As good as it gets?

The U.S. birthrate dropped to the lowest ever recorded. Meanwhile the economy is stalled, showing no growth in the last quarter of 2012, and the unemployment rate is up again despite the fact that people are dropping out of the labor market. Labor force participation is lower than it has been more than thirty years. Most of our assumptions were based on growing populations and a growing economy. What if this is the new normal?

None of us can remember a situation this bad, at least those of us less than around 90 years old. Every other time we suffered downturns, we came back within a year or two. We have had hard times. Unemployment was worse in the early 1980s, but recovery was robust soon after and the labor force was growing. Today we have the unpleasant and unprecedented situation of anemic economic growth and shrinking labor force coupled with high unemployment.

This labor force problem is indicative of a bigger problem. The baby boom is retiring at a time when labor force participation is dropping. I know that unsophisticated people believe that there is some pile of money waiting for retirees, but Social Security and Medicare are funded by current taxpayers. I am uncomfortable with taking much more money from the young to pay for my comfortable retirement.

When conditions change, intelligent people change their minds and their behaviors. Our assumptions were that the workforce would continue to grow & the economy would continue to grow. If these assumptions have changed, we have to try new responses.

We enjoyed two great periods of economic progress. The economy grew robustly (with only a few hiccups) from 1949-1972 and then again from 1982-2007. These were two of the best periods in world history and many of us have had the good luck to live during both. I fear that our children will not have the same good luck and may end up paying for those of us who did. Essentially baby boomers could be "lucky" three times, although the third time we will base our personal prosperity on ripping off the kids who may be facing a tougher economy than we ever did.

President Obama told us in his inaugural address that we are in recovery. Technically he is correct, but it is not a robust recovery. It is not good enough to restore and improve our prosperity. If this is as good as it gets, we have to do some serious retrenching.

Posted by Christine & John at February 4, 2013 6:22 PM
Comments
Comment #361352

We may be in a ‘technical recovery’ but to the folks that have been unemployed for a long time and are having to live off their unemployment checks and food stamps because of Obama’s failed policies it’s still a recession.

Posted by: Ron Brown at February 4, 2013 6:55 PM
Comment #361359

Enuff tautology to send me looking for a 3rd party, C&J. Your post comes across as if you are just waking to the ‘new normal’ looming ahead. IMO, we won’t see the pain, austerity really get underway until about 2014-15.

So, we can assume that if China’s expansion continues then gas may go to $5-6/gal or whatever. Are we aware of any gov’t subsidy going to build the pipelines to xport oil to China? I can’t imagine the corporations paying full cost. I would feel better about it if China subsidized the effort.

I dunno, C&J, probably more cost effective for us to work on gun control than try to move the Corpocracy to reform. Or, maybe go after those folks that caused the 34m blackout yesterday, and so on …

Otherwise - - -

Posted by: Roy Ellis at February 4, 2013 10:10 PM
Comment #361373

I don’t think it’s time yet to talk about the “new normal” or anything like that. I think you’re still having a problem with snapshots of measurements without looking at the overall trend.

Unemployment, despite ticking up slightly over the last few months, has been in steady decline for three years.

Real GDP decreased despite growth personal spending and residential investment which are key indicators of a strengthening economy, not a weakening one. This number will either be revised up or we’ll see a significant difference in Q1-2014 instead similar to Q3-2013 which was over 3% growth.

We can’t really fight the decline in workforce participation but it is a somewhat troubling trend. Growth started to slow in the early 90’s and rolled over in the late 90’s. The two recessions haven’t helped matters.

We know the slow recovery is primarily related to the housing market. This isn’t a problem Reagan had to deal with. Housing starts and residential investment are keys to a strong economy and that’s been dead for three years. It’s coming back now.

I believe the next four years will get us back on track economically but we’ll still probably not catch up ever. The kind of boom that would drive that would probably be bubble based anyway and that’s not really what we need. But we face some big problems right now and in the near future and we need our two major parties to figure out how to work together to deal with them.

Posted by: Adam Ducker at February 5, 2013 8:06 AM
Comment #361374

SO C&J you seem to be capitulating to Osama Bin Laden, you are saying we won the battle but he won the war. Spending all that money in Iraq and Afghanistan has left us in debt with nothing to show for it but some purple thumbs. Time to cut the military down to the size we need to defend the country not the world. Hell we have enough armed militia that we may need to just get rid of the military to save the tax payers the burden of policing the world.

