Category Archives: Economics

Did The Stimulus Work?

Mark Thoma of Economist’s View (references to whom often appear in Paul Krugman’s blog) answers by quoting an LA Times article: “According to a collaboration between Fitch Ratings and Oxford economics, the answer is yes: …” Here’s the hed and first graf of the LAT article:

Government stimulus moves may have ended recession, by Jim Puzzanghera, Los Angeles Times: Without the unprecedented stimulus actions by the federal government triggered by the 2008 financial crisis, the Great Recession might still be going on, according to a study by Fitch Ratings. …

Thoma’s post reproduces a wonderful graph of GDP showing what happened vs. what might have happened without the stimulus, based on Oxford Economics and Fitch Ratings. The difference in GDP increase with and without the stimulus is striking; please go look at it.

So, American voters, in light of this apparent success of Obama’s policy approach to the Great Recession (even if inadequate and even if the banksters and other large corp’s got goodies out of it and even if unemployment is still unacceptably high), you need to ask yourself one question: faced with the same circumstance (which he may well be), how likely is it that Mitt Romney would arrange or  would have arranged any sort of stimulus at all? Right. That was my answer, too. Remember, either Obama or Romney will, with virtual certanty, be president in 2013; there is no viable third choice.

If Americans are supposed to vote their pocketbooks, and if they are smart enough to get their news from something besides Fox, Obama should take this one in a walk, thanks to the effects of the stimulus. That’s a couple of major assumptions, however. You might actually bother to go to the polls in November…

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Forty Years Of WOW – The War On Workers – In America

Here’s another dog-bites-man story, an economic tale of today’s America that only a Republican could love or ignore or feign surprise at. TPM’s Brian Beutler points us to a preview of the Economic Policy Institute’s forthcoming publication, “The State of Working America,” and the state is… not good. The preview, “The wedges between productivity and median compensation growth” by Lawrence Mishel, informs us that from 1948 (my birth year) to 2011, while worker productivity has gained 254.3% in a more or less straight-line increase, hourly compensation has gained only 113.1% in the same time period. The hourly compensation curve tracks the productivity curve up to the early 1970s, but then flattens out as wages have stagnated for four decades. See the linked EPI article for those graphs.

Another graph is more interesting. This one shows productivity gains from 1973 to 2011… more or less my working lifetime… about 80.4%, again in a more-or-less straight line… and median hourly compensation, by gender. Median male compensation has increased almost not at all… 0.1%. Overall median hourly compensation has increased only 10.7%… remember, this is in the face of an 80% productivity gain.

Average hourly compensation has grown by 39.2%, vastly more than median hourly compensation gains, which means most of the gains by both women and men have gone to higher-paid workers. Median female compensation has grown by only 33.2%, in other words, nowhere close to the average though well above the both-genders median. (I assume the much higher gains for women are because equal-pay laws have somewhat ameliorated the unconscionable underpayment of women in earlier decades.) Here is the graph:

 

I said at the beginning that this is a dog-bites-man story. If you are a working-class, working-age American, you scarcely need to be told that you are working harder and more hours while your personal economic situation is simply not improving. Of course there are exceptions, but remember the above graph deals in the median… the most typical numbers… and the average numbers. On the whole, all those productivity gains meant profit gains for your employers. Well and good; there’s nothing immoral about profit… unless it is not shared with the people who make it possible. And those are the workers in America who are just plain not getting a fair deal. We’ve doubled our productivity and gotten squat for our reward. That is wrong.

As someone once said on the ancient 1960s/1970s comedy TV show Laugh-In, “We upped our work production… up yours!” It was funnier before it became a true rendition of the attitude of the 1% toward the 99%.

What, And Who, Killed The Economy?

Paul Krugman and Robin Wells, writing for Salon, sum it up: it’s the dramatically widening inequality of incomes… and plain and simple GOP ignorance, “failing Econ 101,” as they put it. Here’s a sample:

So how did we end up in this state? How did America become a nation that could not rise to the biggest economic challenge in three generations, a nation in which scorched-earth politics and politicized economics created policy paralysis?

We suggest it was the inequality that did it. Soaring inequality is at the root of our polarized politics, which made us unable to act together in the face of crisis. And because rising incomes at the top have also brought rising power to the wealthiest, our nation’s intellectual life has been warped, with too many economists co-opted into defending economic doctrines that were convenient for the wealthy despite being indefensible on logical and empirical grounds.

We can keep on pursuing this course until the nation’s… and the world’s… economies collapse. Or we can “suddenly” remember that we’ve been here before, in the second half of the 1930s, and that we know how we got out of the Great Depression. I could say “the choice is ours,” but hey, it’s not as if we had a democracy or anything… [/snark]

Port City In Greece Returns To Barter System

… with a high-tech twist. Via BBC, in the port city of Volos, you obtain the “currency,” a set of online accounts called TEM, by offering goods or services for barter. You obtain others’ goods and services by debiting your TEM account and crediting theirs. It is not intended as a replacement for the Euro, but many businesses and individuals offer products and accept TEM in payment. It’s effectively a small currency system completely independent from the Euro, and it enables people Euro-impoverished by government austerity to get on with their daily lives by trading with each other.

