Breaking the Economy to Save the Wealthy
In November 2015, FiveThirtyEight posted, The Economy is Better. Why Don’t Voters Believe It? of which I noted they didn’t seem to believe their own explanation.
The easiest explanation for this paradox is that it isn’t a paradox at all: Americans are pessimistic about the economy because, for many of them, the economy hasn’t gotten better.
One of my infrequent commenters didn’t believe it, either.
But in, Americans Are Still Really Worried About The Economy, FiveThirtyEight seems more inclined to believe their own headline:
It’s possible that voters, with memories of the recession still fresh in their minds, simply don’t believe the signs of progress, or worry they won’t last. But here’s another explanation: Americans are feeling better about the economy right now, but they remain deeply worried about their longer-run prospects — retirement, student debt and, in particular, the ability of their children to find middle-class jobs. This shows up in Gallup polling data, which shows a marked divergence between Americans’ assessment of their current conditions and their future outlook.
Those fears are grounded in economic reality. Wages may have rebounded from the recession but they have been largely flat since 2000 after adjusting for inflation. A college degree, long the surest pathway to the middle class, is no longer such a sure bet. And a growing group of influential economists are arguing that the U.S. has entered a prolonged period of slow growth. Few economists would endorse Trump’s plans for dealing with that stagnation, but it’s understandable that voters are looking for solutions.
FiveThirtyEight, and most other pundits, are still failing to notice the savaged class of blue collar hourly wage earners so aptly described by John Michael Greer in one of his most widely read and quoted articles, Donald Trump and The Politics of Resentment:
And the wage class? Over the last half century, the wage class has been destroyed.
In 1966 an American family with one breadwinner working full time at an hourly wage could count on having a home, a car, three square meals a day, and the other ordinary necessities of life, with some left over for the occasional luxury. In 2016, an American family with one breadwinner working full time at an hourly wage is as likely as not to end up living on the street, and a vast number of people who would happily work full time even under those conditions can find only part-time or temporary work when they can find any jobs at all. The catastrophic impoverishment and immiseration of the American wage class is one of the most massive political facts of our time—and it’s also one of the most unmentionable. Next to nobody is willing to talk about it, or even admit that it happened.
Ironically enough, you had to go to Gawker’s, hello from the underclass to find stories about these people.
The Fed is also blind to the situation of the middle class, and is still toiling to preserve the wealth of the upper percentiles. In Al Jazeera, Dean Baker argues against unnecessary inflation control with, Don’t let market crashes obscure our economic malaise:
The world economy suffers from pretty much the same problem it has faced since the collapse of the housing bubble threw the world economy into recession in 2008-2009: a lack of aggregate demand. Prior to the collapse of housing bubbles in the U.S., much of Europe, and elsewhere, the demand created by these bubbles drove growth. …
The best that we can probably hope for is that they not do anything to make things worse. This is where the Federal Reserve Board comes in. The Fed raised interest rates in December. The purpose of this rate hike was to slow the economy in order to head off inflationary pressures.
If it was not already pretty obvious in December, it certainly should be obvious today: We don’t have any inflation to worry about. The inflation rate is way below the Fed’s target and more likely to go lower than higher in the immediate future. In other words, the Fed was acting to slow the economy without any real world justification.
Incredibly, Sen. Bernie Sanders was the only presidential candidate in either party who seems to have noticed. He criticized the Fed’s actions and urged it not to take further steps to hurt the economy.