The Long Depression

Rich Eskow on the Depression that just won’t go away:

The Long Depression is deep. The official unemployment rate is 7.7 percent, while the official U6 rate (which includes the under-employed) is 15.6 percent. An alternate methodology which includes long-term discouraged workers brings the figure up to 23 percent.

Nearly 50 million Americans lived below the poverty line as of the last census. And wealth inequality in the United States is higher than it is in Egypt.

The Long Depression is long. We’ve had abnormally high unemployment for four years now, and the numbers are still dismal.

Poverty in the United States increased for the fourth year in a row in 2011 (the last year for which statistics are available), and now includes one out of every five American children.

High earners have taken more than their share of the lopsided “recovery,” with the top 1 percent capturing 121 percent of the post-crisis income increases while the rest of the country fell behind. The minimum wage would need to be between $.9.22 and $10.25 an hour to keep pace with inflation, but the president’s very modest proposal (which would raise it to $9.00 by 2015, when the gap will be even greater) faces an uphill battle.

This growing inequality stifles growth and points to long-term stagnation in both wages and hiring.

And yet, as DS Wright reminds us (as if reminders were necessary),the topic du jour in Washington is deficits. That’s prolonging the Long Depression. Jobs programs have been declared “politically impossible,” despite the widespread public support seen in most polling data. Less aid is available for the growing ranks of the impoverished.

The sequester will make the situation even worse, with Head Start among the programs facing severe cuts. And tax programs which favor the wealthy and corporations, widening the inequality gap even further, are the topic of compromise rather than challenge.

Our grim economic fundamentals haven’t stopped the stock market from reaching record highs, as speculators and Fed-driven bubbles cash in on the short-term opportunities created by a two-tiered economy. Wall Street and Main Street don’t “rise and fall together,” presidential assertions notwithstanding.

Events of the last four years suggest that we’ve learned nothing from experience. As DeLong says, political leaders at home and abroad are summoning “the same ritual incantations … that were made by the Herbert Hoovers and Andrew Mellons and Ramsay McDonalds” of earlier generations.

They’re taking our economy apart, one piece at a time. Unlike the prisoner in that joke, we have a way out: through concerted action. But there’s no World War-sized event looming that could summon our will — or our willingness to accept government spending. There’s no sign of a new “Greatest Generation,” either.

Until one or the other comes along, welcome to the Long Depression.