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The American Economy, part 3

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American economy, part 3

Continuing yesterday’s post—

As with America’s underlying wealth, our residuals of inheritance from labor successes enable the national economy to keep going the way it’s going. They enable most of the middle class, the bottom 90 percent of the population, to survive without our having to address huge harms such as regressive taxation. To call these immense resources and assets a problem is paradoxical, as with supply in supply-and-demand, but they are a fact of American life.

 

Making thermostats

Take some of the most homespun examples of belt-tightening. That Americans won’t do this, won’t put up with that, and are aficionados of gas-guzzling cars, for example, is often tossed out as a political given in economic discussion. Generally this line of thought is used to justify regressive and damaging economic and social policy, or lack of policy. Thus, like assertions that Americans are turned off by politics, by the duties of citizenship and by political debate, it is heard often from the noise-machine right and from GOP congress members. Regrettably, some of the more over-promoted ‘liberal’ commentators in media also use it, typically the same ones who promote the ‘close election’ and ‘divided electorate’ memes. More on that later.

 

mr

Prospective GOP presidential nominee Mitt Romney

Actually, it is staggering how much belt-tightening is already taking place in this land of abundance. And in spite of all our problems—the land of abundance is also the land of waste–a staggering growth in environmental awareness and organic health awareness is also taking place.

Home vegetable garden

One problem here, up top: Unfortunately, most of the burden has been placed on the shoulders of individuals and families. Too little of the effort in relative terms has been shouldered by corporate America and by multi-nationals, too much of it by individual households. No surprise there: This, in a nutshell, is the outcome designed by all that GOP hype about the national debt, about ‘big government’ and about ‘regulation’. No asking big business for anything, no limit on what can be squeezed from private citizens. Even our most strident right-to-lifers in office do nothing to prevent, for example, chemical abortifacients and chemicals causing birth defects from being released into groundwater and the atmosphere.

 

Policy, meet consequences

Take that matter of the national debt. Set aside the obvious point that the GWBush administration gave us a trillion-dollar war and trillion-dollar tax cuts for the wealthy and for corporations. Set aside that current GOPers in Congress have resisted even the slightest correction for these excesses. Just look at that metaphor of the household budget that GOPers in public office are so fond of—the line that typically starts, ‘Every family knows that if you live beyond your means . . .’, accompanied by metaphors of ‘mortgaging your family’s future’ or ‘loading your children/grandchildren with debt’.

Let’s note some quick points about that household-budget analogy.

1) As we know, the biggest household debt is typically mortgages, college education, or credit cards. A house and a college education are not considered luxuries or riotous excess. These are typical and reasonable outlays of family income, for a considered purpose. Eliminating these kinds of debt would reduce some numbers on a page—but would also reduce shelter and education. It might be added that much household debt also stems from medical necessity—health care—and we’ve seen how much the GOP is attuned to reducing that kind of debt.

2) These categories of debt figure in when household debt-to-income ratio is being calculated. It’s debt-to-income that makes the difference, not debt in isolation. Never—so far as I know—is there an assumption that all the debt has to be paid off at once. Debt-to-income, as the term would imply, compares ongoing yearly/monthly outgo to ongoing yearly/monthly income. But Republican talking points tend to represent ‘debt’ as if all of our national debt had to be paid tomorrow, which is false. And the debt talking point omits revenues. It’s never debt in the context of what you need and what you can afford. It’s always debt as the whole picture, with the false implication that unaffordability is a given. This, to use the household analogy, is like budgeting by leaving your income out of the picture, looking only at your outgo, with a starting assumption that it is somehow normative for households not to spend anything at all. Maybe the core assumption is that it would be better just not to have a household at all. Maybe this is the deep structure or unstated rationale for the whole attack.

