The article <a href="https://scheerpost.com/2024/04/05/bidenomics-and-its-discontents/" author="James Galbraith" source="Scheer Post">Bidenomics and Its Discontents</a> is from April but discusses several structural issues with the economy that persist today and many of which have become even more severe, despite simultaneously being desperately papered over by the song-and-dance of the markets and an administration interested in the economy sinking only after November 5th. <h>Wages rising; hours sinking</h> <bq>Today’s typical American working household has several earners, sometimes in multiple jobs. If one earner loses a job while the others keep theirs, she may leave the workforce for a time; there is the option of making do with less, and for some there is early retirement. She will not, in that case, count as unemployed—however difficult her life. A low jobless rate can mask a great deal of stress in such households. <b>The employment-to-population ratio is still a bit below where it was in 2020, and far below where it was in 2000; average weekly hours are still falling.</b></bq> The first interesting fact is that the perceived increase in many other economic diagnostics can be traced to a reduction in working hours for many people. For example, an increase in wages seems like it would be positive but if the number of hours worked at that wage drops, then the gross payout is still less or, at least, less relative to the increase in costs engendered by an inflation driven by many factors but one that many, in no way unjustly, attribute to elite greed squeezing the last few drops of blood from the corpse of the underclass. <bq>[...] what matters to consumers is prices in relation to household incomes over several years. In 1980 Ronald Reagan famously asked, “Are you better off than you were four years ago?” Today, millions of American households are worse off than they were in 2020. <b>Basic living costs, such as gasoline, utilities, food, and housing, have risen more than their incomes have. Real median household income peaked in 2019 and fell at least through 2022.</b> Yes, but didn’t <i>real wages</i> go up sharply in 2023? According to the Biden-friendly Center for American Progress, real wages (for those continuously employed) have indeed now recovered roughly to where they would have been had no pandemic occurred. But <b>there is a great distinction between steady progress and a sawtooth down-and-up. The former breeds confidence; the latter does not.</b></bq> It is also salient to consider real, felt costs rather to rely overmuch on indicators like CPI, the official inflation rate, or the official unemployment rate (as only the most optimistic and and unrealistic number is generally reported). People have long since lost confidence in any of these numbers, as they continue to be cheerily reported by elite media for whom the numbers mean literally nothing for their day-to-day experience or future. The media live in an economy completely divorced from the one in which the people to whom they're reporting live. And it's really people's confidence that things will continue to be OK that is utterly lacking. People sense how the focus is laser-like on short-term gains for the ultra-rich. They know that, even if they've gotten a little tide to life their boats as well, that this isn't the focus of the economy. If you know that you basically just got lucky to not be regressing financially, then you're not going to be very confident in the economy. You're basically just waiting for the rug to be pulled out from under you, too. <bq>(<b>By 2021 Covid tax credits and relief payments brought child poverty down to a record low of 5.2 percent.</b>) Most Americans were prudent with the support, but they often used it, not unwisely, to achieve a touch of independence from dreary jobs. With that support gone, the cushions erode, savings decline, debt rises–and <b>families feel the pressure to go back to work <i>on whatever terms that employers offer.</i> They don’t like that very much.</b></bq> Yeah, so they think the economy sucks---because it <i>does suck</i>. For them. For the lords of industry, whom economists like Paul Krugman exclusively represent, the economy's doing great. He's got binders full of figures proving that since his portfolio is increasing in value, everyone else must be doing great. Of course he does. He needs to believe this, so that he can simultaneously get richer <i>and</i> be a very moral person who cares about his fellow, though benighted, citizen. <bq><b>As people return to work, how secure are their jobs?</b> In the golden years during which today’s older generation of economists learned their textbook tools, a worker’s job was often a lifetime affair. Autoworkers (and their associates in rubber and glass) might suffer periodic layoffs, but they could expect to be called back; <b>their skills and experience remained useful. That was all over by the 1980s.