My Comments: I have issues with this article title. For one thing, it only stinks if you have a good sense of smell, or in this case an intellectual curiosity to explore things you don’t already fully understand. Unfortunately, there’s a substantial percentage of our population that has no clue what we’re talking about and is not inclined to care.
Ebbs and flows of economic activity are inherently normal. Every now and then there’s one that is dramatically worse, or better, than what everyone is used to. Fortunately, the current upward flow has been far better than normal, and it’s become an expected outcome of government efforts at manipulation to keep the economy humming. Good luck with that.
Sooner or later it will be followed by an ebb. These don’t typically last that long. But to suggest there won’t be one is to believe the laws of economics have been repealed. They have not.
The last ebb was somewhat dramatic, in that we all call it the Great Recession, instead of the Great Depression, the one that happened in the 1930’s. The next ebb is very likely to be far less dramatic, since the truly dramatic ones seem to appear every 70-80 years or so. But it will happen, most likely in the next 18 months. There are too many red flags as seen my those who watch such things, to believe it’s all going to simply disappear.
Income inequality, or the disparity in income between most people and the few at the top, is an existential threat to the fabric of industrialized society. It robs us of initiative and discipline and moves us toward an acceptance of our relative poverty. As we come out of the next recession, it’s in your best interest to find ways to help reduce income inequality. None of the remedies will give overnight proof of their validity, but remedies must be found.
By T.A. Frank \ September 6, 2019 \ https://tinyurl.com/y6dmdlag
A decade of growth has palliated the sickness at the heart of the American dream. But under the surface, symptoms of economic inequality are getting worse. When the next recession hits, and the blinders come off, elites will have to grapple with a more potent radicalism.
Congratulations, Californians. Your median hourly earnings have gone up by 1% since 1979, according to a new report from the California Budget & Policy Center. It might hurt that wealthy Californians have seen gains that are 40-times higher, but we’ve become accustomed to this sort of disconnect. Stocks rallied yesterday over news of revived trade talks, then slid this morning on weaker-than-expected jobs data. Sixty-nine percent of Americans say the state of their personal finances is the same or better than it was two years ago, and many are optimistic about the economy. And yet, and yet—that number for mid-wage Californians says a lot about where we are in the country as a whole.
Many Americans are obsessed with getting rid of Donald Trump, and it’s hard to blame them. But Trump represents forces as well as a person, and we’ll see more figures like him as long as the middle class keeps losing ground. If you’re in the top quintile of earners, life is okay, and if you’re the next quintile down, it’s manageable, but take a place in the next three and life gets very hard very fast. Dive into the numbers on American wealth and you see how bad the past couple of decades have been not for just factory workers but for the middle class as a whole. When the next recession arrives—and arrive it will—we’ll have to grapple, once again, with unbridled capitalism and its consequences.
Here’s one striking, if sad, fact. During seven years of Bill Clinton’s presidency, real median household income grew steadily, reaching a peak in 1999. For the next decade and half, however, it fell in every year but four. By 2014, according to Pew, 49% of U.S. aggregate income was going to upper-income households, meaning those earning more than twice the median income, versus 29% in 1970.
Another cruel statistic: In real income, working-class white men in 2014 were making less than they were in 1996. During the 2016 presidential campaign, people on the left started to pass around the quote (the origins of which are uncertain) that “when you’re accustomed to privilege, equality feels like oppression.” The implication was that working-class men were sad to be sharing their good fortune. In reality, millions of them were sad to be losing their good jobs and finding themselves in more and more competition for bad jobs.
All of the working class, not just the segment that is white and male, has been hurting. Stagnant income feels worse than going nowhere. In practical terms, you’re getting poorer. Crucial goods and services like education and health care have outpaced inflation, and the same is true of housing in prosperous coastal cities. Many consumer goods that didn’t exist in 1970 have also become necessary for middle-class survival. For instance, applying for almost any sort of job, whether as an office assistant or a greeter at Walmart, requires having a device that can connect to the internet. No wonder that financial fear has become the norm.
