Barbara Ehrenreich: Recession--Who Cares?

[marmar]

from The Nation:




comment | posted January 9, 2008 (web only)
Recession--Who Cares?
Barbara Ehrenreich


This essay also appears on Barbara Ehrenreich's blog.

The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, God forbid, recession?

To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical--or at least the newspapers' standard--definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then "recession" doesn't seem to be a very useful term any more.

The economists' odd fixation on growth as a measure of economic well-being puts them in a parallel universe of their own. WorldMoneyWatch's website tells us that, for example, that "The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income." And the latest issue of US News and World Report advises, "The key... for America is to keep its economy growing as fast as possible without triggering inflation."

But hellooo, we've had brisk growth for the last few years, as the President always likes to remind us, only without those promised increases in personal income, at least not for the middle class. Growth, some of the economists are conceding in perplexity, has been "de-coupled" from mass prosperity.

Growth is not the only economic indicator that has let us down recently. In the last five years, America's briskly rising productivity has been the envy of much of the world. But at the same time, real wages have actually declined. It's not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently. ......(more)

The complete piece is at: http://www.thenation.com/doc/20080121/ehrenreich

[JDPriestly]

1. We need an environmentally friendly measure for economic success.

Growth is not a valid measure, especially when the "growth" values the production of useless trash more than valuable time with family and friends, the number of cars more than the ease with which people can actually move from point A to point B. There is no apparent relationship between quantity of growth in the economy and quality of life. As long as the rich get richer, we have growth. Whether the rest of us have what we need is not even considered.

[Fredda Weinberg]

3. To be fair to economics, it is a study of aggregates. Unfortunately

the field was separated from its political components long ago, which is why as an undergraduate I took dual degrees. Even microeconomics is a study of enterprises, not individuals.

So growth is positive and as someone plugged into the global economy I can say from this vantage point that the future ... in the aggregate ... is brighter than ever. Do we care about each locally? I'm afraid that's an open question, but this election will help decide, so I'm participating as best I can.

[raccoon]

6. In WHEN CORPORATIONS RULE THE WORLD, David Korten

basically says what you just said, in Chapter 3, The Growth Illusion.

Great post.

[bhikkhu]

2. Mystery solved: the books have been cooked for years.

I wouldn't underestimate the complexity of the issues, but shadowstats is a good and readable primer for some of the background of our somewhat inexplicable economic times.

http://www.shadowstats.com/

[Fredda Weinberg]

4. Funny site, but absolutely misleading. Facts are facts, but you need

education to make sense of the data. I studied economics in college specifically to figure out why Volker put is in recession ... yes, he sacrified me and my cohort, but there was a national interest he was trying to preserve. These institutions are relatively modern and frightfully insecure, so they're vulnerable to conspiracy theorists. But the equations are sound and within its limitations, econometrics is useful predictor, which is all you can ask from a scientific model: reproducible results.

[bhikkhu]

9. What facts are not misleading, then?

The facts themselves are not conspiracy theory. For instance, the shadowstats site has recalculations of the CPI based upon reversing the various adjustments to the basket that have been made over the years. I don't think anyone would argue that the changes to the CPI calculation methods have served various political and practical goals toward reporting a low inflation rate, and that looking at the unadjusted numbers allows us to more realistically compare present circumstances to past. Without a background in economics, admittedly, one gains little but a mistrust for the official numbers, but to state that the numbers are misleading does not a conspiracy theory make.

Science would not manipulate the terms of analysis during a long term experiment to acquire the results desired.

[nealmhughes]

5. Economics is a field which meets Russell Ackoff's definition of an Open Complex System.

As long as there is the mysterious "k" factor, which no equation can truly satisfy, there will be a bit of mystery. Oh, that "k"? It is human beings acting/reacting on news, hunch, tips, and general "feeling" and that means that one can only stop the fluidity for a small period of time for analysis.

[MISSDem]

7. I've heard economists say that you only

know that there was a recession after the fact.

[dave123williams]

8. Sooner or later, the Chinese will want their 11 Trillion back. With interest.

[truedelphi]

10. Of course there is growth. With oil prices going ever higher, those who own

The Oil Companies, or the rich who have stock in oil companies, are doing fine.

No problem there.

For the rest of us, it is a much different matter. Like the farmers in the 1920's who saw stagnant economics in their own bank accounts and economic trends while the rest of the nation partied, the average income earner has felt that times were bleak probably quite a few years ago (Unless they were involved in the housing market boom.)

[eppur_se_muova]

11. Economists may live in their own universe, but it hardly seems "parallel" ...

more like skew to the universe of all the other poor slobs.