Same Economy, Different Day

The US Census came out with their annual report today, and it confirmed that economic growth in the Bush era is a mile wide but an inch deep, a boon for investors and CEOs and corporate board sitters but a nightmare for those struggling to get by with less.

Real median income actually rose in the US for the first time since 1999. But for full-time, year-round workers, that number goes down. And, that said, the median hourly wage remains stagnant over the last four years, despite a rise in productivity. Somehow, employers have managed to reap the benefits of increased labor output without having to reward that labor. This is the first period of economic expansion since WORLD WAR TWO to exhibit those characteristics.

That's because it's a fake expansion. The fact that it relies entirely upon consumer spending is one reason. The fact that raises at the top of the income spectrum have continued to increase while lowering for lower-income workers, increasing the gap between rich and poor, is another. This so-called expansion has been built on mindless consumerism, which in an age of soaring gas and healthcare prices has cratered, and the housing boom, which is pretty much over. That as much as anything presages a recession next year. And if the presumed rising tide didn't lift low-income boats on the way up, you can bet it'll pummel them on the way down.

There are 37 million Americans in poverty, roughly the same as last year. 46.6 million Americans lack health insurance, or one out of every seven. This is Bushonomics: good for the boardroom, bad for the living room. Thomas Frank takes apart conservative economic ideology in an editorial for the New York Times:

government is corruption, a vile profaning of the market-most-holy in which some groups contrive to swipe the property of other groups via taxation and regulation. Politicians use the threat of legislation to extort bribes from industry, and even federal quality standards — pure food and so on — are tantamount to theft, since by certifying that any product in a given field won’t kill you, they nullify the reputations for quality and goodness that individual companies in the field have built up at great expense over the years.

The ideas I am describing are basic building blocks of the conservative faith. You can find their traces throughout the movement’s literature. You can hear their echoes in chambers of commerce across the land. But what happens when you elevate to high public office people who actually believe these things — who think that “the public interest” is a joke, that “reform” is a canard, and that every regulatory push is either a quest for monopoly by some company or a quest for bribes by some politician? What happens when the machinery of the state falls into the hands of people who laugh at the function for which it was designed?

The obvious answer is an auctioning-off of public policy in a manner we have not seen since the last full-blown antigovernment regime held office, in the 1920’s. Agencies and commissions are brazenly turned over to campaign contributors; high-ranking officers of Congress throw grander and gaudier fund-raisers even after being arraigned; well-connected middlemen sell access for unprecedented amounts.

When the cost of doing business suddenly vanishes, when regulation becomes a thing of the past, when that new-found money no longer has to be funneled to the workers, what you have is a new Gilded Age, where government exists only in service to plutocrats. This may not catch up to the Republicans right away, as Matthew Yglesias explains in discussing the aspirational class:

A lot of surveys indicate that, to a surprising degree, political beliefs are mediated by attitudes toward the future rather than assessments of present circumstances. People with a strong sense of personal efficacy, who believe that their future prosperity lies largely in their own hands, tend to adopt more right-wing economic views. The "new economy" era featured, for a lot of people, an almost limitless sense of possibility -- a sense that was then rapidly betrayed. The run-up in housing prices in recent years has had similar macroeconomic effects to the stock boom, but different psychological ones because home price appreciation doesn't encourage you to identify your interests with those of corporate managers in the way that stock price appreciation does. What's more, while the "new economy" seemed to open up especially awesome possibilities for young people (who are disproportionately well-educated and tend to form a disproportionately large share of upscale left-wingers), rising home prices have had the reverse impact on those who didn't buy a house before the market took off.

So the coming housing crash, followed by economic slowdown, could deflate those who think that NOW the cards are stacked against them. But conservative ideology always has a way of coming up with more yarns to spin, more ways to make people believe they can make it. In this case, however, the numbers are in stark contrast.