Posted by: j2t2 at February 5, 2013 8:27 AM
Comment #361375

C&J, starve the beast, the repub conservative plan to make government small has taken its toll.

http://www.staradvertiser.com/news/nyt/19040101_In_a_hard_economy_older_isnt_betterits_brutal.html?id=189554011

Posted by: j2t2 at February 5, 2013 8:45 AM
Comment #361378

Adam, been looking at ‘snapshots’ since the 80’s, creating a bright vivid pix within the cerebrum. To wit:

Giving up the canal
Regans’ Amnesty and ‘greed is good’
Globalism (WTO, NAFTA, NAU, AFTA’s)
Millions of jobs outsourced, worker wages declining
Recession/depression/recession…
Bailouts and stimulus for the corpocracy
Greatest xfer of wealth in history from us to the 1%
$20T federal debt
Federal screwup of education, healthcare, housing, immigration, border security and so on. Effort is now to legalize another 12-20M workers to take low paying jobs and put even more pressure of worker wages.

Corporations sitting on cash, stock market bubbling over, while US and EU work to grind worker wages into the single digits.

Housing is half way stable while student loan debt represents and even greater problem, some $300B.

Enuff tautology, off to the gym. But the pix looms bright in my head of the ‘New World Order’.

Otherwise - - -

Posted by: Roy Ellis at February 5, 2013 11:59 AM
Comment #361380

This is what happens when nobody allows the system to move on from a decades’ worth of bad policies. We’re expecting an economy that was badly crippled to recover on its own. Well, damn it, this is what doing that looks like? Happy? No? Your fault.

The ability of Republicans to inflict misery on themselves, despite, and sometimes because of their successes is not to be underestimated. Why, because they’re worse human beings than Democrats? No. Democrats have been just as clueless at times.

No, the real reason is that Republicans try to be rhetorically invincible, admit no mistakes, concede no defeats. It may not seem like it, but if you don’t do that, you can’t move on from your failures.

The Debt Ceiling debacle was not a big success. I’d say it did much to cost Republicans the election. Once again, they made the Democrats seem more reasonable, and the President, in particular.

The Republicans have lost two chances to change the Senate, despite what were supposed to be prime opportunities. Why? Because despite all the gerrymandering that allows Republicans to field hard right candidates in narrow congressional districts, only in very few places are such Senators electable, and they don’t really change the balance of power like some would wish.

It is one thing to rig the game at a local level to increase your share of power. But how long can that last in any formal or informal sense with the majority turned against it? I believe that one way or another, the majority’s will shall impose itself.

I think it’s time for you to start dispensing with the illusion that you’ll ever be able to exercise total, unquestion control, that people will ever let you do it. All you can do, if you won’t adapt your politics to the task of reaching a good compromise, is build up pressure to one day be released against all you wished to remain unchanged. Conservatism should have been about managing change, not attempt to stop it altogether.

Posted by: Stephen Daugherty at February 5, 2013 1:36 PM
Comment #361381

C&J, this one might give you some hope…

http://washingtonexaminer.com/conn-carroll-americas-governing-party/article/2520285

Posted by: Rhinehold at February 5, 2013 3:15 PM
Comment #361382

Stephen

So Republicans are responsible for the baby boom of the post war years followed by the baby bust of the 1970s?

I am not sure whether to just dismiss what you write or be really flattered. According to you, Republicans must be many times smarter than Democrats, since they are able to manipulate the wildly popular and much more numerous Democrats and evidently have been able to do this consistently for more than 40 years, even at times when Democrats control the congress and the presidency. We rule - literally, in your world and there is evidently nothing you can do about it. No matter what you win or control, we just kick you around like a raggedy Ann doll. Thanks for the compliment.

You tell us that we will never exercise total control, but according to you we almost do that even when we are in the minority. I figure I will just think of ways to keep on manipulating you all. It is evidently very easy.

