known Wall Street business economists (such as Roubini) beyond Krugman who have clearly said they same thing: without massive Federal spending the U.S. economy, like that in the EU is doomed to long term stagnation or recession.
The math behind macroeconomics is well settled--there are a half dozen such models available through private firms and universities that tell the same outcome. The math behind macroeconomics is compelling and convincing, and not based on political ideology rather intrinsic mathetical relationships and well known statistics.
The corporations, the rich and their paid pr agents try to discredit macroeconomics because they want their favored position to continue and frankly enjoy the benefits of cheap labor. They are profit maximizers even if this means destroying the system that brought them so much profit. Unlike Henry Ford, an enlightened billionaire who paid his workers more because he wanted to sell more cars, today's capitalists do not understand their long term peril.
The Tea Party is destroying America. Most of you righties squeal "socialism" but without looking at wikipedia or the nearest dictionary couldn't define it. The Party of No is killing MY country (that would be the United States of America) and none of you are bright enough to realize it.
How's that "trickle down" working for ya?
Seems like a bunch of comment writers here are simply against Obama. They would like Bush back and then get us into another useless war. People are really clueless how much those useless wars started by Bush have cost us. Either the people writing comments here are plain stupid or paid for by vested interests.
Stupidity is the ultimate reason why any society fails.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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