It’s comical to watch the financial channels’ pundits and Obama Administration officials, almost on a daily basis, tell us that we are well into an economic recovery. Yes, there have been times when the economic data looked promising. During some weeks first time unemployment claims have been down. The economy has grown between two and three percent some months. And there have even been some months when new home sales have swelled and the prices of houses in general have increased. But the fact of the matter is that the worst of the crisis is yet to come and of course like the initial crisis which has lasted for close to three years already it will be Washington’s fault.
So, what are the indications that we are not well into an economic recovery and the worst of the economic pain is yet to come? For one thing, the National Bureau of Economic Research (NBER), the government’s official judge of economic expansion and contraction, has not pronounced the recession that began in 2007 to be over. Additionally, just yesterday the government announced the economy lost 125,000 jobs last month. The real unemployment rate which takes into account discouraged and underemployed workers is still north of 16 percent Food stampusage has skyrocketed to a record high of 40.2 million recipients. Bank repossessions are still a massive problem. They hit a record 93,777 in May which represented a 44 percent increase over May of the previous year. Worst yet, all 50 states are experiencing year-over-year increases. Banks still aren’t lending; consumers aren’t spending; and the national deficit and debt is in outer space with nothing good to show for it.
In all fairness, as mentioned above, there has been some good economic news from time to time. For instance, housing prices did increase in April. But most analysts attribute the rise to the rush to take advantage of the government tax credit for homebuyers which expired at the end of that month. Since the tax credit expired almost all housing market barometers have dropped significantly.
Then there were those months that jobs were produced. But, again, this had more to do with government gimmicks - 2010 census hiring and government spending then real economic progress.
To be sure, some Americans are doing quite well in this recession and this might account for the president’s insistence that the recession is over and prosperity is just around the corner. Who is doing well? Well, folks that live close to Washington and Wall Street are doing very well. Forbes Magazine has reported that 12 of the 25 riches counties in the country border the nation’s capital and financial headquarters. It’s no wonder since government workers receive 45 percent more in pay and benefits than their private sector counterparts. This is pretty good when you consider that it’s almost impossible to lose a government job even in economic recessions. Of course, given the huge taxpayer bailouts to Wall Street bankers and the generous Federal Reserve policies towards the same it is also easy to see why suburban New York City is riding high in these tough times.
Article comments
— go to most recent comments1 - Christine
Hey, Kenn, nice! Haven't been on BC for a while to write or read any articles. Been busy with a huge piece that involves "crony capitalism" and requires tons of research that I am in the middle of right now. Always enjoy your articles.
2 - John Wilson
Yes, it's naive to assume that the economy will simply rebound and recover to previous levels.
There's no intrinsic reason for the economy to recover. Yet people keep trying to tell me that it's 'cyclic', without explaining why it would be cyclic or what parameters define the cycle.
We have a production system capable of fulfilling needs without a decent distribution system. The antique capitalist rewards/penalties system doesn't work anymore.
We should have reduced the workweek as productivity rose beyond needs so that production would be more evenly distributed, but we chose to just increase rewards to a few. Dumb decision.
3 - Arch Conservative
What has hurt us the most and will continue to hurt us is the fact that every single administration and Congress since LBJ, both Dem and Repub have been content to piss away our manufacturing jobs to third world countries.
We've become nothing more than a nation of superficial consumers waiting for next material fix to slap on the credit card. Quite ugly actually.
4 - Les Slater
Arch,
Read an interesting perspective from a significant member of the ruling class on what you're talking about here.
5 - Les Slater
Also, in line with Kenn's article, Jobless crisis deeply affects most workers, from the Militant.
6 - roger nowosielski
I was hoping, though, Les, you would give me feedback as per my last email.
As you may have noticed, I stopped engaging people like Jacobine and company. It's not only unproductive but mind-numbing as well to be going over the same lame arguments time and again. These people suffer from ossification of brain cells and as far as I am concerned, it's a wasted effort trying to engage them. You're a better man than I.
I was hoping, though, you might field the question I raised. Is that too much too ask?
If my response is less than timely, I've been installing a new laptop, in preparation to my California move.
7 - roger nowosielski
Excellent article by Andy Grove, Les,
If there is one lesson to draw from this, it's the short-sightedness of American business. Job creation and manufacturing are the mainstays of any economy. The bottom line, however important, is secondary.
8 - John Wilson
#3 "...both Dem and Repub have been content to piss away our manufacturing jobs to third world countries."
Yes. When I was a lad David Ricardo and his theory of Relative Economic Advantage was considered a damned liberal by conservatives eager to protect their tariffs, but ever since they discovered how much money they could make by selling out to foreigners they've all become Ricardians. Fickle bastards.
