Bickering Over Terminology Delays Real Action
There’s a debate in the media about the recession. On the right are those who say that the economy has never been better. Not so fast, says the official left: we’ve (just) started a recession.
Phil Gramm, McCain’s former economic advisor, leads the School of Sunny Optimism. “This is a mental recession,” said Gramm. “We may have a recession, we haven’t had one yet. We have sort of become a nation of whiners.” Given his day job, you have to admire his attitude. UBS Investment Bank, which employs Gramm as its vice chairman, was recently forced to write off $38 billion in bad debts because of its exposure to the sub-prime mortgage meltdown, wiping out all its profits since 2004.
Economists are mildly pessimistic. In April, Fed chairman Ben Bernanke conceded that a recession was possible. Stuart Hoffman, chief economist at PNC Financial Services Group, believes that unemployment and other data for the first quarter of 2008 marks the official start of a recession. “It is now very clear that the fat lady has sung for the economic expansion. The country has slipped into a recession,” he said, articulating the mainstream view that we’re about to embark on a bumpy ride.
Recession? We’ve been in a recession since 2000.
Forget the experts. They think telling the grisly truth about the state of the U.S. economy could make things even worse–and they’re probably right. But Americans know the truth.
Every major indicator–jobs, wages and cost of living–has trended downward since the dot-com crash of 2000. Since then it has nearly impossible to sell a home, find a job, or get a raise. Rising inflation is tightening the squeeze. Whoever becomes president next year will inherit an economy beginning its ninth year in a downward spiral.
The official inflation rate of two to three percent is a lie, and it has been for years. Presidents Reagan and Clinton ordered the Bureau of Labor Standards to change the way it calculates the Consumer Price Index. Previously they compared the prices of the same items from one year to the next. Now, in order to cheat senior citizens out of cost-of-living increases on their Social Security payments, the government uses a “substitutions” analysis. “The consumer price index assumes that if prices get too high, consumers will start buying cheaper products,” reports The San Diego Union-Tribune. For instance, if steak gets too expensive, they will switch to ground beef.”
Steve Reed, an economist at the Bureau of Labor Standards, freely concedes that the change makes inflation looks lower than it is. He also admits its motivation: “Even if the CPI was one percentage point higher, it could cost the government hundreds of millions of dollars.”
John Williams, an economic consultant who publishes the monthly newsletter “Shadow Government Statistics,” calculates that “inflation is actually running at an annualized rate of 9.95 percent.” Inflation has been rising since 2002.
The U.S. economy must create 150,000 new jobs a month (1.8 million annually) just to keep up with population growth. Anything less represents a net jobs loss.
The Clinton years saw the creation of 236,500 new jobs per month–a net increase of more than 8 million over eight years. As of 2007, the Bush era saw just 70,000 jobs per month–a net loss of more than 7 million. Bush has brought us back to 1992, when his father lost over his own recession.
Among those who still have jobs, they’re not getting raises that keep up with Williams’ inflation rate. Median household income, adjusted for the government’s lowball inflation rate, is down since 2001.
Even white-collar workers, traditionally insulated by advanced degrees, are getting slammed by the eight-year-long recession.
“Wage stagnation, long the bane of blue-collar workers, is now hitting people with bachelor’s degrees for the first time in 30 years,” reported The Los Angeles Times in 2006. “Earnings for workers with four-year degrees fell 5.2 percent from 2000 to 2004 when adjusted for inflation, according to White House economists… [people with master’s and other advanced degrees] have found that their inflation-adjusted wages were essentially flat between 2000 and 2004.” There’s no reason to believe that this trend has reversed.
It takes two consecutive quarterly drops in the GDP, say economists, to make a recession official. But, as with porn, Americans know a recession when they see one. And this one is eight years old.
There are only two real questions. The first is whether Russian president Dmitri Medvedev is right. The U.S., he said recently, is in “essentially a depression.” The second is whether John McCain, Barack Obama, or anyone else is willing to do something meaningful about it.
