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.

American Exceptionalism - the force that begets our downfall as an Exceptional Nation

I hate quoting other bloggers unless I can weave it into a thought parade of my own. Perhaps it's the professor's son in me; more likely its the fact that I started this blog to do real analysis of the world, not just regurgitate the thoughts of others.

In following that path I've slowed of late, as many do. I am intellectually weary of what is going on around me, from the philosophical war against public employees unions that wages in the mid-West to the now three real wars in Muslim countries in the Middle East and Africa. I've also come to the conclusion that our political system is tainted, and that, wiht the next Presidential Election expected to cost $1 Billion, We The People are about to witness the unraveling of our cherished and fetished democracy.

SO, to quote Andrew Sullivan:

America's ideals are not unique to America, and America's success led it to the same temptations of great powers since ancient times. America's exceptional freedom and exceptional wealth did not exempt it from unexceptional human nature or the unexceptional laws of history. To believe anything else is to engage in nationalist idolatry. In retrospect, Vietnam was a form of madness brought on by paranoia. In Iraq, America actually presided over 100,000 civilian deaths as it failed to perform even minimal due diligence in invading and occupying another country (while barely a few years later, we invoked - with no irony or even memory - the risk of mass murder as a reason to invade another country). And US forces are still there - and the same alliance that gave us the Libya campaign will surely soon be arguing for extending their presence as the Potemkin democracy slowly collapses. In Afghanistan, the graveyard of so many empires, we are busy sending drones to hit targets with inevitable civilian casualties in a war that has no end, no discernible goal, and has now lasted longer than any war in the country's history. When America finds itself in wars where it can accidentally kill nine children gathering firewood, it seems somewhat abstract to talk uncritically of America's moral superiority. And when America has also crossed the line into legalized torture, and refuses to acknowledge or account for it, let alone hold the war criminals responsible, it has lost the moral standing to dictate human rights to the rest of the world.

Obama had a chance to turn this around.

H/T The League of Ordinary Gentlemen

Winconsin Updates

If both of these things are true, it says something really sad about the state of conservative political trust of Americans:

NPR's link to The Nation:

Wisconsin's Legislative Fiscal Bureau was created in 1968 by a Republican governor, Warren Knowles, and a Republican-controlled state legislature.

The purpose was to establish a nonpartisan agency that would provide honest fiscal analysis and information for Wisconsin Legislators. Across more than four decades, the bureau has done just that, earning the respect of legislators from both parties, including a young Scott Walker, who frequently cited the bureau when he served in the state Assembly.

Less than a month ago, a Fiscal Bureau memo reported that the state had a $121.4 million surplus through the remainder of the current fiscal year.

AFL-CIO Blog:

This from AFL-CIO Political Communications Director Eddie Vale who’s on the ground in Madison, Wis.

As we speak, Gov. Scott Walker & the Senate R’s are literally having the windows of the capital welded shut to keep people from passing food into the building to the people inside.

This is why our national government is going broke

From the CQ Toady/Roll Call Briefing email that landed in my in-box, the House is working the budget issue, the Senate is debating patent reform, which is becoming a vehicle for fiscal policy amendments 9which have nothing to do with patent law. This is why Mr. Reid is not a leader - my employer runs out of money come mid-night Friday, and he can't be bothered to rearrange the deck chairs to deal with that. Amazing!

Today In Washington THE HOUSE: Convened at 10 and will start legislative business at noon. Before sunset it will pass the latest stopgap spending bill, which would cut $4 billion from fiscal 2011 appropriations and keep the government open for the next two weeks. THE SENATE: Convened at 10 to continue debating what would be the first substantial patent law rewrite in half a century. The bill — which would switch from a first-to-invent to a first-to-file system of issuing patents — is quickly becoming a magnet for unrelated fiscal policy amendments that could slow its progress. One would offer an early test vote on raising the debt limit; another would endorse the idea of a balanced-budget constitutional amendment.

Framing the story to shape reality - how Republicans are telling economic lies to the Nation

I was planning to start the week with a lambaste at the Right side of the aisle for(at best) dissembling on a number of important issues - and doing some pattern analysis when doing that.

But then I read this, and it just makes my blood boil:

The key problem is that journalists are assuming that statements by Gov. Scott Walker have basis in fact. Journalists should never accept the premise of a political statement, but often they do, which explains why so much of our public policy is at odds with well-established principles.

The question journalists should be asking is "who contributes" to the state of Wisconsin' s pension and health care plans.

The fact is that all of the money going into these plans belongs to the workers because it is part of the compensation of the state workers. The fact is that the state workers negotiate their total compensation, which they then divvy up between cash wages, paid vacations, health insurance and, yes, pensions. Since the Wisconsin government workers collectively bargained for their compensation, all of the compensation they have bargained for is part of their pay and thus only the workers contribute to the pension plan. This is an indisputable fact.