</b></bq> While it is still possible to find employment where skills and experience are not only useful, but rewarded, this is absolutely not encouraged by general economic policy. Companies that continue to work like this have damned well better have an advantage in the market and good margins. Otherwise, they'll be hammered out of existence by companies that don't give a flying blue f*&k about their employees. <bq>The growth of GDP, another once-reliable icon of prosperity, has also lost much of its meaning. <b>The concentration of gains in the small, ultra-rich sectors of finance and technology is one reason.</b> Another has to do with the nature of government-supported investments in chips, in renewable energy and in military hardware, all of which have been contributing to growth and to massive corporate profits. Such investments do create jobs. But <b>they add nothing <i>visible</i> to living standards.</b></bq> This is a very astute observation. Improvements are concentrated at the very top. The numbers look great. The averages and indexes are all booming---because of about seven companies, without whose progress the rest of the index is in free-fall. Those companies are booming because of a huge bubble in "AI" that is bound to fall to Earth quite soon. The first signs are already here that it's too expensive and unreliable and that the current state of the technology cannot be scaled to address either of those problems. There are no products; It's a command-line prompt with no UI guidance. <bq>Although there were good things in it, even <b>Biden’s infrastructure bill</b> was largely a conventional roads program, notoriously likely to <b>foster suburban sprawl and to enrich developers</b>, rather than to visibly repair the decaying core of most American cities and towns.</bq> People see that these bills are very much about funneling money to the usual suspects and very little about actually improving their living conditions. Knowing how the fraud of the last several decades have worked out for them, they are naturally suspicious that this next scheme will also be a fraud that benefits only the already-wealthy and the budding fraudsters in their midst. That is, it is only the unprincipled that see hope in anything because it is they who are most likely to benefit. Still, anecdotal evidence---speaking to Americans---suggests that even those for whom the economy is working reasonably well don't really see much hope. They don't expect it their good luck to last. <bq>[...] what are <b>Biden’s priorities</b> these days? They are to <b>get money for Ukraine, Israel, and Taiwan</b>—that is, for (respectively) distant, dishonorable, and prospective wars. <b>The belligerence with which he opened his State of the Union address was astonishing.</b> Yet looming failure in Ukraine and mass murders committed with American bombs in Gaza add to the war-weariness that many Americans feel, after 23 years of brutal and fruitless fighting. <b>The notion that the United States could fight and win a war against China over Taiwan—150 miles from the mainland but more than 5,000 from Hawaii—is too ludicrous for words.</b> When foreign policy is delusional, <b>it’s not unreasonable to lose confidence in economic policy as well.</b></bq> I'm not so sure about that. Again, it's only anecdotal evidence, but people aren't really aware of America's wars. They think that China is the aggressor. They think that Russia is the aggressor. They are basically no better informed or morally equipped than Israelis in that regard. Some people might worry about an economy build on lies, war, murder, and genocide, but that's nearly none of them. <h>Profits are up; how shocking</h> The article <a href="https://www.counterpunch.org/2024/04/01/profits-are-still-rising-why-is-the-fed-worried-about-wage-growth/" author="Dean Baker" source="CounterPunch">Profits Are Still Rising, Why Is the Fed Worried About Wage Growth?</a> has a different take on it. Unlike Galbraith, Baker thinks that the numbers are OK. But I think he needs to think that they're OK because he desperately wants Trump to lose. If the economy is not doing well, that will almost certainly happen. So that's kind of the background to Baker's piece. He writes, <bq><b>I was more than a bit surprised to see the profit data this morning. I really did believe that the profit surge during the pandemic was a one-off, associated with supply-chain issues.</b> We can argue about how much of this increase was a predictable story, where profits rise due to shortages, and how much was about companies exploiting market power to jack up prices, but the fact that profit shares increased is not disputable. In any case, <b>it was reasonable to expect that profits would return to their pre-pandemic shares after supply chains returned to normal.