Vox can write about a “labor shortage” and call for more low-skill immigration in “order to fill all the open jobs and keep the economy growing.” But Vox writers have college degrees, and such Americans have an unemployment rate that’s only half that of Americans without them. This speaks to what people take for granted about today’s economy, in which we’re paying only $12 or $13 an hour to the Americans who prepare our food, care for our elderly, or harvest our fruit. As the economist Dean Baker has noted, doctors are protected from labor competition in a way that agricultural workers are not. It’s a sign of who calls the shots that we have an economy in which a doctor can get less expensive fruit instead of an economy in which a fruit picker can get a less expensive doctor.
If the story of middle-class income has been grim, the story of middle-class wealth has been downright stunning. New York University economist Edward N. Wolff has offered some numbers that have received too little notice. By 2010, the blow of the Great Recession had been so hard that median wealth, in real terms, had fallen to below what it had been in 1969. By 2016, mean wealth had recovered to pre-recession 2007 levels, but that was because rich Americans had recovered. Median total wealth among Americans in 2016 was still 34% below what it had been in 2007. The average wealth of the poorest 40% of Americans was already low in 1983, at about $7,000 in today’s dollars, but by 2016, with spiraling debt, it had gone thousands below zero, to minus $8,900.
Most of us have seen big-ticket statistical shockers about wealth inequality today, so hearing that the net worth of Bill Gates, Warren Buffett, and Jeff Bezos exceeds that of the bottom half of Americans put together has become a refrain of sorts. Also, the rise of hyper-billionaires does not bother everyone in itself, since it can be a sign of overall national vitality, as was the case in the Gilded Age. But we’re far less prepared to accept a broad-based decline of fortunes. Most Americans are poorer than they used to be.
To put it gently, this has implications. Radicalism will be a potent strain of our politics for decades to come. If you’re fine with where the ship is going, overall, then the question of whether your captain steers a bit left or right doesn’t feel urgent. If you hate where it’s going, however, and taps of the wheel fail to change it, then you look for someone who promises to cut it hard.
Resentment toward an elite expresses itself in populism, the variety of which will be up for grabs. In his book The Populist Explosion, John B. Judis distinguishes between left wing populism and right wing populism, noting that the former pits the lower and the middle against an elite, while the latter pits the middle against an elite that is coddling a third group, such as immigrants. “Left wing populism is dyadic,” he writes. “Right wing populism is triadic.”
You could say, therefore, that left wing populism seems kinder. At the same time, it may be a tougher sell. Resentment of the poor isn’t something that politicians create among those in the working class but rather something that grows out of proximity and a sense of unfairness. As University of California law professor Joan C. Williams has pointed out in her book about the white working class, people struggling to make ends meet on a working income can get angry about benefits (such as childcare subsidies) that are denied to them but made available to people in a lower income bracket. Some of the bigotry on display at Trump rallies, which many on the left refuse to see as economic in origin, can be tied to this phenomenon, a belief that those who, in the words of Bill Clinton, “work hard and play by the rules” are the last to get help and those who take advantage of the system (welfare recipients, asylum seekers, etc.) are the first.
If there is any cause for hope, it’s that economic problems tend to have economic solutions, unlike problems of identity or faith, which are often all or nothing. Currently, a lot of trends prevent us from making deals on any divisive question. On the left, a lot of populist energy has been lost because of infighting over identity. The same is true on the right, as Trump makes up for his ineffectuality by stoking cultural grievances as much as possible. But Americans are better than their ruling class, an assertion that sounds like reverse snobbery but, with the evidence at hand, is something more like the truth, and our financial divides have left us less miserable than you might think on other measures. A 2019 survey from the right-leaning American Enterprise Institute found that about three quarters of Americans are still happy with life in their communities, which suggests that we have an incentive to make things work and not just break them.
With a sunny radical who played to our better angels, perhaps we could escape the jam we’re in. That’s one reason why lesser-known figures like Pete Buttigieg and Andrew Yang have had made waves and why Bernie Sanders remains potent. Until the right person comes along, though, we’ll have to keep ourselves together. The times may require a healthy respect for the necessity of a sharp turn, but they require an even healthier respect for the necessity of keeping the peace when deciding how to make it.