Friday, August 17, 2012

Not good enough

- by New Deal democrat

Three years ago I was arguing with Doomers on Daily Kos who thought that, as awful as things were, they were only going to get worse and worse as we fell into the bottomless abyss, quoting Zero Hedge and The Automatic Earth as gospel scripture that we were going to 25% unemployment and 1000 on the Dow Jones Indsutrial Average.

Since then, I've countered the double-, triple-, and quadruple-dippers who have mistaken every spring slowdown for vindication. Over the last 9 months or so, I seem to have become the poster child for disagreeing with the very prominent forecasting firm ECRI, who thought we might already be in a recession, or one was "right in front of us," almost 1 full year ago.

I stand by all of those calls, because that's what the data showed me.

But pointing out that the economy isn't actually contracting is a far different opinion than believing the economy is in anything remotely close to good condition. It isn't. It's in terrible condition, and all its advances grow more and more precarious as time goes on.

In a liberal democracy like the US, the desiderata of the economy ought to approximate the greatest good for the greatest number. Instead, for possibly as long as the last 40 years, but certainly since 2000, a majority of Americans have almost certainly fallen behind, a condition that looks ever more chronic as wage growth declines to 0% YoY. A defaltionary wage and debt spiral becomes a greater and greater possibility, even if its timing is not yet known.

It is simply not good enough that the economy is growing. Real income growth is paltry. Job growth is mediocre at best. The plutocrats and the banksters -- generally, the creditor class -- have been made whole or at least kept afloat via bailouts. Debtors have been left to fend for themselves. That is a recipe for not just months or years of malaise, but possibly decades. Supply does not create its own demand. Yes, efficient new goods will find markets. But otherwise we need growing demand to justify expansion of supply.

Unless and until the well-being of the shriveling American middle class is placed front and center, there will be no full recovery. While the Doomers have been wrong at every turn for the last three years, there should be no mistaking the fact that simple growth in the economy is simply not good enough.