So, once again, we see a compliant press willing to take a politician at his word, even when the political speaks half-truths in support of a radical and potentially economically damaging agenda. Fourth estate my a$$. Door mats more like.

Come to think of it, this actually fits in rather nicely with my original idea. Especially when you read this:

By falsely describing the situation the governor has sought to create the issue as one of the workers getting a favor. The Club for Growth, in broadcast ads, blatantly lies by saying "state workers haven't had to sacrifice. They pay next to nothing for their pensions."

And then there's this, echoing something I have written about before:

Simplistic coverage has also resulted in numerous reports that Wisconsin state workers make more than workers in Wisconsin' s private business sector. This is true only if you compare walnuts to tuna fish.

America has roughly the same number of food preparers, who can be high school dropouts, as registered nurses, who require a college education. But the nurses make on average $66,500, compared to just $18,100 for the food service workers. The food service workers collectively made less than $50 billion, while the registered nurses made almost $172 billion in 2009, my analysis of the official data shows.

Business and government hire both food service workers and registered nurses, but you are much more likely to work for the government as a registered nurse than as a food preparation worker.

When you control for the education required to be a prosecutor or nurse, government workers get total compensation that is less than those in the corporate sector. This may reflect the fact that fewer and fewer private sector workers are in unions, about 7 percent at last count. As economic theory predicts, as fewer workers can bargain collectively the overall wage level falls. Effectively wiping out public employee unions would only add to downward pressure on wages, standard economic theory shows.

Yep, when you compare wages for Wal-Mart employees (I used to be one part-time) and NASA Satellite construction program managers, those NASA boys sure are overpaid!

When you add it to this from the Washington Post, it becomes clear the that Party of Jobs (as some Republicans have cast them selves) is NOT into anything resembling employment in the public sector:

Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.

Zandi also had bad news for liberal Democrats who are resisting sharp spending cuts: Bringing deficits down to sustainable levels will require more than a growing economy. Even if the economy recovers as expected, he writes, lawmakers will have to cut about $400 billion a year through the rest of this decade to narrow the gap between spending and revenue, and stop adding significantly to the national debt.

"Significant government spending restraint is vital, but given the still halting economic recovery, it would be counterproductive for that restraint to begin until the economy is creating enough jobs to bring down the still very high unemployment rate," Zandi writes. "Shutting the government down for any length of time would also be taking a big chance with the recovery, not only because of the disruption to government services, but also due to the potential hit to the fragile collective psyche."

Now I know that political rhetoric is just that, and usually carries no intellectual weight. But at the statehouse, and the U.S. House, politicians are putting forward proposals that will eliminate government jobs at a time when the national unemployment rate continues to flirt back and forth across 10%. In order to fulfill campaign promises, and make a point about "how big government should be" they are willing to threaten the size and stability of the economic recovery. The same politicians do not have any idea if or whether these folks will ever by re-employed, nor (if you read the recent remarks of Mr. Speaker Boehner) do they care. They are also seeking to break the last of the powerful unions, who presumably stand in the way of further privatization of government services. In short, a semi-manufactured financial crisis (caused at its heart by lax financial regulation at the federal level) is being leveraged to dismantle the last vestiges of worker protection in our economy, and to convulsively and without thought destroy much of the social service infrastructure of the nation.

And lest anyone think my ire is directed completely at Republicans, let me be clear - Democrats are playing into their hands because they have no spine, no will, and no wish to upset the corporate donors who have captured them just as surely as they captured Republicans a political generation ago. If Democrats were really in opposition, they'd be fuming about bias in the Wisconsin coverage; they'd be willing to allow the government to shut down again to prove Republicans wrong, and they'd have a budget on the table that tackles entitlement and tax reform in a way that eliminates the deficit while dealing with the real culprits of significant government spending growth. That the President did none of those things is shameful, and as a Democrat, I am quickly loosing faith.

Fiscal Crisis in the U.S> Not really; Bad decision surplus - you bet!

As usual, Simon says it better then I can:

But the Democrats have played perfectly into their hands. The heart of their mistake was the president’s refusal to explain clearly how the financial system produced a recession that has pushed up our national debt.

Both sides of our political elite have contributed to the sense of fiscal crisis. And as we continue down this path – dangerous big banks, out of control health care spending, significant tax cuts, small changes in nonmilitary discretionary spending, and irresponsible rhetoric on both sides – we are well on our way to a real crisis.

This is what Government workers do - and this is what Republicans want to kill

I know that government workers are not popular right now with certain politicians. But a government shut-down, and deep cuts in non-security, non-defense spending threaten programs like this one at the National Severe Storms Lab in Norman, Oklahoma. NSSL is part of NOAA and works to make weather forecasts more accurate and timely. But you wouldn't know that government employees were even capable of that sort of publicly beneficial work if you listen to certain House members and commentators on the Right side of the aisle . . .