3) This disingenuousness has a purpose. As we know, the same members of Congress who do not talk about what we need, what we want for our country, and how to afford it also adamantly oppose any progressive taxation for the wealthy and for corporations. I don’t know of any household where only the kids’ allowance can be used to pay off debts. But this is the effect of GOP policy, in the GOP analogy: Disproportionately, the burden of paying for everything is shouldered by the population less able to pay. As written previously, GOP tax policy mainly boils down to this central aim—shifting the tax burden from the wealthy to the middle class, from corporations to individuals, and from the federal government to states and localities, which generally have more regressive taxes.

(Side note: GOPers so concerned with loading our grandchildren with debt show remarkably little concern about conservation. Don’t they want our grandchildren to have some oil left?)

 

Oil tanker headed overseas

 

Back to the future—

By any reasonable measure, U.S. individuals and households have made sweeping changes over recent decades. To use a few easy examples from transportation:

  • Millions more people drive smaller, more gas-efficient automobiles than previously
  • Use of mass transit is up in regions where it is available
  • Millions of people plan local trips and errand runs on the UPS model, combining tasks and planning routes so as to eliminate unnecessary driving
  • Millions of households are using online shopping and delivery, as shown by business for UPS and eBay among others
  • More expensive travel is being replaced by shorter trips and by ‘staycations’
  • Buying locally where possible is increasingly popular, including buying local produce
  • Home gardening continues to rise, bringing food supply even closer to home
  • Even the chickens are coming home to roost, in some areas

All of these are individual small changes on an immense scale, given our population of over 300 million. None of them, so far as I know, have been accompanied by massive social dislocation or even widespread unpleasantness. Some congress members may vilify Amtrak, but most people seem to recognize that there’s no percentage in making commuting or travel less feasible for the already-congested East Coast.

Regrettably, individual changes go only so far. Mass transit is a boon to people who have it, but not every region has it. Metropolitan Houston, Texas, for example, with an immense population and land area to match, is only now moving into light rail. The planners actually ripped out miles of railroad track west of town, to expand double-decker freeways. The track was ripped out because it ran parallel to—next to—the freeway. In other words, it could have been used for passengers, for commuting.

Commuting to work is still the big gap in improving traffic and energy conservation. Millions of miles of roadway, every weekday morning, in virtually every metropolitan area, fill up with one-passenger-per-car traffic. The daily commute to work, after all, is one place where purely individual trip-planning and energy conservation do not provide an adequate solution—people have no choice about going to work, and little choice about how to get there. Too little mass transit, too little company-provided transportation, too little company-subsidized moving so you can live near where you work. Instead, GOPers around the country are cutting mass transit in public budgets—and finding ways to hike taxes on individuals who benefit from mass transit, however modestly: raising fares and parking fees, taxing employer subsidies of every sort, and reducing federal contributions to cash-strapped states and localities.

Too little consistent treatment of and attention to neighborhood schools, too, so that fantastical differences among neighborhoods can be corrected or ameliorated, but maybe that’s a different chapter.

 

More later

The American Economy

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The American Economy

Our immense resources a problem?

One fundamental problem with the U.S. economy is one we have had for at least the last fifty years: We have the capacity to produce more than we need. This fundamental fact becomes clearer when one thinks about supply of the basic material needs of food, shelter and clothing. Notwithstanding periodic crop failures, America has more than enough farmland to produce food for our entire population, if necessary. We do not face a realistic possibility of famine—barring some appalling ecological disaster, an explosion or fissure or airborne menace that destroys the honeybee population or irrevocably contaminates our land and water supply.

honeybees

The same goes for shelter and clothing. The U.S. has more than enough construction capability to build houses for our entire population, again barring ecological disaster on a life-threatening scale. We have more than enough resources and manufacturing to clothe our entire population, even if to do so would mean resuscitating underused or abandoned industries. The fundamental fact that we can produce more than we need is one of the causes of our chronic unemployment and underemployment. It is one of the causes of our widespread health problems, obesity being the most obvious example. Ironically it is one of the causes of our ongoing trade deficit. Anyone who genuinely wants to ameliorate unemployment and underemployment in the U.S. has to face the fact that we can produce more, far more, than we need to buy, both of what is essential to survival and of nonessential extras.