</b></bq> Was it really reasonable to expect that to happen, Dean? In what world? This one? Fat chance. What was reasonable to expect to happen is that the fat piggies running society would try to stuff as much as they can into their maws---even if they're not hungry anymore. This is the rich: <img src="{att_link}mr._creosote_-_monty_python_s_meaning_of_life.jpeg" href="{att_link}mr._creosote_-_monty_python_s_meaning_of_life.jpeg" align="none" caption="Mr. Creosote - Monty Python's Meaning of Life" scale="75%"> Sometimes I worry about Dean. Sometimes he's so spot-on with his appraisal of both economics and politics and sometimes I wonder if he's got his head stuck up his ass. Or is he just covering his ass for having talked about how great the Biden economy is for the last two months? I know he just looks at numbers---like a good economist does---without really lending any weight or credence to the economy <i>as she is experienced by her subjects</i> but he can't have completely missed the looting and pillaging for the last year, can he? Well, here he is saying that he's <iq>a bit surprised</iq> that profits are up---and persistently so. Yeah, why wouldn't those durned corporations be willing to share their overflowing profits as increased wages with the employees whose surplus value generated those profit? Because it's a plunder-based, rent-based economy that barely manages to produce enough stuff of value as a side-effect of the profits it generates for the handful of people that run it. How can Dean claim to be <iq>surprised</iq>? He ends his short article with <iq>If profit shares are rising, there is no reason for it to be trying to slow wage growth.</iq> Yeah, Dean there's absolutely no <i>economic</i> reason why that would be. But you know as well as I do that the goal of the economy is to funnel money upwards. This will continue until there is a violent revolution. No-one in charge has shown the slightest tendency of being satisfied with the level of plunder---not while a single grubby 99.9% hand holds a single grubby penny will they be happy. Think of the Grinch swiping the last crumb of Christmas cookie and you have a good picture of the upper class. <img src="{att_link}grinch_snatches_the_last_crumb_from_the_mouse.jpeg" href="{att_link}grinch_snatches_the_last_crumb_from_the_mouse.jpeg" align="none" caption="Grinch snatches the last crumb from the mouse" scale="50%"> <h>Student loans</h> Another strong effect on the economy is the drag of student loans on an entire generation or two. The following video provides a pretty good overview. <media href="https://www.youtube.com/watch?v=zN2_0WC7UfU" src="https://www.youtube.com/v/zN2_0WC7UfU" source="YouTube" width="560px" author="Last Week Tonight (HBO)" caption="Student Loans: Last Week Tonight with John Oliver"> This is a pretty good summary of the student-loan crisis. $1.7T of debt, most of which is owed by people who aren't making much money, who owe less than $25,000, who are paying back primarily interest, and who will never pay back the principal. It's just not feasible. They can't declare bankruptcy to get rid of the debt. They are caught in a scam that the U.S. government lured them into, to the benefit of large banks that get to keep their interest---and large universities that hiked their rates into the stratosphere as soon as they saw how much free government money there was to hoover up. It's a drag on the economy and it was a mistake to do it. The only real beneficiaries are the usual suspects---the people who already had most of the money in the first place. The student-loan system is there to squeeze blood from a stone. I can concede the point that forgiving this pile of federal loans is only a band-aid, because there's just another generation of loans coming. Nothing will have been done to address the fact that the job market requires college degrees for jobs that don't need them, and that college prices have outpaced inflation and cost-of-living increases by a tremendous amount (two orders of magnitude?). The real solution is to force the universities to return the money they stole from the government to build up dozens of billions of dollars in endowments. <h>Food-delivery apps</h> Another part of the economy that has been destroyed is restaurants and food. This is a very, very visible change to most people. The following video is a good introduction of the current situation. <media href="https://www.youtube.com/watch?v=aFsfJYWpqII" src="https://www.youtube.com/v/aFsfJYWpqII" source="YouTube" width="560px" author="Last Week Tonight" caption="Food Delivery Apps: Last Week Tonight with John Oliver (HBO)"> Food-delivery apps predate the local restaurants. No-one makes money, though. The customer actually gets delivery more cheaply than the service actually costs. The delivery companies are hemorrhaging money and don't have a path to a viable business model. Local restaurants are being dragged into delivery service against their will. Customers are required to tip or the delivery workers remain woefully underpaid. This is a giant clusterfuck of a business to which a bunch of people have become addicted. Meals on wheels is something that's absolutely necessary for many people, but not nearly the number of people who use these services.