COPYRIGHT 2008 TED RALL
29 Comments.
What's there to do when the only the only things left to exploit are drugs and organs?
The government has been manipulating its economic reports for decades but there are still some numbers it can't hide. Five Graphs Vs. Phil Gramm's 'Mental Recession'
Americans don't have to rely on their guts to spot a recession, the numerical evidence is abundant if you're not an ideologue. Meanwhile, ideologues debate about "well technically we're still waiting for GDP to drop another one-ninth of a point". Great but that doesn't pay my astronomically-accelerating bills.
The Emporer has no clothes!
Thank you for pointing this out, Ted.
I was an employment counsellor for ten years here in Canada, and I watched as the percentage of unemployed persons eligible for unemployment benefits went from 80% to 20% !!
Anybody who actually talks to ten people (five from another area of the country) will easily come to the conclusion that unemployment and inflation are high and that the country has been in a long recession, about to plunge into a depression.
As a public service, here's a timeline to make it easier to listen to the radio commentators. "__________(factor) hit its worst level since _____(year)."
Using the timeline saves having to remember which Republican administration was in its second year at that point.
Way I see it, if Obama wins and he actually takes a progressive stance, this country might be saved.
BUT, if McCain wins, Hillary sneaks in, Obama is assasinated – or – either hamstrung by the rest of the government or turned into a Nanci Peloski, this country is over. Remember, Peloski was about to turn the government around then she went for a luncheon with Bush… Did they threaten her, or bribe her? Then she turned into the enabler traitoress she is. America's Republic was based on Ancient Rome's and now it faces what ruined it; A small elite power base forcing itself in office and using that power for its own gain while ignoring social issues destroying it from within.
At that stage America is no more and it is up to us what to do. Run, hide, fight within to either restore or just bring it down…? But better not to talk on the net about either.
Can you please show me someone of any prominence on the right who says "… the economy has never been better. "
I usually like to give more detailed messages, but this one should be brief.
We are doomed.
That is all…
Can we still get Ladytron to play at the next inauguration? Pretty please this time?
> Can you please show me someone of any prominence on the right who says "… the economy has never been better. "
er… Phil Gramm? Are you not paying attention???
Hey Ted- cool being mentioned in Time magazine, having the last word on the New Yorker cover!
Edward at 12:18 said:
Can you please show me someone of any prominence on the right who says "… the economy has never been better."
Okay. You consider a nationwide syndicated columnist who has his own eponymous show on CNBC to be "prominence" ? Then Larry Kudlow's your man.
The Bush Boom: How a Misunderestimated President Fixed the Broken Economy
Okay, sure, Kudlow only wrote the introduction, not the book, but obviously he endorses its thesis. And since its thesis specifically uses the word "boom", I'm counting it even though I don't know whether he uses the exact phrase "never better". I'd be quite surprised if that phrase was completely absent from the book.
The reviewers on Amazon of course excoriated this book, but that's Ted's entire point. Conservatives with gigantic national media exposure keep trying to force upon average citizens the viewpoint that our lying eyes and empty pocketbooks are deceiving us about the huge success of Republican policy. Well there has been a huge success, but only for the conservatives who happen to have gigantic national media exposure, so in a way I can understand their sentiment.
In noting this book on his blog, Krugman explained, "the attitude Phil Gramm takes — an attitude shared by many on the right — is that we know that tax cuts work, so they must have worked", so anyone — ANYONE, even you, Edward — who doesn't think the economy has never been better, is either deceived or self-deluded. Because everyone _I_ hang out with at the golf club is doing just great.
Edward,
Yesterday, I heard Rush Limbaugh say that the economy was great (and it might be for him). Phil Graham said that there is no recession and that we Americans are all whiners. Sean Hannity said last week that "there is no recession." Michael Medved said last Tuesday that the economy is "much better than all the gloom and doom news reports would have you believe." the didn't say exactly what Ted said, but it sure was implied.
It seems like we live in a Ted Rall cartoon.
