Commentary: Economics and Politics
There are many subjects I know only enough about to be dangerous, and economics is one of them. I took intro econ in college, and at the time I learned that economics is about scarcity. Only later did I learn it is actually about politics. If we had everything we want we wouldn’t need government. Since we don’t, someone has to make and enforce rules to keep the peace generally and to keep greed and larceny at bay specifically.
Politics is about who gets to make and enforce the rules. Originally the priests made and enforced the rules, then, according to legend, along came the second-oldest profession, prostitution, which some argue is merely the lascivious version of a politician. But I digress again.
I was thinking about economics because we currently have the greatest income inequality in a hundred years. The Roaring Twenties were followed by the worst depression in American history, with more than 25 percent unemployment. In Toledo Ohio the rate was an unimaginable 80 percent. It took the New Deal, experimental to the core, to reduce unemployment by half, and World War II to restore full employment.
I wonder if we are facing a similar scenario? Between 1979 and 2016 American manufacturing jobs declined to 12 million from almost 20 million, while the U.S. population increased by more than forty percent in that period. Eight million good-wage, good-benefits, often unionized jobs – gone. The number of jobs lost is more than the total number of people who live in Arizona or Massachusetts. It’s way more than live in Missouri.
In the late 1970s, CEOs made thirty times average worker pay. In 2014, CEOs made 300 times average worker pay. Today the top ten percent of Americans own 84 percent of traded stocks. The top one percent owns half. The bottom half owns almost none at all.
We are in what economists call a K-Shaped economic recovery, where the top three percent are doing very well indeed and the rest of us are, at best, stagnating. The official unemployment rate is about six percent, but it counts only Americans who are actively seeking full-time employment. The actual unemployment rate, which includes Americans who want full-time work but must settle for part-time, and includes Gig workers, is at least double the official rate. And this figure doesn’t include the millions of Americans who have quit looking for work entirely.
Much of this dislocation is caused by globalization, to be sure, which depends on American businesses and consumers insisting on getting “the best price,” even if it means – as it almost always does – that the product is made in China or Pakistan. Some of it is able-bodied Americans using benefits and charity instead of employment for living expenses. And some of it is the neglect, if not abandonment, of the working class by the Democratic Party.
Trump exploited this brilliantly, of course, but he didn’t create the conditions. The Democratic Party, especially during the Clinton administration, cast its lot with Wall Street, Hollywood, Silicon Valley and the Fortune 500 elite. Democrats are still reaping this whirlwind, and may have only until Election Day in November 2022 to make a successful case that they actually do get it about the plight of ordinary Americans.