 

Other countries do it, too

This fundamental fact served the United States well in World War II. The nation went into high gear as a patriotic war machine, and immediately began production on a scale not seen before. Some kinds of commerce, construction, production and imports may have been curtailed—not counting the importation of human capital like Albert Einstein, fortunately driven from Nazi Germany by German ignorance, envy and hysterical beliefs about ‘race’. But domestic production ramped up to fill most essential needs, at least within the parameters of knowledge at the time, and there was less hunger in the United States during a horrific world war than there had been shortly before it.

World War II poster

Post-World War II, the same fundamental production capability and natural resources and well-qualified labor force created economic expansion for over twenty-five years, again on a scale not seen before. Public highways, public schools and the private use of birth control all contributed to the development of an immense, self-confident middle class with a reasonable confidence in achieving shelter, education and personal advancement, among other things. The conformity may have been food for satire, the natural environment somewhat strained by missteps and miscalculations, the health of individuals plagued by toxic products from tobacco to thalidomide, but the material benefits of national development became so obvious as to highlight shameful poverty among the elderly and in Appalachia and in historically excluded groups. They also ineluctably exposed ‘separate but equal’ as transparent sham.

In 2012, the same fundamental is working differently, as we know from the massive slump that has resulted from the mortgage derivatives debacle. When we can readily produce more than we need, some people inevitably end up—or start out–doing things that no one wants to pay them to do. And that’s without factoring in imports. I don’t want to go into dispiriting detail here. Most thinking people have already noticed that we have millions of over-qualified Americans laid off, or trying to enter the job market, or underemployed, underpaid or working in lower-skill occupations than they trained for.

Needless to say, the GOP is blaming all the disappointment on President Obama. Hence the election-year rhetoric about ‘jobs’ and ‘putting people to work’. Predictably, Republican campaigns are funded by entities like Big Oil and the airlines, which have no more standing than does the Chamber of Commerce to yell about ‘jobs’, but more on that later.

For now, there are generally three levels of response to the situation outlined above. That it, there are broadly three kinds of response—boiling this down—once the fundamental fact of our immense resources and production capability is acknowledged:

1)      Bogus. The first is what might be termed the horrible, or George F. Will, response. This is the pseudo-erudite argument that high production capability inevitably means unemployment. This is the way it is, and it’s hopeless. Nothing to see here, folks; move along. People like Will himself, overcompensated for the reverse of beneficial service to humankind, generally use fancier language to make this unsubstantiated claim, but this is what it boils down to.*

2)      Short-term. The second response is the focused, material approach: Let’s expand our overseas markets. A reasonable response–if we recognize that we can, and do, produce more than we need, then it’s logical to look for markets elsewhere. If we can’t consume all our production domestically, and we want markets to sell in, then we should be trying to export. A nice idea as far as it goes, but mostly a) not attempted; and b) problematic when it is attempted. Whatever the problem, dumping tobacco products in emerging markets is not a long-term solution. Unfortunately, for at least the last thirty years we have been exporting ideas and importing products, rather than the other way around.

3)      If we can do these things, why don’t we? In the interest of full disclosure, I should state right up front that this would be my response.  A partial explanation is that the perspective of ‘the law of supply and demand’ tends to treat wealth of resources as a problem.

 

More later.

 

*For right now, Will is with the Boehner-Mitchell crowd in blaming unemployment on the president, but that’s for election year. It’s not his usual or level-of-rest kind of statement.

Side note: If Will weren’t already a syndicated columnist with the Washington Post, he would soon be taken on. Anti-labor are the Post’s cup of tea, where commentary is concerned. They’re popular on ABC News programs, too.

