Posts tagged Economics
Posts tagged Economics
Columbia Journalism Review has a takedown of a “study” from American Enterprise Institute purporting to show that inequality hasn’t increased, after all. What’s striking is the way AEI doesn’t even resort to the usual practice of concocting misleading numbers; it just flat-out lies about what various other peoples’ research, like Robert Gordon’s work, actually says.
Oh, and read the comments for entertainment. CJR, welcome to my world.
What I found myself thinking about, however, is the way the inequality debate illustrates some typical features of many debates these days: the way the right has a sort of multi-layer defense in depth, which involves not only denying facts but then, in a pinch, denying the fact that you denied those facts.
Think about climate change. You have various right-wingers simultaneously (a) denying that global warming is happening (b) denying that anyone denies that global warming is happening, but denying that humans are responsible (c) denying that anyone denies that humans are causing global warming, insisting that the real argument is about the appropriate response.
I’m not sure there are three levels (yet) on inequality, but we definitely have (a) right-wingers denying that inequality is rising and (b) denying that anyone is denying the rise in inequality, but attacking any proposal to limit that rise.
You might ask, how is it possible to take such mutually contradictory positions? And the answer is, it’s very easy if confusing the debate is your job.
So bailing out the banks while punishing workers is not, in fact, a recipe for prosperity. But was there any alternative? Well, that’s why I’m in Iceland, attending a conference about the country that did something different.
If you’ve been reading accounts of the financial crisis, or watching film treatments like the excellent “Inside Job,” you know that Iceland was supposed to be the ultimate economic disaster story: its runaway bankers saddled the country with huge debts and seemed to leave the nation in a hopeless position.
But a funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.
So how’s it going? Iceland hasn’t avoided major economic damage or a significant drop in living standards. But it has managed to limit both the rise in unemployment and the suffering of the most vulnerable; the social safety net has survived intact, as has the basic decency of its society. “Things could have been a lot worse” may not be the most stirring of slogans, but when everyone expected utter disaster, it amounts to a policy triumph.
And there’s a lesson here for the rest of us: The suffering that so many of our citizens are facing is unnecessary. If this is a time of incredible pain and a much harsher society, that was a choice. It didn’t and doesn’t have to be this way.
Few economists have been more correct about the economic crisis of the last several years than the proudly liberal Paul Krugman.
Krugman spotted the “liquidity trap” early on (since the problem with the economy was too much debt, cutting rates and creating easier money would not get us out of it).
Krugman shot down the hyperventilation about a coming hyper-inflation, arguing that the global labor glut would prevent easy credit from inflating wages.
Krugman quickly pronounced the Obama Administration’s stimulus as far too small and said it would not get the job done.
Krugman scoffed at the idea that interest rates were about to skyrocket as our creditors decided en masse that we were so fiscally irresponsible that they couldn’t possibly lend us any more money.
He has been right on all counts.
Recently, Krugman has denounced the “austerity” push of the GOP, arguing that tackling our debt and deficit problem right now with spending cuts is the worst move we can make. Such cuts, Krugman argues, will put more people out of work and shrink the economy. And this, in turn, will increase, not decrease, the deficit.
Krugman thinks we should tackle the debt and deficit problem later, when the economy is on more solid footing. He points to record-low interest rates as a sign that the world is still willing to lend us as much money as we want, practically for nothing. And he argues that, instead of cutting back, we should be using that money to build infrastructure, strengthen the economy, and put more Americans back to work.
And some Republicans, it seems, are starting to notice.
A couple of months back, Republican commentator David Frum made a startling observation:
Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?
Will Frum be ostracized for that remark? After all, Paul Krugman is supposed to be Public Enemy No. 1.
Or will more Republicans begin to agree that, although government spending does indeed need to be cut eventually, and the debt problem does need to be addressed, suddenly chopping, say, $1 trillion of government spending next year is not the best way to get ourselves out of this mess?
As bad as the overall economic situation may be, the creative class has in fact gotten off comparatively lightly. The creative class added nearly three million jobs between 2001 through 2010, growing jobs at a seven percent clip. And the sub-group of the creative class that spans arts and media grew at nearly double that rate (13.8 percent) over the same period. Average creative class wages increased by more than a third (34.5 percent), from $52,707 to $70,890, over this decade—more than any other major occupational group—and wages for arts and media creatives rose by 31.5 percent. To Timberg’s point, that these gains were not shared equally across the creative class: there were indeed winners and losers. The biggest job losses occurred among “news analysts, reporters, and correspondents” (a category that lost 15,130 jobs, a substantial 22.9 percent decline), musicians and singers (8,830 jobs lost, down 16.9 percent), photographers (10,810 jobs lost, down 16.5 percent) and editors (5,050 jobs lost, down 4.9 percent). But other segments of the creative class experienced substantial job growth. Jobs for producers and directors went up by nearly 80 percent (36,770 new jobs); art director jobs grew by 45 percent; nearly 60,000 new jobs opened up for graphic designers (up 45 percent); and audio and video equipment technician jobs increased by roughly 40 percent. But these changes pale in comparison to the decimation of the working class – spanning manufacturing, construction and transportation – which lost a staggering 6.2 million jobs.