(H/T Avedon.)

Rmoney (sic): The Bain (sic) Of Our Existence

Robert Reich tells us how private equity firms work:

Chevy Volt Sees Record Sales, Production To Resume Early

“Reports of my demise” etc. … GM, which recently placed production of its electric car on temporary hold, will resume production a week earlier than scheduled. The original hold was due to lagging sales in January.

This is great news, unless you happen to be a worker on the Volt production line, in which case you know this will happen all over again any time sales lag for a short while. Contract work may come and go, but one cannot sustain an economy without reliable full-time employment available to skilled workers essential to the business. Automobile market conditions aside, people have to eat every day… why is that so hard for some employers to understand?

Economic Recovery? For Whom?

For America’s obscenely, overwhelmingly wealthy… and, to a lesser degree, for people with incomes in the top 10%… there’s been a recovery.

For everyone else in America… there has been not even a hint of a change.

Is this just the vanishing of a fondly if fuzzily remembered Clinton era of growing wealth for everybody?

No. Here’s a summary of what Robert Reich has to say on the subject:

The top 1 percent got 45 percent of Clinton-era economic growth, and 65 percent of the economic growth during the Bush era.

According to an analysis of tax returns by Emmanuel Saez and Thomas Pikkety, the top 1 percent pocketed 93 percent of the gains in 2010. 37 percent of the gains went to the top one-tenth of one percent. No one below the richest 10 percent saw any gain at all.

In fact, most of the bottom 90 percent have lost ground. Their average adjusted gross income was $29,840 in 2010. That’s down $127 from 2009, and down $4,843 from 2000 (all adjusted for inflation).

Some of us… the chronically unemployed… have not even been that lucky. Averages are great, if you’re not below them, but they’re a terrible measure of typical economic well-being.

Eat the rich, I say. (Be sure to clean and cook them thoroughly before consuming them.) Seriously: there is no just basis for the change in income distribution over the past three decades. It is rapidly turning America into a third-world nation with a bimodal wealth distribution like the worst of South America… or possibly worse. I unapologetically favor taxing the rich mofo’s back into the Stone Age… not punitively, but as a matter of national survival.

A Krugman Column Title That Jane Hamsher Could Love… Or Maybe Not

The title: “Natural Born Drillers.” Krugman’s main point, among many, is that the oil market (unlike, say, the natural gas market) is a world-wide market, in part because oil can be (relatively) easily shipped*… and hence the price of gasoline is almost completely beyond the control of any part of a sitting US government. In particular, Mitt Rmoney [sic] is demonstrably lying when he blames Obama for high gas prices. “Drill Baby Drill” may make oil companies richer, but it will not ease American consumers’ pain at the pump.

Still, it’s no surprise GOPers are attempting this ploy: Republicans lie the way the rest of us breathe. If I recall correctly, GeeDubya Bush is thought to have attempted to prevail upon his buddies among Saudi royalty to assure low(er) gas prices in time for his own re-election.

That was then, and it worked; this is now, and you know they’re thinking the reverse of that strategery might work again. After all, those to whom lying equals breathing are not about to stop breathing.

* Notwithstanding drunk tanker pilots. Your, um, mileage may vary.

The Article Contains Nothing New To You, But The Source May Astonish You

Kenneth Lipartito of Florida International University recalls some Great Depression history for us, involving FDR’s initial attempts, wealthy fellow that he was, to balance the budget (which had predictably catastrophic results), and his administration’s growing understanding… along with some more enlightened businessmen… that Keynesian policy, i.e., government spending, was the only way out of the Depression.

The article is published in… wait for it… Bloomberg.

American Middle Class Income Becomes Decoupled From Economic Growth

Mark Thoma of Economist’s View (h/t David Dayen of FDL), citing Lane Kenworthy, remarks on the rapidly increasing decoupling of middle-class income growth from economic growth. The charts, particularly the one provided by Thoma, show that income growth tracked economic growth in America, from about 1947 until… please note… approximately 1980, when Saint Ronald was inaugurated. From that point forward, middle-income individuals have not partaken of the nation’s economic growth as they did previously, almost no matter what measure of income you use… e.g., median family income or average household income.

Many of us can look at our own earnings for those periods and see the difference. Until about 1980, my financial condition improved slowly but steadily. Starting in 1980, my income leveled off, and of course eventually my assets, already flat for 1980-1990, began to decline in about 2000.

I believe this is not the consequence of the operation of any sort of grand natural law of economics: it is the result of conscious decisions by people in power to make the rich richer at the expense of everyone else. And they have succeeded more than most of us ever expected.

Welcome to the era of Republican and New-Democratic economics. Enjoy your increasingly cramped lifestyle. Please keep the line moving; the powers-that-be have a lot of people to screw…