Category: The New Depression

Krugman in Rolling Stone

~ susie ~ 7 Comments

obamarollingstone

I have to admit, I didn’t even bother reading the article praising Obama when that issue came in the mail — because Krugman, of all people, should know better. (Once Matt Taibbi left, I figured Jann Wenner would have to justify the magazine’s all-out push for Obama in the 2007 primaries.) Turns out I wasn’t the only person who said “WTF?”. Thomas Frank in Salon:

What are the numbers on public cynicism today? Well, thanks to a big assist from the shutdown-crazed lunatics in the House of Representatives, public trust in government islower today than it has been since they started keeping records. For the executive branchspecifically, the numbers are comparable to those of the final years of the Bush administration. And the inevitable consequence appears to be headed our way next month.

Why is this important? Aside from the obvious and direct reason—that Obama was supposed to restore public faith in government and achieved the opposite—we need to reconsider the role the mighty righties play in the liberal imagination. If we want to believe that Obama has been a consequential and a great president, then the only way to explain his many failings is as a function of his right-wing opposition. He didn’t get the king-sized stimulus we needed, liberals often say, because the right wouldn’t give it to him. He didn’t break up the banks or prosecute the banksters because the Tea Party wouldn’t let him. He didn’t get single payer or the public option because Republicans wouldn’t go along with that. Ditto for card check, antitrust enforcement, cramdown, renegotiating NAFTA, and the rest of the items on the long, doleful list of liberal priorities.

However, anyone who has followed the news for the last five years knows there is another factor to be taken into consideration here: Obama didn’t do these things because he or his advisors didn’t want to do them. Oh, there were ways to get many of them done, especially in 2009 and 2010, when the world was at Obama’s feet, begging for action. (The only possible obstacle in those days was the filibuster power of Senate Republicans, which should have been—and eventually partially was—taken away.) But the Democrats’ heart wasn’t in it. They didn’t even try.

In this connection, allow me to quote Paul Krugman himself, in his column for July 18, 2010, on the matter of the then-looming Tea Party triumph: “The best way for Mr. Obama to have avoided an electoral setback this fall would have been enacting a stimulus that matched the scale of the economic crisis. Obviously, he didn’t do that. Maybe he couldn’t have passed an adequate-sized plan, but the fact is that he didn’t even try.”

And that, folks, leads us to the greatest disappointment of them all: This administration’s utter failure of imagination. I admit that this beef might be peculiar to me, since one of the reasons I was once so psyched to see Barack Obama in the White House is because I thought he was a man who respected learning, intelligence, new ideas. Maybe he still does, in his private life. But as president, he couldn’t seem to see what is obvious to everyone who is not a regular golfer at Congressional: That ignoring the conventional and facing down the Republicans and doing the right thing—on the stimulus, on the banks, on inequality—would also have made him enormously popular, not to mention consequential and successful. It might even have spared him the electoral comeuppance he received in 2010, and whose second installment he seems likely to take delivery on just a few weeks from now.

Also, read Bill Black’s retort.

It does not mean what I think you think it means

~ susie ~ 4 Comments

Jobless America

What is the big fucking deal? People are poor now, more people than ever. Yes, they have jobs — shitty jobs. Most likely, more than one job, which might make it look better than it is. People are killing themselves, running just to stay afloat. Do they want medals? Fuck these cheerleaders, the people in this administration and their Wall St. advisers. They should live our lives for just one day:

If you’ve watched Wall Street lately, you know global tumult has rattled investors. But if anyone’s looking for encouraging economic news, look no further than the new figures from the Labor Department on initial unemployment claims.
The number of people who applied for U.S. jobless benefits fell 23,000 to 264,000 in the week that ended Oct. 11, hitting the lowest level since April 2000, showing that employers are laying off few workers, according to government data released Thursday. Economists surveyed by MarketWatch had expected initial claims for regular state unemployment-insurance benefits to bump up to 289,000 in the latest weekly data from 287,000 in the prior week.
The four-week average of new claims, a smoother barometer of labor-market trends, fell by 4,250 to 283,500, also reaching the lowest level since 2000, the U.S. Labor Department reported.
That’s not a typo – jobless claims have improved to a level unseen in 14 years,

What skills shortage?

~ susie ~ 2 Comments

skillsgap

The missing piece that economist and former White House advisor Jared Bernstein knows and is too nice to say, is that the Powers That Be set out to deliberately suppress wages, to the point where hiring an engineer in America won’t cost any more than hiring one in Pakistan. But I’m not that nice, so I’ll say it for him. Whenever you see the president making his speech about STEM (Science, Technology, Engineering, Math) training for good jobs, what he really means is that corporations demand a glut on the market that will drive down wages. Because we already have plenty of unemployed people in those fields, people employers don’t want to hire at the rate their skills demand. And new graduates are also having trouble getting hired. So when employers talk about a STEM skills shortage, they almost always mean “trained people who will work for peanuts.” See how that works?