Of course, Rhinhold shares some hope. Americans generally think their state and local governments are good. Republicans control 30 of the fifty states and those states are doing much better than those benighted places run by Democrats. The average unemployment rate in the 25 states controlled completely by Republicans (governor and legislature) is just 7.2 percent, more than half a point lower than the national 7.9 percent unemployment rate. In the 14 states with full Democratic control, unemployment is 8.4 percent, a full half-point higher than the national average.

I guess we are smarter than liberals.

Posted by: C&J at February 5, 2013 4:10 PM
Comment #361388

C&J-
I don’t believe I was just speaking about the birthrate.

But speaking of that, 54% of Americans are younger than 40, and around 40% are my age and younger.

Long story short, I don’t credit your brute force exercises of political power to greater intelligence. I credit stubbornness, insularity, and a ruthless willingness to gain power by other than just democratic means.

You’ve got yourselves convinced, too, that you’re on some kind of bloody crusade. The rest of us have more normal, compromising attitude. For the time being, you are willing to risk this country’s future in order to make sure you’re in control. The sad thing is, though, that you’ve really screwed the pooch, and you’re doing a great job of testing your current advantages to destruction.

Put another way, put simply, the Republicans are coasting on the last of their advantages, leaning heavily on procedures, burning up the soft power they once had, and refusing to face the consequences of the demographic changes.

It doesn’t impress me. It saddens me. It makes me hope the breaking point comes sooner rather than later so the country can finally move on, and the GOP with it.

And you know what? The GOP will be less powerful for all its screw-ups, all of its insanity. When the time comes, the good will you burned now will come back to haunt you. It’s only a matter of time.

Posted by: Stephen Daugherty at February 5, 2013 6:43 PM
Comment #361390

Stephen

Seems to me that if you control all three parts of government, as you did in 2009 PLUS have a supermajority in the Senate and you still get kicked around by the minority party, there is something wrong with you.

I don’t believe Democrats are as stupid and inept as you imply. I think that Democrats have indeed implemented some of their policies and we are living with them.

Re the birthrate - I will thank you for the piles of money you will be giving me over what I believe will be a long retirement. I really don’t need your money, but you liberals insist on giving it to me and all of us other old guys who did well during the boom times of the late 20th Century.

Re demography - many people are liberal as young but they come around later to the better ideas. Another interesting fact is that the Hispanic wave has crested. Birth rates dropped all over the U.S population, but they fell fastest among Hispanics.

Re you being saddened - yeah. You know what saddens me? People not taking responsibility for themselves.

Posted by: C&J at February 5, 2013 7:01 PM
Comment #361392
The rest of us have more normal, compromising attitude.

Stephen, you should seriously contact Baratunde and see if you can write for the Onion…

BTW, you might want to do yourself a favor and read

The same thing you are saying now was said in 1964, 1971, 1977, etc…

There was 1964. Following Lyndon Johnson’s overwhelming landslide victory over Barry Goldwater—at 61 to 38.5 in the popular vote and 486 to 52 in the electoral college, far more staggering than Obama’s not-at-all-overwhelming 51 percent to 47 percent and 332 to 206—the pundits said things like, If the Republicans continue “advocating reactionary changes at home and adventures abroad that might lead to war” (this was the Los Angeles Times Washington bureau chief), “they will remain a minority party indefinitely.” Those arguments were fundamentally demographic: The nation had been 38 percent rural in the 1950 census and 33 percent rural in the 1960 census, and falling. So how could an ideology of backward rural folk—conservatism—possibly survive?

The conclusion was on every supposedly intelligent person’s lips, but it betrayed an actual idiocy. The census classified an American as “rural” (if memory services) if they lived in a municipality with 5,000 residents or less. That excluded suburbanites, of course—and Goldwaterite proclivities was of course the reason many of them lived in suburbs in the first place. In any event, the Republicans bounced back handily by 1966, borne aloft in many cases by big-city voters (for instance, Chicagoans in the Illinois senate race) who ran screaming from the Democrats’ continued embrace of civil rights during a season of riots.

