As much as I'd like to lay blame for our current situation on either of our political parties (or our current government style in general), it simply is not their fault.
Our biggest problem is not disfunction in Washington, DC, debt (or its limit), or imperial politics on the world stage. It can be summed up in one sentence:
THERE ARE CURRENTLY FEW JOBS FOR THE MIDDLE AND LOWER CLASSES THAT PAY ENOUGH TO ALLOW THEM TO IMPROVE THEIR SITUATION.
That can be deduced simply by making two assumptions--that increasing the number of people vying for jobs lowers wages and that increasing the number of jobs raises them.
This didn't occur overnight--it has roots as far back as the early 70s, when upper middle-class women joined the workforce en masse. That has, for all practical purposes, locked real wages to inflation since then. It was aggravated by the Reagan administration when it legalized undocumented immigrants during the 1980s. The first Bush administration de-commissioned ships, airbases, and Army divisions, throwing their officers and inlisted men into the workforce.
At the start of the 1990s, Congress and President Clinton passed NAFTA and other free trade acts. Corporations, having the sanction of their nations of origin, proceeded to (just as Ross Perot predicted) move their jobs overseas, eliminating millions of higher-paying American industrial and customer service jobs over the next two decades, while creating lower-paying ones at Wal-Mart and other distribution centers.
As the internet revolution spread, people were making money by having others click-through websites. A huge army of middle-class programmers were needed to retool computing during the run-up to 2000 and Y2k. Once that was over, a few were let go and others diverted to converting our entire manufacturing and government infrastructure to modern information technology.
When the post-Y2k bug boom ended and the stress of 911 hit, the economy was in trouble, so Krugman and others like him urged the government and public to incur debt in order to prevent the economy from bottoming out. This worked for a while, until the spike in gasoline prices popped the housing bubble and we fell into the situation that we are in now--the second dip of a series making up the Second Great Depression.
Now, none of Krugman or the other Keynesian econmists' predictions of results from government stimulus are working. They predicted in 2008, for example, that if there was no stimulus, the unemployment would go as high as 9 or 10%, then gradually get better as the decade progressed.
(All of their predictive charts are on record with the New York Times and Wall Street Journal archives, but cannot be reached without pay. If you've got a subscription, feel free to confirm the hypotheses that they promulgated at the time.)
I believe that the problem with their predictions was that they were not subtracting public and private debt from their values of GDP. If you do that, the real-world numbers suddenly make sense. (Try it yourself, I'll never get a Nobel Prize in Economics--nor physics, finding the Top took 400 people--but it works.)
As it is, with the stimulus, the unemployment went much higher, but hasn't dropped below 9%. The problem is that when the economy crashed, businesses and governments almost everywhere in the country laid people off and efficiency *improved* because the new information tech had replaced those people and didn't need coffee breaks or health care.
We're now stuck in a Cyberpunk future where we're looking at at least a decade of developing a new, huge underclass and no amount of government spending is going to make a bit of difference (because of the debt subtraction described above). While I can define the problem, I cannot supply a solution because in the past, new innovations would give jobs to workers--now, because of free trade and delocation, they'll just move the new jobs to other, poorer countries.
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branchandroot
(no subject)
Date: 2011-08-05 06:56 pm (UTC)Our biggest problem is not disfunction in Washington, DC, debt (or its limit), or imperial politics on the world stage. It can be summed up in one sentence:
THERE ARE CURRENTLY FEW JOBS FOR THE MIDDLE AND LOWER CLASSES THAT PAY ENOUGH TO ALLOW THEM TO IMPROVE THEIR SITUATION.
That can be deduced simply by making two assumptions--that increasing the number of people vying for jobs lowers wages and that increasing the number of jobs raises them.
This didn't occur overnight--it has roots as far back as the early 70s, when upper middle-class women joined the workforce en masse. That has, for all practical purposes, locked real wages to inflation since then. It was aggravated by the Reagan administration when it legalized undocumented immigrants during the 1980s. The first Bush administration de-commissioned ships, airbases, and Army divisions, throwing their officers and inlisted men into the workforce.
At the start of the 1990s, Congress and President Clinton passed NAFTA and other free trade acts. Corporations, having the sanction of their nations of origin, proceeded to (just as Ross Perot predicted) move their jobs overseas, eliminating millions of higher-paying American industrial and customer service jobs over the next two decades, while creating lower-paying ones at Wal-Mart and other distribution centers.
As the internet revolution spread, people were making money by having others click-through websites. A huge army of middle-class programmers were needed to retool computing during the run-up to 2000 and Y2k. Once that was over, a few were let go and others diverted to converting our entire manufacturing and government infrastructure to modern information technology.
When the post-Y2k bug boom ended and the stress of 911 hit, the economy was in trouble, so Krugman and others like him urged the government and public to incur debt in order to prevent the economy from bottoming out. This worked for a while, until the spike in gasoline prices popped the housing bubble and we fell into the situation that we are in now--the second dip of a series making up the Second Great Depression.
Now, none of Krugman or the other Keynesian econmists' predictions of results from government stimulus are working. They predicted in 2008, for example, that if there was no stimulus, the unemployment would go as high as 9 or 10%, then gradually get better as the decade progressed.
(All of their predictive charts are on record with the New York Times and Wall Street Journal archives, but cannot be reached without pay. If you've got a subscription, feel free to confirm the hypotheses that they promulgated at the time.)
I believe that the problem with their predictions was that they were not subtracting public and private debt from their values of GDP. If you do that, the real-world numbers suddenly make sense. (Try it yourself, I'll never get a Nobel Prize in Economics--nor physics, finding the Top took 400 people--but it works.)
As it is, with the stimulus, the unemployment went much higher, but hasn't dropped below 9%. The problem is that when the economy crashed, businesses and governments almost everywhere in the country laid people off and efficiency *improved* because the new information tech had replaced those people and didn't need coffee breaks or health care.
We're now stuck in a Cyberpunk future where we're looking at at least a decade of developing a new, huge underclass and no amount of government spending is going to make a bit of difference (because of the debt subtraction described above). While I can define the problem, I cannot supply a solution because in the past, new innovations would give jobs to workers--now, because of free trade and delocation, they'll just move the new jobs to other, poorer countries.
Can anyone come up with a way to save us?
Tom Trumpinski