Jared Bernstein in the American Prospect:

Technology and employers’ skill demands have played a critical role in our job market forever, but they turn out to be of limited use in explaining the depressed incomes of today, or of the past decade.Consider: The demand for college-educated workers has actually slowed quite sharply since 2000 and their real wages have been flat. If that fails to surprise you, you may well be someone who’s recently graduated and looked for work. If that does surprise you, you may well be a high-level economic policy maker.

[…] But a number of important new studies show that it’s not technology-driven skill deficits that are depressing wage and job growthBut a number of important new studies show that it’s not technology-driven skill deficits that are depressing wage and job growth. It’s the weak economy, not yet recovered from the Great Recession, it’s persistently high unemployment robbing workers at almost every skill level of the bargaining power they need to claim their fair share of the growth, it’s terrible fiscal policy, it’s large and persistent trade deficits, it’s imbalanced sectoral growth as finance booms while manufacturing lags.

The policy implications that flow from these findings are profound. Improving workers’ skills is obviously insufficient. Supply doesn’t create demand. In fact, there’s evidence that as demand for college-educated workers has tailed off, they’ve been moving down the occupation scale, displacing workers with lower education levels.

If we want to improve the quantity of jobs, we’ll have to do more to promote labor demand.

They made the recession worse

~ susie ~ 1 Comment

Thanks, austerity hawks!

The Census Bureau’s latest headline numbers on income, poverty and health insurance received wide coverage: The poverty rate fell in 2013 while real (inflation-adjusted) median household income was little changed and the share of Americans without health insurance coverage fell. Here’s a look behind the headlines, courtesy of my Center on Budget and Policy Priorities colleagues’ deep dive into the Census reports, and a few reminders about how better policy could produce better results.

A significant drop in poverty is always welcome, but last year’s decrease was only the second statistically significant one in 13 years (see chart). Moreover, at 14.5 percent the 2013 poverty rate was still a full two percentage points higher than in 2007, before the Great Recession, and 45.3 million Americans were poor last year. Similarly, real median household income (the dividing line between the richer half of households and the poorer half) was little changed from 2012 and 8 percent lower than it was in 2007.

poverty
Chart on poverty decline in 2013
As I argued previously here, our austere budget policies of recent years have dragged out the jobs slump that followed the recession. That’s an important reason why median incomes stayed flat last year and the poverty rate did not drop more.

We shouldn’t be surprised that in an economic recovery that has left workers behind, the Census data show income inequality remaining historically high. CBPP reports that the share of the nation’s income going to the bottom fifth of households (3.2 percent) is tied for the lowest level on record, while median income of the top fifth of households was more than 12 times higher than that of the bottom fifth for the first time on record, with data back to 1967.

How costs have screwed working families

~ susie

Supermarket in Katowice

Whenever you leave Republicans in charge of anything, we’re sure to pay for it:

The picture painted by a report from the Center for American Progress released Wednesday is a gloomy one.

For a typical married couple with two children, the combined cost of health care, day care, housing and savings for college and retirement jumped 32 percent from 2000 to 2012 – after adjusting for inflation. Average income barely rose in that time once you factor in inflation.

The figures marked a sharp change from the preceding 12 years ending in 2000, when average income for a four-person family rose 20 percent, after inflation, and college and health care costs rose more slowly.

Here’s how costs have grown in some key categories:
Continue reading “How costs have screwed working families” →

Declining wages? Yep

~ susie ~ 2 Comments

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Is this a secret? This so-called “recovery” is fake, just like extend-and-pretend policies Obama approved for the banks. If the banks had been held accountable and cleaned up, we’d have a real recovery by now:

Think your money’s not going very far this year? It’s not your imagination. According to new research by the Economic Policy Institute, real hourly wages declined for almost everybody in the U.S. workforce in the first half of 2014. Thanks, so-called recovery.

Economist Elise Gould pored over data from the government’s Current Population Survey and determined that workers at the 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th, and 95th percentiles all saw declines in their real wages in the first half of 2014 compared with the same period last year. This was true whether you had no high school degree, a high school diploma, some college, a college degree, or an advanced degree. In fact, people with advanced degrees saw the biggest drop (2.7 percent).