As it happened, that 1966 result—repeated in the presidential races of 1968 and 1972—confounded a previous generation’s glib assumptions about demography and destiny. Those newly minted urban Republicans came from immigrant populations—Italians, Eastern Europeans, the Irish—that had formed the beating heart of the New Deal coalition. Back when Roosevelt won his four terms, followed by the Democratic electoral dominance of the 1950s and ’60s (the Republicans had to run the non-ideological general who had defeated Adolf Hitler to create practically the only exception), the declining population share of White Anglo-Saxon Protestants had people presuming that Democrats would enjoy a “natural majority” for time immemorial. We’ll talk more about that, and the presumptions concerning another vector of immigrant inevitability, in future installments, but for now, just this thought: no one then bothered to consider that voting behavior might not be a trait passed on in the genes, from generation to generation.

Posted by: Rhinehold at February 5, 2013 7:16 PM
Comment #361393

Why would anyone expect our quality of life and our economy to improve when capital is being incentivised to move off-shore? The average American now has to compete with labor from 3rd world countries with smog filled skies and no workers rights. Also increased mechanization and technological advances with advanced banking (shadow banking) technologies just makes income inequality that much worse. This race to the bottom was called out by numerous authors 25 years ago and they are on record predicting the plight we now find ourselves in as democracy is handed over to corporations and holders of incredible wealth while the Republican party provides cover for their Kings drawing attention away from the real problems and screaming incessantly about the spending and the debt while obstructing ever possible action of the president and the democratioc party. Of course corporate profits annd the stock market are at record levels so the well to do and Wall Street are experiencing an economic boom. The middle class fools who vote for them will continue to get more frustrated as they see their lives trashed and continue to gobbkle up the scapegoating and propaganda of their right wing media masters. This here internet is our best hope.

Posted by: muirgeo at February 5, 2013 7:57 PM
Comment #361394

“The economy grew robustly (with only a few hiccups) from 1949-1972 and then again from 1982-2007.”

These two period are in NO WAY comparable. When you understand this graphic:
http://www.irle.berkeley.edu/events/spring08/feller/productivity_wages_graph.gif

and it’s causes THEN you will understand why they are not comparable AND you will understand the real problem with our economy. Go forth Grasshopper and learn the meaning of this graph.

Posted by: muirgeo at February 5, 2013 8:01 PM
Comment #361397

Sez it well, muirgeo. Welcome to the NWO and so on …

Posted by: Roy Ellis at February 5, 2013 9:26 PM
Comment #361398

Wow! What a revealing graph, muirgeo.

Posted by: Rich at February 5, 2013 9:44 PM
Comment #361415

muirego

Democrats have controlled the presidency since 2008. They controlled both houses of congress 2006-10 and the Senate 2008-now.

If you think the country is moving in the wrong direction, look to the leadership we have had since 2006 or 2008.

Your graph is interesting. It looks like productivity diverged from wages around 1968, when Democrats has pushed through the war on poverty and Great Society. It remained more or less flat and went up a little under George W. Bush.

Maybe it is diverged because all those liberal programs such up the resources that used to go into people’s pockets.

Re the graph - lot of other things were happening too. In any case, wages went up until 2007. I went to work during the second boom. It was a good time, easy to make money if you were reasonably intelligent and willing to work. Unless you had a major disability, if you failed to prosper during most of the 1982-2007 period you really were stupid, lazy or among the most unlucky people in the world.

Posted by: C&J at February 6, 2013 5:17 AM
Comment #361420

Nope CJ I don’t blame the current leadership for what is clearly the result of a trend that has been going on for 40+ years. Especially when the republicans have found out they can hold our government, our economy and our policy hostage by changing the rules to require a 60 vote majority to do anything. The republicans don’t need to win elections they just need to keep their 40+ seat “majority” in the senate and by stalling all legislation they are effectively doing their masters bidding. Corporate profits, upper tiered incomes and the stock market are booming. Meanwhile,the rank and file middle class people like yourself are willing to make jokes about graphics that have very serious implications rather than try to actually understand whats going on. Your post makes it clear that you are very concerned about the possiblility of this economy being the new normal but your ideological preconceptions make it very difficult for you to actually look for true causes and real solutions… so you muddle on… on so will we all.

Posted by: muirgeo at February 6, 2013 9:29 AM
Comment #361421

Here CJ… if you have any intellectual curiosity left in you here is a little hint… another graph that goes with the last one.

http://www.data360.org/temp/dsg270_495_600.jpg

Challenge yourself CJ. Challenge what you believe don’t just go for the easy talking point explainations others have put into your head. Be original…THINK… for yourself. Question the facts and what you believe? Are they consistent?