As long as the key public indicators do not measure the immediate availability of food, housing and similar necessities, medical care, and education, confusion will reign and the business cycle and the needless suffering that goes along with it will continue unabated. It is whether or not necessary work is being organized and getting done and not jobs that is the issue. Economic security relates to knowing that these are the top economic priorities. All these financial indicators and job statistics are red herrings if they are not surrogates for what really matters.
All we know with certainty is that only a relatively small fraction of the population is allowed to feel secure in this way and that it seems to take a lot of institutional support and effort by others to allow them and their progeny this privilege. Seems nuts to me.
Screw job numbers if the only jobs our elites are willing to fund involve blowing up folks and building fortresses in the desert so that some wackos can indulge their fantasies. I could live with building parks, libraries, schools, etc and giving them a pat on the back, but no, that just doesn't do it for them anymore and the gone-ape-shit public seems enchanted by carnage.
Folks in my area are already taking up shoplifting so they can eat and the shopkeepers are kind enough to ignore it as long as they can feed themselves and their families. There are some humans around. Like Diogenes, you have to look for them. Treat them with respect when you find them; they are an endangered species.
Not to take issue with your article Ted, or with the explanations given, but I'd like to add a critique to the way discussion of the economy is framed, that I think is a problem.
I think we should stop arguing about "the US economy" as a monolithic entity and start talking about the plurality of 'economies' that exist in this country. Looking at the whole tends to cancel out enormous disparities that affect specific types of people more than others. Also, so long as we talk about the economy as a singularity, I think we can't escape the dishonesty of the political rhetoric (our economy is fine, it's robust, it's recovering)….recovering from what? the late 90s? recovering from the 50s and 60s? Women entering the workforce? Off-shoring labor? McDonaldization? etc.
Some things will never recover, it's inherent with change. Because we talk about the singular economy as a whole, it will never be more than a rhetorical and ideological argument about supply side vs. demand side economics and state vs. private market control, etc.
The argument should be about how best to ensure economic security for citizens in a world that, by definition, will continue to change technologically faster than we humans change.
It needs to be about specifics; What do we do about X and Y specifically.
A recession has a specific definition. Now you can try to redefine recession like many libs try to redefine marriage, but the fact of the matter is we are not in a recession.
"Way I see it, if Obama wins and he actually takes a progressive stance, this country might be saved."
Obama, progressive? When did that happen? Being a biracial Democrat doesn't automatically make him progressive. What has he actually done in the Senate that shows he holds progressive principles? Can someone give me examples? I want to know because I'm supporting him and I'd like to be able to do so with a little more enthusiasm.
Jana C.H.
Seattle
Saith Will Cuppy: In America everybody’s conscience is unusually free. If it isn’t, we fix it. We’re funny that way.
The same effect occurs regarding whether or not to term the situation in Darfur a "genocide."
Edward,
The funny thing is that recessions are by definition assigned retroactively. So, sure, we can't PROVE we're in a recession. But in six months, it's very likely that economists will say a recession exists. And that is retroactive to the start. The genocide effect is an appropriate analogy. The first murder is part of a genocide as is the 1000th. But people don't want to call it one til about 500k die. But, eventually it'll all count! So we all win!
I agree with you, Edward. We are not in a recession.
For example: My Halliburton stocks have never been better, my limosine has never been shinier, and all those young suckers, er, I mean brave soldiers, are dying to keep it that way.
By the way, Edward, how's the weather in Langley?
It's no "recession" -I don't hold with them fancy ecomomist terms-
It's just Wall Street that got drunk andnow has a hangover…
Thanks to all who replied. You've pointed me to people who say the economy is booming, is doing well, not doing as bad as some think. But you have not shown me anyone of any prominance who directly says "the economy is doing better then ever".
"Obama, progressive? When did that happen?"
The term progressive is relative
However, some of his planks are definitely in that direction.
For example, tax penalties for companies outsourcing jobs, tax incentives for companies who employ Americans.
sds:
The funny thing is that recessions are by definition assigned retroactively. So, sure, we can't PROVE we're in a recession. But in six months, it's very likely that economists will say a recession exists. And that is retroactive to the start.