It was never about the debt ceiling

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It was never about the debt ceiling

What a time for my domain to become live again, just when Congress leaves town after finalizing a rise in the ‘debt ceiling.’

There will be several parts to this post.

First, to some of the more sweeping or superficial distortions and debt-ceiling politics:

  •  On balance, I think the Democrats in Congress, the White House, and the public came out better—given the situation–than has been indicated by some progressive outlets. Admittedly I am influenced by the fact that some of the most vitriolic ‘progressive’ voices against Dems and the WH are also corporate-allied. They do tend to get all rabble-rousing in the abstract, simultaneously resisting options to help improve the lot of working people (such as writers) themselves. They also tend not to be very effective, politically speaking. They also tend to have dismissed candidate Obama’s chance of winning early. So in a sense it is natural for them to lob attacks on the president, rather than fight 1) against the GOP corpo-party and 2) for working people. That aside, the final bill avoided default (more on default later); prohibited another debt-ceiling ruse for the next couple of years; and kept the GOP on the hook for its program cuts, government spending, and tax favoritism for the wealthy and corporations.
  • That last item is so significant that I have been a little surprised to see it so neglected in political commentary over the last few days. The lift on the debt ceiling was passed by Republicans in the House.
  • Let me repeat that: After all the hoopla about the Tea Party, a ‘rift’ or schism in the GOP, threats to John Boehner’s position as Speaker, etc., etc., the bill raising the debt ceiling was passed by Republicans in the House. The bill was supported by more Republicans than Democrats, with 174 Republicans voting to raise the debt ceiling and 95 Democrats. The bill was opposed by more Democrats than Republicans, with 95 Dems voting against it and only 66 GOPers.
  • Our political reporters have not highlighted this fact. While the final tally pretty much had to be reported, the party break-down is being spun so far as a revolt against the president in Democratic ranks; or as a sign of weakness for Dems/WH; or as a sticking point for progressives re 2012; etc. (Again the refrain: So much for the liberal media.)
  • Even in the Senate, where the bill passed 74-26 and more Democrats voted for it, more Republicans voted for it (28) than opposed it (19).
  • Btw, one factoid sheds some light on the supposed popularity of opposing, or rebelling, or shaking things up, re those Republican primaries. Of the 19 Republican senators who voted not to raise the debt ceiling, 13 are not up for re-election until 2016. Four are not up for re-election until 2014. Every GOPer up for election in 2010 voted to raise the debt ceiling, except Hatch (R-Utah) and Heller (R-Nev.). Theoretically Hatch and Heller know the electorates of their states best. In any case, the final vote tally casts some doubt on the much-vaunted electoral clout of the Tea Party, at least measured against the importance of Wall Street contributions.
  • Any Dem running for Congress who allows himself to be put on the defensive about ‘gummint spending’ after this deserves to lose.

 

The bigger distortions are misrepresentations on a more fundamental level. Some of the deeper issues go to the heart of political reporting in large media outlets:

  •  This fight in Congress was never about the debt ceiling. With the exception of a few Tea Party members, mainly from South Carolina, who were genuinely ready to become defaulters, the GOP in both House and Senate has repeatedly voted in the past to raise the debt ceiling, under both Republican and Democratic presidents, or to vote no only in a symbolic gesture after it was already clear that it would be raised. Every member of Congress had access to former Federal Reserve Chairman Alan Greenspan’s remarks on the debt ceiling, including Greenspan’s call for eliminating the debt ceiling. (Yes, the right wing distrusts the Fed. That doesn’t mean they mistake Greenspan for Greenpeace.) Every experienced Congress member knows that, as the president said, raising the debt ceiling simply allows the U.S. “to pay its bills on time, as we always have.”
  • The fight from Republicans in Congress was never about reducing the deficit. As President Obama said earlier, “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires.” The congressional GOP could have attempted what Sen. Tom Coburn (R-Okla.) is attempting, to find genuine examples of waste, fraud and abuse to cut. It could have voted—for the past thirty years—to trim military spending, reining in federal contractors. It could have eliminated tax breaks, unneeded by any measure, for Big Oil. It could have voted against the Iraq War. It could have reined in the intelligence establishment, which failed to prevent 9/11 and was rewarded for failure by more far-flung billions than ever, with the massive additional layer of bureaucracy known as the Department of Homeland Security. Congress could even have opted to run itself more frugally.