EPI reveals this isn’t just a blip. Real wages dropped 4.9 percent for workers with a high school degree and 2.5 percent for workers with a college degree from the first half of 2007 to the first half of this year.

Gould explains in the report that “the last year has been a poor one for American workers’ wages.” She states that “on the whole, the broad wage trends by education level over the last decade and a half make clear that wage inequality cannot be readily explained by stories about educational credentials and technology; wage inequality has increased steadily, yet even those with a college diploma or advanced degree have experienced lackluster wage growth.”

Casinos to laid-off workers: Happy Labor Day!

~ odd man out ~ 1 Comment

The Showboat

I was telling Swamp Rabbit about my Labor Day Weekend trip to Atlantic City, where three casinos are closing and more than 5,700 casino workers are being laid off over the next two weeks.

“Closed” stickers were slapped onto the Showboat’s front doors by security personnel at 3 p.m. yesterday. Just like that, 2,100 people were out of work. A stunned looking woman standing nearby told me she’d worked in the employees’ cafeteria for 25 years and was still hoping Caesars Entertainment, Showboat’s owner, would reverse its decision to pull the plug. Good luck with that.

The rabbit said he’s angry because the news media keeps assuring us the recession is over and unemployment is declining. “I was hopin’ to git me a job in the service sector,” he said. “At this rate, I won’t never be one of them high net-worth individuals.”

Showboat is the casino located closest to the $2.4 billion Revel, which was audaciously designed and built at the place where the ocean meets the Inlet. The sixth-floor casino has window walls overlooking the Boardwalk, beach and ocean.

When Revel closes Tuesday, thousands more will be jobless. In its casino yesterday, I strolled past the HQ nightclub and noticed that superstar DJ Scrillex was scheduled to perform Sept. 6. Tough luck, Scrillex fans. Take your molly somewhere else. An HQ employee told me she was hoping to hold on to her job for an extra week. This would allow her to miss the rush Wednesday, Sept. 3, when the newly laid-off will swarm the A.C. Convention Center to sign up for unemployment compensation.

Revel’s casino was far from crowded yesterday. It was hard to believe high net-worth individuals had thought a gambling venue so big and expensive — you’d have to see it to believe it — would succeed in today’s economy. In fact, construction of Revel ceased when the Recession hit and Morgan Stanley stopped bankrolling it. It’s partly thanks to New Jersey’s genius Gov. Chris Christie that Revel was completed two years ago.

“You should get all this shit in your book, Odd Man,” the rabbit said. “America wants to know.”

I told him America already knows about Revel and at this point is immune to — I should have said asleep to — economic disaster stories. But yes, there is plenty about Revel in my novel Good Sal/Bad Sal, including this passage, which mentions the construction scene in 2009:

…Salvy’s plan today was for us to stroll from Valhalla to G. Michael Mazilli’s office, at the end of the Pacific Avenue strip, in the South Inlet section, where the terrain is still bleak after 30 years of casinos and redevelopment schemes.

“Let me guess, your lawyer works out of a crack house,” I told him as we walked.

I could see the lighthouse and a few high-rises and the steel bones of Revel, the mega-casino project that was supposed to pull Atlantic City out of its death spiral by luring in an army of high rollers, as opposed to the usual busloads of geezers on Social Security who dominate at the other A.C. casinos, most of which are glorified slots parlors. Construction of the Revel stopped when the housing bubble burst and the Wall Street crooks stopped investing in commercial real estate. They won’t invest again in casinos, not unless they sense a critical mass of new suckers with real money to blow. The old casinos will be on their own, laying off workers left and right. And even if there is a Revel someday, it won’t generate enough business to keep all the casinos in business…

Bad policy

~ susie ~ 1 Comment

And how it’s making the recession damage permanent.

Still, some countries have managed to avoid, or at least start to climb out of, this “lowflationary” trap. Australia, for example, defines “price stability”more liberally than other countries—2 to 3 percent averaged over the business cycle—and that’s helped it keep rates and inflation from falling too far to begin with. And then there’s Japan: after decades of deflation, it’s finally raised its inflation target, started printing money again, and promised to permanently double its monetary base.

All of these, though, are further than most central banks are willing to go. That’s because their unconventional policies are still circumscribed by conventional concerns. Or, to paraphrase Keynes, it’s better for their reputations to fail with the “right” unconventional policies than to succeed with the “wrong” ones.

The problem is we live in an upside-down economic time. Prudent policies are dangerous, because they could turn temporary losses into permanent ones. And dangerous policies are prudent, because they could keep this from happening—keep the economy’s growth trajectory from getting knocked down.

It’s a radical time. Policymakers need to be too.

H/t Kaveh Miremadi.