Posted by: muirgeo at February 6, 2013 9:34 AM
Comment #361422

lemme work on that graph, muirgeo.

Let’s see, the big imbalance suggest a big imbalance. That is, we are importing more and/or exporting less, thus creating the imbalance.

Following info from Pat Choate’s “Saving Capitalism” relates that this trade inequity has its origins in the aftermath of WWII, when the US was trying to speed Europe’s recovery. The US accepted a tax loophole in postwar trade that let other gov’ts rebate to their producers any indirect taxes paid of their exported goods and impose an equal tax on any imports, including those from the US. Europe popped right up. The tax loophole remains.

Further, WTO regs prevent rebate of direct taxes (income tax) but allows other nations to rebate the VAT. This acts as a subsidy for their exports sold in the US, while imposing a tariff-like VAT on US imports into their countries. For example, a trade disadvantage of some $355B existed for 2007. Almost 230B was from other gov’ts rebate of the VAT to their companies that exported goods and services into the US. These gov’ts created another $125B disadvantage when they imposed VAT equivalent taxes on US goods and services imported into their countries, taxes that were not rebated.

Example: the VAT allows German producers to cut their price in the US by 19% and simultaneously increase the price of any US made products imported into Germany by the same percentage. Today, a VAT is applied to near 95% of US exports. Thus, a $50k Cadillac has $10k VAT added when exported to Germany, becoming a $60k vehicle. A German mfctr gets a rebate for a German car exported to the US. If the car cost $50k the German mfctr would get a rebate of $9500, allowing the US base price to be circa $40,500.
Since the WTO (didn’t the US write the regs?) won’t allow direct tax rebates why would we, like every other sane nation in the world, adopt a trade VAT? Short ans: because the corpocracy wants the middle class US worker to carry the world on its back, and so on - - -

This is just one of the millions of not so tiny cuts bleeding the US middle class worker. We need a trade VAT and a flat income tax to survive as a nation, IMO.
But, we will get neither.

In 74 at the Tokyo Round of global trade talks the US tried to negotiate away the VAT disadvantage. Other nations ignored the demand and refused to deal with the issue.
In 72 and again in 84 the US changed their tax code to create a VAT effect. In 98 the EU went to the WTO claiming the tax benefit was an export subsidy that violated WTO regs.

In 99 the WTO agreed and the US had one year to change their tax code.


In 2000 congress introduced new legislation and again the EU went to the WTO. In 2001 and 2002 the WTO agreed with the EU.

Congress ignored the WTO causing the WTO to authorize a $4B retaliatory tariff per year on US imports. Bush persuaded congress to enact a substitute for its replacement bill of 2000. Meanwhile the WTO sanctions were postponed.

The EU filed with the WTO in 05 resulting in a 34 page decision that concluded the US law enacted in 04 constituted an illegal subsidy that violated the US WTO obligations. EU threatened sanctions and in 06 Bush/congress gave up and stripped the tax provisions.

Pat relates that we could do much to balance the trade deficit almost instantly by adopting a VAT. Negotiations with other nations would not be required since the US has treaty rights with them to get these advantages if it adopts the VAT.

The Corpocracy has established itself overseas and enjoys using the VAT of other nations, They are now invested abroad and will try to keep their VAT based competitive advantage of US domestic competitors. Foreign gov’ts will maintain lobbying efforts in DC to sabotage any effort to shift the US from an income tax to a VAT.

Posted by: Roy Ellis at February 6, 2013 12:22 PM
Comment #361436

Muirego

A trend that has been going on since 1968. Maybe you cannot blame the current government,but you cannot blame the previous etc. The trend started under Lyndon Johnson and an overwhelming Democratic dominance. It got worse under Obama.

The new trend started in 2008. We usually recovered from downturns. What is the difference.

Your graph the second time shows the same sort. Things started to go to hell in 1968. What was it in the 1960s that caused us to begin to lose so much? Indeed, I think the 1960s were a terrible time when we lost a lot. What point do you think you are making by pointing this out? Surely you cannot blame conservatives for the mess up in the 1960s and 1970s.