9 - Les Slater
Anybody have a way of contacting Arch? I'm sure he would appreciate that article. It's directly related to his #3.
10 - roger nowosielski
You posted it already.
11 - Mark
re #7 Those of us who disagree with the likes of Kenn and Mises need to shut up until able to put up. I'm with this guy --
and as I cannot put up a compelling argument at this time, I'll follow my advice.
12 - roger nowosielski
Excellent appraisal except for one thing - it addresses the political/economic climate and conditions in the present, not the conceptual relations. Besides, even with this proviso, it fails to address the strains and fissures.
I totally disagree with the premise that the likes of Jacobine and Mises need to be convinced. They're reactionaries, and reactionaries they'll remain. No cogent argument is going to change the fact. It's a PR job at best, not likely to carry much weight.
Solutions will and must come from bottom up - the disgruntled workers and the growing army of the perennially unemployable. Don't expect Geithner or Bernanky to set the economic ship afloat.
That's why I asked both you and Les, in my last email, to look into the concept of "socialized capitalism" (as per links provided). It's an unfortunate terms, not of my own choosing, but that's neither here nor there.
The concept offers some interesting possibilities - in particular, the democratization of the economic processes, from ground-up.
How many times do I have to ask for feedback?
13 - Mark
Please retransmit the links, Rog.
14 - roger nowosielski
Last post as per the following.
15 - Les Slater
Roger,
I'm about half through the link in your #14. I have a hard time following all the arguments. Your refference to 'socialized capitalism' in #12 gives me a much better idea what your talking about. Mark's 'this guy' mistakes 'socialised capitalism' for socialism. It wss the attempt to socialize the market or to use market forces as the foundation for socialism that has failed, not socialism. 'This guy' not only does not have the slightest clue as to what the NEP was but sees it as one of the methods of building socialism. Lenin, who instituted NEP, saw it as a necessary but temporary, step away from socialism.
Around 1924 Bukharin was beginning to push the idea of what was meant to be a temporary retreat that Lenin prescribed for an economy coming out of a devistating civil war that these retreats were really a way forward.
By 1926, as Preobrazhensky had pointed out in his 'New Economics' this relying on market forces was the new watchward for the Soviet economic planners. When I read Preobrazhensky's work I saw the seeds of the downfall of their pseudo-socialist experiment.
Les
16 - Les Slater
Mark,
I see Paul Cockshott's 2007 piece a muddle of horseshit.
Les
17 - roger nowosielski
I realize it's rather hard to get through the muddled dialogue. I'm only asking if you can clarify the underlying concept. And how different is it from "socialism," such as we know it?
18 - roger nowosielski
And BTW, I see a different potential, beyond adherence to "market forces," something on the nature of public referendum for investment in certain projects (rather than mere taxation coming down from the top).
That's what I mean about democratization of economic processes.
19 - roger nowosielski
I'll deal with your responses tomorrow. It's been a long day.
20 - Mark
re #16 I, on the other hand, take his argument that Austrian theory requires a compelling response to heart.
Rog, there are problems are with 'growth' and 'maximization' -- if they remain controlling factors influencing the behavior of the managers of social capital I see no solution to boom and bust. No matter the public referendum, the basic problem will remain the reproduction of the population/workforce and how to maintain a 'revenue flow' for that purpose.
21 - roger nowosielski
I see it in quite different terms, Mark - in term of new approach to public funding, which is to say, of standing the old system on its head (almost the reverse of taxation). Of course, the political environment must be ripe to even think of going that route.
How do the set of factors you allude to in the end come into play?
22 - Arch Conservative
Mayer Rothschilde said:
"Let me issue and control a Nation's money and I care not who makes its laws".
It's all part of the plan for the NEw World order. We've already seen in Europe with the EU an attempt at the flavorless homogenization of a great part Western society. Who needs national sovereignty and when you can have Herman Van Rompuy, looking like Dr. Evil from Austen Powers, sitting in the well of EU chambers. A Belgian dictating the lives of Germans, Spanish, Irish, greek etc etc
Now on our side of the ocean we have those who once whispered but are now saying out loud that we need some type of North American union with Mexico and Canada. We're also seeing calls for a global currency.
23 - Les Slater
As far as I can see, postmodernism is an illness, a reactionary ideology born in disappointment and delusion whose heart and soul is pessimism.
24 - roger nowosielski
Aren't you yourself being reactionary here, Les, in line with your own insight that emotions rule?
Besides, what does your #23 hook up to?
25 - Les Slater
In 23 'delusion' should be 'disillusion'.