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Krugman: The Joyless Economy

Discussion in 'BBS Hangout: Debate & Discussion' started by thacabbage, Dec 5, 2005.

  1. thacabbage

    thacabbage Contributing Member

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    (by request, no link)

    The Joyless Economy

    By PAUL KRUGMAN

    Falling gasoline prices have led to some improvement in consumer confidence over the past few weeks. But the public remains deeply unhappy about the state of the economy. According to the latest Gallup poll, 63 percent of Americans rate the economy as only fair or poor, and by 58 to 36 percent people say economic conditions are getting worse, not better.
    Yet by some measures, the economy is doing reasonably well. In particular, gross domestic product is rising at a pretty fast clip. So why aren't people pleased with the economy's performance?
    Like everything these days, this is a political as well as factual question. The Bush administration seems genuinely puzzled that it isn't getting more credit for what it thinks is a booming economy. So let me be helpful here and explain what's going on.
    I could point out that the economic numbers, especially the job numbers, aren't as good as the Bush people imagine. President Bush made an appearance in the Rose Garden to hail the latest jobs report, yet a gain of 215,000 jobs would have been considered nothing special - in fact, a bit subpar - during the Clinton years. And because the average workweek shrank a bit, the total number of hours worked actually fell last month.
    But the main explanation for economic discontent is that it's hard to convince people that the economy is booming when they themselves have yet to see any benefits from the supposed boom. Over the last few years G.D.P. growth has been reasonably good, and corporate profits have soared. But that growth has failed to trickle down to most Americans.
    Back in August the Census bureau released family income data for 2004. The report, which was overshadowed by Hurricane Katrina, showed a remarkable disconnect between overall economic growth and the economic fortunes of most American families.
    It should have been a good year for American families: the economy grew 4.2 percent, its best performance since 1999. Yet most families actually lost economic ground. Real median household income - the income of households in the middle of the income distribution, adjusted for inflation - fell for the fifth year in a row. And one key source of economic insecurity got worse, as the number of Americans without health insurance continued to rise.
    We don't have comparable data for 2005 yet, but it's pretty clear that the results will be similar. G.D.P. growth has remained solid, but most families are probably losing ground as their earnings fail to keep up with inflation.
    Behind the disconnect between economic growth and family incomes lies the extremely lopsided nature of the economic recovery that officially began in late 2001. The growth in corporate profits has, as I said, been spectacular. Even after adjusting for inflation, profits have risen more than 50 percent since the last quarter of 2001. But real wage and salary income is up less than 7 percent.
    There are some wealthy Americans who derive a large share of their income from dividends and capital gains on stocks, and therefore benefit more or less directly from soaring profits. But these people constitute a small minority. For everyone else the sluggish growth in wages is the real story. And much of the wage and salary growth that did take place happened at the high end, in the form of rising payments to executives and other elite employees. Average hourly earnings of nonsupervisory workers, adjusted for inflation, are lower now than when the recovery began.
    So there you have it. Americans don't feel good about the economy because it hasn't been good for them. Never mind the G.D.P. numbers: most people are falling behind.
    It's much harder to explain why. The disconnect between G.D.P. growth and the economic fortunes of most American families can't be dismissed as a normal occurrence. Wages and median family income often lag behind profits in the early stages of an economic expansion, but not this far behind, and not for so long. Nor, I should say, is there any easy way to place more than a small fraction of the blame on Bush administration policies. At this point the joylessness of the economic expansion for most Americans is a mystery.
    What's clear, however, is that advisers who believe that Mr. Bush can repair his political standing by making speeches telling the public how well the economy is doing have misunderstood the situation. The problem isn't that people don't understand how good things are. It's that they know, from personal experience, that things really aren't that good.
     
  2. Dubious

    Dubious Contributing Member

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    This just in:

    The Rich get Richer!
     
  3. GladiatoRowdy

    GladiatoRowdy Contributing Member

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    Great article that explains clearly all of the points made in the last thread about the economy. It also is a departure for Krugman in that he does not blame the Bush policies for but a small fraction of the economic malaise that most of us are feeling.
     
  4. Dubious

    Dubious Contributing Member

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    Captalism is defined by Greed and Fear.
    Socialism deadens the masses with mediocrity and immobility.

    Neither is ideal in it's purer form. The degree which we blend them is the constant debate and fine tuning. Is it time for the pendulem to swing back a little to the left?

    It probably won't since greed has the means to influence public opinion until the weight of poverty finally exceeds their inertia and the pendulem comes violently the other way. But maybe we are more savy this time.
     
  5. calurker

    calurker Contributing Member

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    Adjusting the minimal wage probably has more of a rising the tide effect on all wages than that bullsh!t trickle down theory of tailoring policies to benefit corporations and the rich.
     
  6. Deckard

    Deckard Blade Runner
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    Thanks for the Krugman, thacabbage. :)

    He makes some great points. In Texas, for example, there are people doing quite well (the Blade Runner household certainly is), but far too many who are not. The number of people, mostly families, without insurance continues to rise. Working people find that their wages are rising slower than prices, and especially hard hit are those who depend on their cars for either work, and/or long commutes. The cost of gasoline has had a big impact on their take-home pay.

    Those on fixed incomes are seeing their energy costs going through the roof, and not just for their cars. Gas, in Texas, has traditionally been a cheap commodity. We use it for heating, cooking, washers and dryers. We've laughed, in the past, at how those "up north" paid through the nose for home heating oil. Texans aren't laughing so much any longer.

