"The Joyless Economy" (Paul Krugman, NYT, 12/05/2005)

[swag]

http://select.nytimes.com/2005/12/05/opinion/05krugman.html?hp=&pagewanted=print

(subscription required)

Excerpt:
. . .

Behind the disconnect between economic growth and family incomes lies the extremely lopsided nature of the economic recovery that officially began in late 2001. The growth in corporate profits has, as I said, been spectacular. Even after adjusting for inflation, profits have risen more than 50 percent since the last quarter of 2001. But real wage and salary income is up less than 7 percent.

There are some wealthy Americans who derive a large share of their income from dividends and capital gains on stocks, and therefore benefit more or less directly from soaring profits. But these people constitute a small minority. For everyone else the sluggish growth in wages is the real story. And much of the wage and salary growth that did take place happened at the high end, in the form of rising payments to executives and other elite employees. Average hourly earnings of nonsupervisory workers, adjusted for inflation, are lower now than when the recovery began.

So there you have it. Americans don't feel good about the economy because it hasn't been good for them. Never mind the G.D.P. numbers: most people are falling behind.

It's much harder to explain why. The disconnect between G.D.P. growth and the economic fortunes of most American families can't be dismissed as a normal occurrence. Wages and median family income often lag behind profits in the early stages of an economic expansion, but not this far behind, and not for so long. Nor, I should say, is there any easy way to place more than a small fraction of the blame on Bush administration policies. At this point the joylessness of the economic expansion for most Americans is a mystery.

What's clear, however, is that advisers who believe that Mr. Bush can repair his political standing by making speeches telling the public how well the economy is doing have misunderstood the situation. The problem isn't that people don't understand how good things are. It's that they know, from personal experience, that things really aren't that good.

[cal04]

1. If this does happen tomorrow(below), I hope the dems will

have plenty of ammunition
(The problem isn't that people don't understand how good things are. It's that they know, from personal experience, that things really aren't that good.)

Bush set to go on offense Monday re the economy; hit Dems for seeking to raise taxes

[Canuckistanian]

3. Raise taxes?

Who, in the known American universe, is asking for tax raises right now?

AFAIK, the fight is just to keep the status quo.

Or is this a phoney accusation (like that's a surprise)?

[Vitruvius]

13. Free link to article at truthout.com:

http://www.truthout.org/docs_2005/120505K.shtml

[qanda]

2. Yes, things are going great

I just got back from the grocery store where I spent $70 for five bags of groceries, just enough food to last a few meals. It's depressing when you look forward to Sunday because you know you won't be receiving any new bills in the mail.

I listened to George Will, on ABC this morning, trying to convince me that the Bush economy was just great for me and my family and all I could do was shake my head in disbelief. These clowns just don't get it! Life for the average American trying to make it in this economy is stressful and depressing.

[Canuckistanian]

4. qanda, if you don't mind me asking..

What is your financial... um... situation?

[qanda]

6. I don't mind at all

My husband and I have been struggling for close to four years since he lost his fulltime job. My hubby started his own business and even when he does have jobs coming in (some months are better than others), it seems we are always playing catch-up. We have no health insurance and my husband has asthma and glaucoma which have to be managed and the cost is amazing. We don't own our home and our rent just went up $100 a couple of months ago, not to mention the increase in our gas/electric bill which was about $75 before we even turned on the heat. I feel overwhelmed just talking about it.

[Canuckistanian]

7. I can sympathize

My wife and I were unemployed last year and things got pretty grim. We almost lost the house.

Mind you, it's not a 'trivial' house. We have an acre, parking for an army, an outdoor pool.. but we're out in the country, in a very old house (110 years old) with lots of upkeep and lots of property taxes.

Well, the short story is, both my wife and I are both doing very well now, both working full-time and advancing on our personal carreer ladders.

I really credit our Canadian economy for this, as most everyone is doing well that we know. Business is up, there are relatively lots of jobs out there, and most people seem to have some discretionary money.

But I'll never forget the experience of being poor. The secretive trips to the Food Bank, the decisions to pay the oil bill rather than buy some gas for the car, fearing every time the phone rang...

[Warpy]

5. The more the blowdried bobbleheads chirp enthusiastically

about this economy, the more the average American who has always trusted the evening news will feel a disconnect and suspect he's been lied to for a very long time.

They're doing the chirping to try to persuade people hammered by declining wages, offshoring, threatened job loss and the return of inflation to go out and charge up those already overcharged credit cards to give the retailers one more season they can crow about.

I honestly don't think it's going to work this year. Joe Sixpack suspects he's been had, and he's not thrilled about it.

People will flock to big sales, but otherwise I doubt this season will be a good one.

Oh, and the propagandists on the tube will only make the mistrust grow.

[ninkasi]

8. Yep. You're right.

The more the economy is talked about in glowing terms, the more betrayed the average American will feel. He'll know that SOMEONE is benefiting from the present economy, but he knows it isn't him, or his friends and relatives.

Joe Six pack will compare his take home pay to what is being touted on the news, and wonder why he isn't sharing in this great economic boom. He'll start to blame the party in power, and right now, that's the conservatives. They control all three branches of government, and it's hard for them to spin it any other way.

There is nothing more dangerous than a person who has voted for, and defended a party which has betrayed him. He will vote his feelings next time.

[Cassandra]

9. Who are you going to believe...

Bushco or your lying wallet?

[swag]

10. I like that this question is from someone named Cassandra,

like another unheeded prophetess.

[hadrons]

11. "disconnect between G.D.P. growth ..." Noam Chomsky had something to say

about this (I believe he was talking about the GNP - I'm not sure because I'm going by memory); Chomsky says that NOT repairing roads RAISES the GNP since the gov't is spared an expense and if someone's car is damaged they have to go to the auto shop to have it repaired thus increasing consumer spending and helps employ the guys who fix the car and makes a profit for the guy who owns the shop.

Then he asked if the person who needs his car repaired due to poor roads is better off for helping to rasie the GNP

[RaulGroom]

12. I don't think that was Chomsky's point exactly

He wasn't necessarily asserting that not repairing the roads raises the GDP, just illustrating the general principle that a rise the GDP doesn't necessarily mean anything good for society as a whole.

Another example is that of crime - since 1970 the rate of incarceration has gone up astronomically, which means we've had to build a ton of prisons, employ guards, cooks, medical staff, etc. All of this contributes to GDP, but it's actually an indicator of a huge negative change in the society, not only socially but economically as well, since all of those resources in the end aren't actually creating any actual product.