Water Is Wet
McClatchy writes about the just released 2008 annual survey data from the U.S. Census Bureau which tells us what most of us had already figured out, that under the Hedgemony the rich got richer, and the rest of us got poorer:
_ The worst is yet to come. “This is just the beginning, or the tip of the iceberg because 2008 was not nearly as bad an economy as 2009,” [Harvard economics professor Lawrence F.] Katz said. The average unemployment rate in 2008 was 5.8 percent, up from 4.6 percent in 2007. That pales in comparison with the 9 percent average unemployment rate so far this year, and it’s likely to increase. August unemployment was 9.7 percent, and it’s expected to peak above 10 percent in the months to come.
_ Because real median household income is 4.2 percent lower than it was in 2000, Katz said, “We’ve basically seen a lost decade for the American family,” with only the top earning families doing better now than they were in 2000.
The national poverty rate also hit its highest level since 1997, jumping to 13.2 percent in 2008 from 12.5 percent in 2007. The increase meant that 39.8 million people lived below the poverty line, the most since 1960. That’s up from 37.3 million in 2007. For children, the poverty rate hit 19 percent, or 14.1 million youngsters in 2008. That means 35.3 percent of the nation’s poor in 2008 were under age 18.
As long as the government is focused on making the wealthy Wall Street gamblers happy, these trends will continue. Until we return to the programs and policies that pulled the nation out of the Great Depression things will get worse. If there are no jobs, there is no demand. If there is no demand, supply is irrelevant. If there is no demand, the private sector will not create jobs. Jobs have to come first.
8 comments
Once again, Mr. Duff, if people don’t have jobs, they don’t have money. If they don’t have money, they can’t buy. If they can’t buy, businesses don’t sell.
I’ll be posting later today an article on the over one trillion dollars in profits that business is holding in cash. They aren’t doing anything with the money because there is NO DEMAND. You don’t invest unless there is a demand. There are huge pools of money out there that are not circulating, and the US is facing deflation because there are no jobs to spur demand.
Incidentally, we were already on our way up when the war happened, and that is based on the testimony of people who lived through it. not people who looked at it afterwards. You might also consider that war is a huge government stimulus package. The government can do the same thing without getting anyone killed, and build useful infrastructure instead of blowing it up.
The only thing that FDR did wrong is when he decided to reduce the deficit in 1937 and cut back on spending. The economy slumped, That is exactly what the austerity moves that are now popular are going to do, cause a slump, if not a global depression.
Once again Mr. Duff appears to believe that businesses are charities, and will hire people when there is no demand to justify hiring. I am baffled as to the lack of simple business savvy amongst right-wingers. Have none of them ever run their own business? Anybody who has ever run even a simple pizza shop knows that you hire as few people as are needed to meet demand, because if you don’t, your competitor *will* and will out-compete you.
There will be no hiring until there is sufficient demand that the current workforce can’t meet it. And there shall be no demand until there is sufficient hiring to put more money into circulation to buy stuff. Vicious circle here, and saying that one piece is in front of the other is hard to do — unless you say that, hold it, there is this other entity out here, in possession of a (money) printing press, called GOVERNMENT, that could, like, print up some money and hire a bunch of these unemployed people and create demand, which in turn would result in more hiring, and things could get back to normal again as government cut back and let private business take up the slack! Whoa, what a concept. Flew over Mr. Duff’s head, I’m sure, because it doesn’t require austerity and suffering (for other people, not for Mr. Duff… I mean, c’mon, a good tighty rightie must have his priorities straight, suffering is for the little people, not for good tighty righties!).
– Badtux the Snarky Penguin
They must not teach about supply and demand in the MBA programs, nor in many economics courses apparently, because there are an awful lot of people who don’t understand the process. Business is now controlled by the underwear gnomes.
Mr. Duff, has obviously never been in business for himself, or he wouldn’t think that profitability is the main determinate in hiring. We have record profitability, but no hiring.
As usual, winger talking points go directly from the ear to the mouth without any processing by the brain:
“And incidentally, the only thing that pulled you out of the depression in the ’30s was the war in the ’40s. Virtually everything FDR did just dragged it out longer”
Yeah, right. And what happened after we got into the war that finally pulled us out of depression, tax cuts and deregulation? Sorry, no, the top marginal income tax was cranked up all the way to 94% (from 24% in 1929, 63% in 1932) while government control of the economy was vastly expanded by means of mandated rationing, direct price controls, centralized planning of manufactures and of course, massive spending.
Anyone with even minimal knowledge of the U.S. during WWII knows these things. Well, anyone who’s not either wearing their right-wing blinders or just plain lying.
Oh, and quoting straight from Mr. Duff’s linked article:
“By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high.”
In other words, during the six years of FDR meddling from 1933 to 1939, unemployment decreased almost 31% from it’s high point three years after the 1929 crash. Gee, I’m sure glad we’ve learned better than to put our trust in that failed New Deal stuff!
And furthermore, the 1939 unemployment rate is that high only if you deliberately do not count those who are working for the government as being employed. If you do, the unemployment rate falls to a still alarmingly high 12% or so but decidedly *not* the 17.2% listed. As for WW2, that was the largest Keynesian economics program ever created — money was printed on a massive scale, and huge numbers of people were employed to either travel around the world blowing stuff up (i.e. do nothing useful for the economy) or build stuff that was then blown up or turned to scrap or shot out of the barrel of a gun, i.e., “make-work” in the context of anything other than a war. So why does Keynesian economics in even this inefficient “make-work” fashion work to end a depression in the context of a war by even the admission of the right-wingers who admit that the massive Keynesian stimulus of WW2 brought the US out of the Great Depression, but anywhere else even if used to build actual productive infrastructure and provide valuable services it is harmful? Curious penguins want to know!
– Badtux the Economics Penguin
Of course government employment should be counted, but to be fair, there is a vast amount of chaff and propaganda dedicated to confusing that issue, mostly by blurring the difference between real wealth and little pieces of paper with the right symbols printed on them. I used to wonder myself whether government employees really could be said to pay taxes, since their salaries are paid from government funds rather than private. After some thought, you realize that wealth is wealth, no matter who produces it, so long as it consists of actual goods or services rather than worthless pieces of paper (or electronic bits).
It’s true that quite a few people are paid for activities that are not productive in those terms, but it’s my opinion that the percentage of the unproductive or counter-productive is probably higher in business than in government. In any case, though, that argument is irrelevant to the question of whether civil servants should be counted as part of the “real” economy.
Understanding the vast structure of rules and prerogatives that we call “The Economy”? Complicated and difficult. Understanding basic economics? Not so much, as long as you base your reasoning on real-world observation rather than attractive axioms that fit the map but not the territory.
Is Mr. Duff listening, do you think, or is he one of those drive-by posters?
The unemployment numbers were actually lower in 1936 than 1939, but then FDR decided to “do something about the deficit” and they shot back up because the economy wasn’t strong enough to sustain the growth, so they had to go back to the stimulus.
If we used the same rules for determining unemployment that were used in the 1930s, the current rate would equally dismal. Real unemployment is probably twice the stated rate. This is the non-farm rate, and the fishing industry is counted under agriculture for some reason, so Gulf fishermen don’t show up in the figures.
PJ, Mr Duff is a conservative Briton, and retired. He hangs around and attempts to blame everything on “liberal” policies. Like most conservatives, he tends not to read the entire post he links to, when he links. He will see something that supports his view, and miss the context. Conservatives also tend to miss quotation marks and ellipsis [the … not the oval, which is ellipse] which indicates that things have been omitted.
Badtux and I try to show him the light, while Steve Bates gets upset with him.