Why some people are surprised that the economy continues to be weak speaks more to the bankruptcy of our elected leaders and the cluelessness of the press release transcribers (we used to call them "journalists"). People don't have money--and that is a real issue when two-thirds of the economy depends on people buying stuff. But, the reason for people being impoverished--and the solutions--is still something that seems to escape the Smart People and the transcribers--either by design or by ideological blindness.
When the last little flurry of disappointment among the "here comes the recovery" gang popped up in May, I wrote that there can be no recovery until we stop obsessing simply about "growth"--which is almost meaningless. When the president rushes to the Rose Garden or concocts a made-for-TV photo op at a factory to hype some quarterly stat going up, it is not telling us very much--other than more stuff is being made somewhere.
People don't have work. People are leveraged out to the max because wages have not gone up for years--and credit cards have no more room and, obviously, there is not more to dig out of home equity.
But, what we don't seem to want to be pretty clear about is this: the financial crisis was an obvious outcome of the robbery of the average worker over the past 30 years by a bankrupt economic system that cannot be tinkered with.
It is still an economic system anchored on cheating people out of a decent paycheck for a day's work, and taking away their health care and their pensions. And, then, obviously, when greed and avarice run rampant on Wall Street, letting the robber barons of the financial and corporate world come up with crazy-ass "instruments" designed simply to increase profits, then, yes, people with no other place to go for cash--meaning, with no pay checks--will climb on that bubble, mesmerized and desperate to find any place they can go to for money (in this case, over-inflated homes).
This was brought home to me today in The New York Times in a column by David Leonhardt who writes the "Economic Scene" for the paper. Leonhardt is actually a decent columnist who doesn't mind pointing out CEO greed and corporate abuse.
Today, he writes "We're Spent" in looking at what the economy is so bad:
But the real culprit — or at least the main one — has been hiding in plain sight. We are living through a tremendous bust. It isn’t simply a housing bust. It’s a fizzling of the great consumer bubble that was decades in the making.[emphasis added]
And:
Both consumers and executives are easily frightened by the latest economic problem, be it rising gas prices or the debt-ceiling impasse.
To this point, all is fine. And, then, he starts to veer off-track:
We are feeling the deferred pain from 25 years of excess, as people try to rebuild their depleted savings. [emphasis added]
And:
But consumer spending will not soon return to the growth rates of the 1980s and ’90s. They depended on income people didn’t have.
The tone of the column shifts in a very subtle fashion to the "it's your fault" for overspending and "you now have to bear the pain".
But, hold on. How did this "pain" come about? How did people not have income? It wasn't some natural phenomena. It was a very carefully orchestrated effort to rob the wealth of the country.
What about thirty years of corporate robbery, denying people decent wage increases while paying CEOs millions of dollars in pay and benefits?
What about the relentless union-busting that has taken place over the past 30 years that has denied people a fair return on their work?
What about the Wall Street greed that was the principle reason behind the loss of millions of dollars and trillions of dollars in wealth?
The idea that everyone spent wildly beyond their means on fur coats and yachts is utter bullshit. The number one reason for bankruptcy in America is health care spending.
It underlies the stupid debate we are having now--you, the people, spent too much and now you need to participate in the "shared sacrifice" and give more, either in wages or lost services. Let's add another to the list of the incomprehensible attacks by Democratic leaders on the people--the poodle-for-the-rich New York governor, who won't demand a surcharge on millionaires, can now notch another "victory" with new concessions wrung out of the hide of public workers--who, of course, will now have less money to spend.
I am not arguing for a return to an economy that is powered just by consumer spending--largely because I think that has disastrous consequences for the planet.
But, let's be honest about why we're in the mess we're in.
Robbery, pure and simple.