Re my general beliefs - I can count. We had fewer babies starting in 1962. Whether or not you think this was good, it has significant effects today. We had five people supporting each retiree in 1960s: now we have two. Soon even less. This means to me that the young people cannot afford to support me in the way that we supported our old people. What part of this do you not understand?

Posted by: C&J at February 6, 2013 5:01 PM
Comment #361448

C&J-
Something occured to me while I was reading a TVTropes entry about defeat and victory.

Victory is all in how you define it.

I think the trope is called We win because you didn’t.

You keep on trying to say that I think your side brilliant, or somehow more powerful. I’d say, you revise history enough, stop trying to revise my comments!

It doesn’t show you’re smarter. Road blocks don’t require brains.

It doesn’t show you’re necessarily more powerful. As a matter of fact, it reflects your desperation at the fact that if you didn’t filibuster, didn’t do anything, you’d only have that power which Senate Democrats willing to defect would provide you.

What it shows is stubbornness and an extremely partisan attitude on the part of your party.

But even that has a limited half-life, as your party again and again tests its majority against unpopular issue stances, and the stress of being the party that has next to nothing to report back home to the voters besides what you didn’t let happen builds up.

It can and has gotten pretty pathological. Republicans voted in the majority against the tax cuts for the poor and middle class. I know it was a complicated political process, but there it is! At the end of the day, Republicans made this completely out of character vote, for the sake of defending the notion that the tax cuts for the rich should be extended. So, not only do they contradict themselves, they do so in a way that blatantly demonstrates their economic elitism.

That’s why I don’t shower their political manuevering with praise. As a student of logic and its use in translating thought to meaningful, useful action, what the Republicans are doing strikes me as a self destructive failure to let logic and reason serve common sense goals and expressions of conservative. Instead, arbitrarily applied logic and reasoning has painted them into ridiculous corners.

As the Tea Party and other factions become more ruthless about how they apply their logic and their litmus tests, its my belief that the Republican Party will splinter, and that the splintered parts will begin forming their own islands and battling with other parts of the former coalition. They will do this because they have been taught to take their own arguments, their own policies to the furthest extreme, with no provision made to tone things down or smooth out the differences in order to get things actually done.

Or put more succinctly, in their quest to prevent Democratic and Liberal policy from being done, sure Republicans are succeeding in preventing our policies from getting carried out, but they’re also losing the capacity to form the relationships and the compromises to make sure that, long term, they can come together to carry out their policies.

Even more succinctly: You congratulate yourself on our paralysis, but you are paralyzed with us.

Everything you can do to stop us, we can do double to stop you. Even if you win the Senate and the White House, and reverse things, guess what? Democrats, citing your precedent, will be able to essentially gut your President’s policies in turn. You’ve won essentially the ability to keep the political battle in stalemate on a permanent basis. And if you act to undo that? Then the next Democratic majority will be able to follow that Precedent and then you won’t have any ability to stand in our way.

Did you ever think things out that far? Or are you content merely to win the political battles of the moment?

That’s what saddens me, really. Those people are supposed to do a job, but instead, they’re bound up in this pointless, myopic political blockade. And the rest of us are going to pay for it, both literally and figuratively.

Democrats aren’t stupid and inept, they’re simply not as flat out ruthless or as able to disregard the condition of the country when it comes to what they do. But despite the power fantasies we sometimes have concerning people who are callous enough to do that, ultimately, those are the people who crash and burn by taking stupid risks and seeking out pointless pleasures.

Posted by: Stephen Daugherty at February 6, 2013 9:32 PM
Comment #361460

Stephen

I don’t congratulate myself on this. Rather, I believe that your idea that Democrats would somehow be doing great thing if not for Republicans is silly. According to you, Republicans stop Democrats even when they are in small minorities. Logically, if you believe this, you must credit each Republican with significantly more power than each Democrat.

But just one serious question. Can you name a time when you think Democrats were really calling the shots? In other words, can you recognize any time in the last 50 years when outcomes were the fault of Democrats?

“We” are not stopping you. Reality is stopping you. Some of the things don’t work in practice. “You” spend a fortune on stimulus. Much of it was supposed to be infrastructure. We see little of that.

Posted by: C&J at February 7, 2013 4:53 PM
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