I agree that we may nowbe in a recession and we won't know for a couple of quarters. However, Ted said we have been in a recession since 2000. This is factually incorrect.
Edward,
I agree… I haven't heard anybody say exactly that. That said, people have painted some overly rosie pictures of the real economy. I want to address your point about the specific definition of recession. The definition of a recession is when the GDP shrinks for 2 quarters in a row. The facts are, however, that since 1985 we have changed the way that the GDP is measured several times. Most recently, we started including some of the production of other countries that import products into the United States as being part of the U.S. GDP. Were we to use the exact same indicators as we did in 1979 when the Carter recession officially began, we have been in a protracted state of recession since 2001. You make a good point about redefining things and it definitely applies here. You still managed to miss the point about Gay Marriage which is that civil marriage is a contract that extends certain property rights that the partners in a marriage enjoy. Since the 14th Amendment affords all Americans equal protection under the law, it hardly seems that the civil marriage contracts that states provide are extending that equal protection to all people. A church marriage, without the civil contract, provides no such property rights and has absolutely nothing to do with the conversation, regardless of what you heard on the 700 Club.
Edward,
Fine, we're not technically in a recession, by the current definition; problem is, everytime the numbers look grim, conservative think-tanks start changing definitions. This economy is f-cked, your Orwellian language notwithstanding. Do you understand that? Why are we arguing about semantics?
I see a liberal and a conservative being boiled alive. The liberal says "Yep, we're f-cked." The conservative says "Technically, no. There are no women here."
As with your 'person of prominence' question, again we're debating semantics not issues. The issue is, the economy has tanked, and many conservatives deny there is a problem. So no, I'm not going to go through the trouble of finding a prominent figure (which you haven't defined) who said EXACTLY the phrase you want to hear, nor should I have to.
Because we're not talking about points in a debate round here, we're talking about real world problems that affect most of us. It's not TECHNICALLY a recession, Gore TECHNICALLY didn't win in 2000, it's not TECHNICALLY torture if we do it, and TECHNICALLY we sold Iraq farming equipment, not weapons used to kill Kurds.
Jesus-tap-dancing-Christ, enough with the technicalities! People are dying! Let's start talking about solutions instead of definitions. Please? With sugar on top?
All,
I think Edward has a valuable lesson for us though. It's best to debate using the minimum of hyperbole and vagueness. It sounds like Edward is at least rational about the topic. He's just picking at the extreme characterizations. Which just shows he's a sound thinker so we probably shouldn't get too mad about that.
I think the debate that has transpired for this article is a very good example of the problem that Ted raises in the article.
Oh the Irony, Ted!!!
Which is that we're arguing about rhetoric, about phrasing, and about how to define what the US economy is in. People are disagreeing about terminology and focusing their attention on that, rather than focusing their attention on the real-world outcomes for people who live their lives getting jerked around by social forces all around them, having been trained from birth to believe that their socio-political status in this world is of their own making.
Conservative retort "So they got a raw deal, life isn't fair, BUT….."
But….what? Acknowledging that not everyone has the same opportunities is the first step in recognizing why it's important to have a social welfare system that ensures people can have the economic and physical freedom, as well as the intellectual capacity, to create their opportunities.
economic and physical security is the first step, not the last.
Of course, once we start talking like this, then someone accuses us of being platitudinous
Fair points, aggie. But at the same time, I think it's important to keep your eyes on the prize. While Ted's dream of steamrolling the opposition sounds nice, it's going to take a lot to get that to occur. So, staying honest about rhetoric is at least one way of gravitating the centrist right people. Slow progress ain't fun, but it's all this system really allows.
Wow. I have never gotten that much action out of edward. He usually wusses out much earlier in the conversation.
One way to piss off conservatives is to talk about the CPI (which you usually have to explain to them).
The operative term for what Russia has gone through and what the U.S. faces isn't recession or depression but economic collapse:
http://www.energybulletin.net/node/23259