All workers and all classes of work were hit by the economic meltdown. The creative class lost slightly less than three quarters of a million jobs during 2008-2010, the height of the economic crisis, less than two percent of all its jobs. Arts and media jobs declined at a higher rate, 4.9 percent, shedding 88,300 jobs. But this pales next to the destruction of more than two million service jobs and 5.3 million blue collar jobs, one in six jobs in that sector. In the first half of 2009, when national unemployment was at 8.7 percent, creative class unemployment was about half that level (4.4 percent) and just a third of the 15.2 percent rate faced by blue collar workers. Interestingly enough, creative class workers who had jobs actually saw their wages grow by 4.4 percent during the crisis, while the wages of arts and media workers grew by 3.2 percent. At the same time, blue collar workers faced the double whammy of massive job destruction and falling wages (which declined by 4.7 percent).
WASHINGTON — Rep. Paul Ryan (R-Wis.) said on Sunday that House Republicans would oppose President Barack Obama’s payroll tax cuts for both employers and employees, arguing that the policy had already failed to provide a sufficient boost to the economy. “It hasn’t worked,” Ryan said, suggesting the current temporary tax cut should be allowed to expire, which will amount to a 50 percent tax hike on workers making less than $106,000 per year.
He also said he opposes the president’s proposal to require millionaires to pay the same tax rate as the middle class, known as the Buffett plan. “Class warfare might make for good politics, but it makes for rotten economics,” Ryan said. (Read More.)
Because tax hikes are only okay when they are on the middle class. Right. NOW I understand.
A 50% tax hike on ME!? Are you fucking kidding me? I actually put money into this goddamn economy, you take 50% more of my money and that’s games, electronics, and food I can’t buy! I’m not hiding my money in offshore accounts, I’m putting it into my local retailer! That’s a reduction in everything I waste my money on that keeps this economic system limping along.
They call the rich these illustrious job creators, but you know how most of them got rich? From shmucks like me buying their products and services. You raise my taxes by 50% and they will get 50% less of my business, and not from lack of enthusiasm for their products and services. When their businesses receive 50% less of my money then they cut back production, which in turn cuts jobs. You want to get this economy back on track? Give people like me more money to piss away, that’s how stimulus works! Shit, that’s how economics works!
And he has the fucking gall to say it’s class warfare?
FUCK YOU! FUCK YOU! FUCK YOU!
Welcome to Tent City: The community where every person has lost their job and home because of the U.S. financial crisis.
In scenes reminiscent of the Great Depression these are the ramshackle homes of the desperate and destitute U.S. families who have set up their own ‘Tent City’ only an hour from Manhattan.
More than 50 homeless people have joined the community within New Jersey’s forests as the economic crisis has wrecked their American dream.
These people have been reduced to living on handouts from the local church and friendly restaurants and the community is a sad look at troubles caused as the world’s most powerful country struggles with its finances.
Read more here.
Since 1980, income inequality has fractured the nation. Click each icon to see each of the dozen states, which counties belong to them and how median income has changed over the last 30 years.
The Atlantic Magazine has boiled our nation down into twelve distinctly unique types of places. From evangelical epicenters to Mormon outposts to military bastions to immigration nations. Follow the title link or click through to find out which category your county falls into.
* The photo above is a freeze frame of a fully interactive map. Click through for interactive version.
We now live in parallel universes.
One universe is the one in which most Americans live. In it, almost 15 million people are unemployed, wages are declining (adjusted for inflation), and home values are still falling. The unsurprising result is consumers aren’t buying — which is causing employers to slow down their hiring and in many cases lay off more of their workers. In this universe, we’re locked in a vicious economic cycle that’s getting worse.
The other universe is the one in which Washington politicians live. They are now engaged in a bitter partisan battle over how, and by how much, to reduce the federal budget deficit in order to buy enough votes to lift the debt ceiling.
The two universes have nothing whatever to do with one another — except for one thing. If consumers can’t and won’t buy, and employers won’t hire without customers, the spender of last resort must be government. We’ve understood this since government spending on World War II catapulted America out of the Great Depression — reversing the most vicious of vicious cycles. We’ve understood it in every economic downturn since then.
The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy — spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in peoples’ pockets, which they’d then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It’s a win-win.
This is not rocket science. And it’s not difficult for government to do this — through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs.
Yet the parallel universe called Washington is moving in exactly the opposite direction. Republicans are proposing to cut the budget deficit this year and next, which will result in more job losses. And Democrats, from the President on down, seem unable or unwilling to present a bold jobs plan to reverse the vicious cycle of unemployment. Instead, they’re busily playing “I can cut the deficit more than you” — trying to hold their Democratic base by calling for $1 of tax increases (mostly on the wealthy) for every $3 of spending cuts.
All of this is making the vicious economic cycle worse — and creating a vicious political cycle to accompany it.
As more and more Americans lose faith that their government can do anything to bring back jobs and wages, they are becoming more susceptible to the Republican’s oft-repeated lie that the problem is government — that if we shrink government, jobs will return, wages will rise, and it will be morning in America again. And as Democrats, from the President on down, refuse to talk about jobs and wages, but instead play the deficit-reduction game, they give even more legitimacy to this lie and more momentum to this vicious political cycle.
The parallel universes are about to crash, and average Americans will be all the worse for it.
Contrary to talking points claiming Social Security, Medicare, Medicaid, and other economic relief programs for poor people as the main reason we have a deficit, the Bush-era tax cuts for the wealthiest Americans are actually the single largest contributor to the deficit—even larger than the wars in Afghanistan and Iraq.