    Teachers and government employees have had their real income stagnant for years. In many cases, after factoring in the raising cost of their insurance, those real incomes have dropped. Frankly, what puzzles me is the continued knee-jerk voting for the GOP in this state, despite demonstratively poor (I'm being chairitable here) performances by that party now that it has been in power. One day, Texans are going to wake up and throw the bums out.



    Keep D&D Civil.
     
  7. vlaurelio

    vlaurelio Contributing Member

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    I think the only people who are prosperous right now are the minority who in one way or another reaping money from the war (defense/military/security contractors), gas/energy crisis, tax give away, and high health insurance/prescription drug costs.. ( and add to that disaster/energy consultants like brownie)

    while the majority of americans go through misery and suffering because of the war (losing love ones/being away) , high gas/energy costs, tax give away (money being taken away from programs and services to fund the milliqonaire tax breaks), and high health insurance/prescription drug costs..
     
  8. SamFisher

    SamFisher Contributing Member

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    And the funny thing is, even the rich, like Gates, Buffer, etc, are warning us about it. But people who aren't rich, like some/all of the posters on this board, and who never will be, keep expounding on the benefits of plutocracy now! Absurd.
     
  9. StupidMoniker

    StupidMoniker I lost a bet

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    If only there were some way, some system of government by which every person could be made sure to have every thing that they needed. Then, in return, we would only ask that they provided whatever service to the state that they could, whatever they were able to do. We just need something that focuses not on enriching individuals in their pursuit of capital, but rather a focus on the community. The new system will be: to each according to his need, from each according to his ability.
     
  10. real_egal

    real_egal Contributing Member

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    Welcome to the communist society:D
     
  11. glynch

    glynch Contributing Member

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    Yeah, if we want a society with health care for all, a higher minimum wage, more vacations etc.,likeother prosperous Western Nations, then we are communists and traitors.
     
  12. insane man

    insane man Member

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    obviously the irony is that a democracy cannot be truly democratic unless we afford each citizen basic human rights such as health care. if a large number of americans cannot lead a basic decent dignified life what in hell is the point of a democracy?
     
  13. StupidMoniker

    StupidMoniker I lost a bet

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    Not true. As long as the policies of the government are determined through a vote of the people, the government is a democracy. If the people do not choose to institute universal health care, that does not make the country undemocratic. A democratic country could vote that only right handed people are allowed to own property, or any other policy they could think of, no matter who among the populace thought it was unfair.
     
  14. SamFisher

    SamFisher Contributing Member

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    LMFAO, just do like basso does and call people dirty commies. Because as we all know, all markets are perfectly efficient, all the time, always, ad inifinitum.

    And it is either this perfection, the type of which we are witnessing now which resembles the perfection of the Gilded Age or the late 20's, or outright communism. Those are the choices folks, especially if you are stupid enough to believe this, those are the choices.
     
  15. glynch

    glynch Contributing Member

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    It is true that we have a type of demccracy. . However, you have a very distorted type of demcoracy when you rig election laws to keep the turn out of working people down and you deliberately try to have elections in which the debate is controlled by who can get the most money from rich donors. Our sytem of "one person one vote" is being distorted into a system of "$10 dollars one vote and theminority with money can effectively outvote the many.

    For your information, a strong majority of the American people support national health care, but their political will is frustrated by the strong parasitical health insurance lobby who buy politicians and spread Bush type deceptions about national health insurance.

    This is the type of distorted demcoracy , I guess ,is the type you prefer.
     
  16. Deckard

    Deckard Blade Runner
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    Vote buying in America? Check this out:


    NEW YORK — Billionaire Mayor Michael Bloomberg spent more than $77 million to get re-elected, or more than $103 a vote, breaking the $74 million record he set in 2001 during his first try at politics, according to campaign finance reports. Bloomberg was elected in a landslide Nov. 8 over Democrat Fernando Ferrer, who had trouble raising money and spent just more than $9 million during the race. Bloomberg pummeled Ferrer by nearly 20 points, gaining 753,089 votes to Ferrer's 503,219.

    http://www.statesman.com/news/content/news/stories/nation/12/6nationbriefs.html

    What's bizarre, and disturbing to me, is that Bloomberg could have won this election without spending an obscene amount. His arrogance in flaunting his wealth to "make sure" is a sickening display of what's wrong in American politics today. Our system is bent, and on the verge of being broken.



    Keep D&D Civil.
     
  17. insane man

    insane man Member

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    actually no as im sure many of our right winged friends would tell you the US is a republic not a democracy but thats obviously a more theoretical debate for political science graduate students at 3AM before finals.

    however i do honestly believe that a system of quality healthcare and education and basic needs is necessary for the electorate to be able to rationally look at their choices and make decisions that are the best for them. and given that a sizable minority of our population lacks those basic needs...which incidentally is also the part of our electorate which votes least frequently...it is tantamount to saying out democracy is not functioning anywhere near our forefathers might have hoped. (requiring land ownership might look like an elitist idea but perhaps it was a method to force the democracy to have its electorate be living a dignified life)
     
  18. StupidMoniker

    StupidMoniker I lost a bet

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    We are a representative democracy, not a direct democracy. Nothing is keeping the vast majority of non-voters from voting, nothing but apathy. If a majority of districts have a majority of people that care enough about getting universal healthcare to vote for a candidate that stands for that issue, then there is nothing that Big Pharm can do about it. That is America folks. There is no vote buying, unless you choose to sell your vote. You are not required to vote for whoever spends the most money on their campaign. You are not even required, to my knowledge, to vote for people whoi are on the ballot. The representatives we have are the fault of the poeple, and no one else.
     

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