What’s Wrong Today:
Last Friday, The Center on Budget and Policy Priorities
(CBPP) released a series of charts that
document the course of the economy since the 2008 recession. It is well worth
your time. Here is the chart that shows the number of unemployed people per job
opening in the US in September 2013:
From the CBPP:
(emphasis by the Wrongologist)
looking for work for every job opening. That ratio…remains at a level roughly
equal to the highest point reached in the 2001 recession and its
aftermath. In September 2013, 11.3
million workers were unemployed but there were only 3.9 million job openings.
That is about three unemployed workers for every available position…even if
every available job were filled by an unemployed individual, about two of every
three unemployed workers would still be unemployed.
So, it should be no surprise that we
have 4 million long term unemployed in America today, a number not seen since
we started keeping records in the late 1940’s. The number was only 1 million in
2007. From the St. Louis Federal Reserve:
Today, Paul
Krugman is concerned about the loss of unemployment benefits for 1.3
million Americans just before Christmas, which he says is based on bad Republican
ideology, buttressed by bad economics. He writes:
entered the Great Recession, four and a half since it officially began to
recover, but long-term unemployment remains disastrously high. And Republicans
have a theory about why this is happening. Their theory is, as it happens,
completely wrong.
He goes on
to say that Republicans think that unemployment insurance reduces the incentive
to search for a new job. As a result, the story goes, workers stay unemployed
longer. Republicans claim that the Emergency Unemployment Compensation program,
which lets workers collect benefits beyond the usual limit of 26 weeks,
explains why there are so many long-term unemployed workers in America today. So
the GOP answer is to increase their pain by cutting their benefits: If we eliminate
their incentive to sit at home, they will get jobs.
But, with
3 times as many long-term unemployed as there are jobs, Republicans must be
expecting another Christmas miracle.
Krugman
continues:
today’s American economy is limited by demand, not supply. Businesses…[are]
failing to hire because they can’t find enough customers. And slashing
unemployment benefits — which would have the side effect of reducing incomes
and hence consumer spending — would just make the situation worse.
Your Republican grandfather probably
told you that the PROVEN model for personal success is:
#1. Stay in school
#2. Start at the bottom and continue to
learn, starting over when bad things happen, as they often do#3. Save a piece of every pay check…etc,
etc.
Of course, grandpa didn’t tell
you what to do when #2 becomes: “what you do if you can’t get a job”, or when it becomes: “what you do if you DO get a job
but the pay doesn’t cover your expenses”…etc, etc.
He should have added the rule: “Be
lucky enough not to start at the bottom”.
David Simon, creator of The Wire and Treme, has a longish article up at The
Guardian where he describes what he calls our “Two Americas” and the challenge presented
by what Krugman called “the perfect marriage of callousness”, the complete lack
of empathy combined with bad economics:
of the market economy and the market knows best, to the point where now libertarianism
in my country is actually being taken seriously as an intelligent mode of
political thought…People are saying I don’t need anything but my own ability
to earn a profit. I’m not connected to society. I don’t care how the road got
built, I don’t care where the firefighter comes from, I don’t care who educates
the kids other than my kids. I am me. It’s the triumph of the self. I am me,
hear me roar.
Shorter: Unchecked capitalism has created a fractured society. Here
are a few things that the “marriage of callousness” has delivered:
- From
1947 to 1979, the middle class received 54% of the nation’s total income, and the
economy grew at 3.7% per year
- From
1980 to 2010, when the middle class’s share of the nation’s total income fell
to 46%, and annual GDP growth fell to 2.7%
- If
the minimum wage had kept up with inflation, it would be $10.74 today
- The top 1% of Americans own 40% of the country’s wealth while the
bottom 80% owns less than 5%
- In
the past 50 years, the tax rates of the 400 richest families in America have fallen
by 60%
- The
wealthiest among us have taken control of election finance: 28%
of all campaign donations came from the wealthiest 0.01%
David
Simon’s article closes with: (emphasis by the Wrongologist
acquired…almost the ultimate moral authority over what’s a good idea or
what’s not, or what’s valued and what’s not – the last journey for capital in my country has been to buy the
electoral process, the one venue for reform that remained to Americans.
The enemy
that created the two Americas and the marriage of callousness is the corruption of
the political system and the corruption of individuals who work within that system.
We need to
take the money out of politics. We need total transparency about donations from
lobbyists and corporations. We need to limit the amount that can be spent on
elections. The next presidential race will certainly set another spending
record; many Senate races will set spending records in 2014.
If you
want your democracy back, then it’s time to have a re-think regarding what a
political system that works for everyone should look like. We need to come up
with a system that limits the ability of the rich and powerful to buy the
political process and system of government.
John F.
Kennedy, in a 1962 speech
to the Alliance For Progress, said:
revolution inevitable
If our
political process continues without dealing with unchecked capitalism, this is surely
what we will face.
What is funny is how folks think of the unseen hand of the market as replacing social policy. Nope. The market only “solves” for price.
And yes, if the government does almost anything, that create incentives that skew the markets… but almost anything of significance skews things differently from the absence of the thing.