  • Instead, the Republican apparatus in government has worked, often behind the scenes, to drive up the cost of government more, regardless of the wishes of ordinary Republican voters. Every delay in Congress adds to the cost of government—added on top of other damage done in delaying needed legislation (the FAA is a prime example). Every delay in confirming judges and other federal appointees adds to the cost of running the agencies involved, and this GOP has delayed judicial confirmations and backlogged the courts more than any other party in U.S. history. The delay in raising the debt ceiling alone cost U.S. taxpayers billions. Furthermore, top GOPers have resisted efforts to make large federal contracts (mainly in military-security spending) more competitive, sometimes while simultaneously resisting efforts to exempt small contracts from competition. All this, of course, comes on top of the massive trillion-dollar hole of two wars and tax breaks for the wealthy and corporations, all funneled into effect by the GOP with some acquiescent Democrats.
  • The fight was never over the national debt. What GOPer has seriously called (publicly) for refusing to pay the interest, let alone the principle, on U.S. Savings Bonds bought by Americans or by other people? Come to think of it, what Republican in office has mentioned U.S. Savings Bonds recently?

  • Conclusory statement: Regardless of ‘red-meat’ campaign rhetoric, the GOP in office never strays far from the Wall Street fold. If you really want to analyze current GOP politics you can forget guns, god and gays.
  • Second conclusory statement: Regardless of ‘the base,’ the middle class, or the rest of the electorate, Republican policy in office is about using the power of office to break the middle class. GOP honchos have tried to replace Social Security; they are trying to weaken Medicare and Medicaid, using Orwellianisms the while; they fought tooth and nail to prevent enlightened single-payer health coverage and to keep insurance companies the gatekeepers for health care. For three decades they have boosted corporate efforts to undermine pension plans. They support every corporate effort to jettison pensions and health benefits. Their financial policy, if you call it that, enabled the mortgage-derivatives industry to damage trillions of dollars worth of pension security. They support easy bankruptcy for corporations and impose stringent bankruptcy standards on the unemployed. They oppose every effort toward accountability and transparency (‘regulation’) in both government and corporate bureaucracies. They oppose every effort to protect ordinary people’s ability to seek redress for harm, harm up to and including death, in our taxpayer-funded courts. The strategy is to reduce the clout of the middle class—i.e. the bottom 90 percent of the population, as Inside Job puts it—and to make most of the population ever more dependent on the few. And when individual GOP congress members interrupt the over-all strategy on some particular legislation, they lose. The one exception to this big-picture GOP rule in his own way, the one congressional Republican who opposed the invasion of Iraq, Rep. Ron Paul (R-Tex.), is retiring from Congress.

All of this has passed largely unreported in the same news media that also missed (among other things) the lead-up to the Iraq War, the bubble and bust in the real estate boom, and the impending crisis in the mortgage-derivatives industry.

 

Thought for the week, passed along from Local 2336 of Communications Workers of America (CWA): “Do you remember when teachers, public employees, Planned Parenthood, NPR and PBS crashed the stock market, wiped out half of our 401K’s, took trillions in taxpayer funded bailouts, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses and paid no taxes?  YEAH, ME NEITHER!”

 

Side note: In what is being reported as bad news financially, Americans are spending less and saving more. Setting aside if one could that that is actually good news, what did they expect after the charade over what should have been a routine rise of the debt ceiling?

Did anyone catch the language coming out of Washington last month, along with the name-calling? Debtdebtdebtdebtdebtdebtdebt . . .

 

More later