Tuesday, April 5, 2011

The Great Recession - tip of the economic iceberg

When the final history of the Great Recession of 2008-???? is written, I hope two key points will guide the narrative. First, the recession came about because the wealth of the nation was not equitably distributed, but rather collected in the hands of a conniving few, for whom controlling and maintaining that wealth became a business investment:
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
Second, as our Nation struggles to lift itself out of a "jobless recovery" we have run head long into a type of inflation that is not amenable to "traditional economic solutions" nor is it driven by American consumption or supply and demand mismatches:

It’s not just that prices are rising — it’s that wages aren’t.

Previous bouts of inflation have usually meant a wage-price spiral, as pay and prices chase each other ever upward. But now paychecks are falling further and further behind. In the past three months, consumer prices have been rising at a 5.7 percent annual rate while average weekly wages have barely budged, increasing at an annual rate of only 1.3 percent.

And the particular prices that are rising are for products that people encounter most frequently in their daily lives and have the least flexibility to avoid. For the most part, it’s not computers and cars that are getting more expensive, it’s gasoline, which is up 19 percent in the past year, ground beef, up 10 percent, and butter, up 23 percent.

Rather, the capture of the political system by those wealthy few, for whom the status quo is a virtual economic requirement,has led us to a place where we can not address either wage stagnation, nor inflation caused by competition for consumer goods. Simply put, we as a Nation have traded our long-term economic and food security - and a decline in standard of living for nearly all Americans - for a oligarchical political system that protects the top 1% of Americans wealth. We made that trade explicitly, knowingly, because we were misled into thinking that the rising tide would indeed lift all ships, even though repeated world events (from the Roman Empire to Tahrir Square) continue to show us our folly. This, perhaps, is the most egregious example of non-military American Exceptionalism, and it may be more our undoing then any misadventure in Libya.

1 comment:

Mike at The Big Stick said...

"...we as a Nation have traded ...a decline in standard of living for nearly all Americans..."

Is this actually true though? Has the standard of living in this country actually gone down? For the cost of a television 10 years ago you can get a kick-ass laptop that does a whole lot more, including access to a LOT of information. Medicine has improved, etc. I don't know that Americans are actually doing worse than they were.