Worth contemplating: many of the new indicators are really calculated fields and don’t require net new data collection. The financial press is free to report them using their own calculations. That might not be as good a s a government statistic but it certainly would bring attention to the discussion when parties disagree on what’s most valid. Other measures require new data but in the Internet age, collection isn’t that hard. So the real question is why is the financial press happy to report on statistics from the Model T era?
193
@DenisPombriant. So all reports can be sourced, and some sort of “one truth” is reported. You cant just run around making up stuff, which is essentially what you’re proposing.
3
The Chronicle of Higher Education publishes in the fall an annual compilation of statistics, focusing, particularly, on salaries and positions, among other things. Many in academe read that publication avidly.
So, why doesn't David Leonhardt convince the staff of the New York Times Magazine to publish an annual compilation of statistics that he (and others) would like to see. He can edit it, with a preface each year. Call it "Portrait of An Economy," publish it every year in September (before elections), and I think you would find, as there has been with college rankings, something of a media rush to compile and feature similar statistical pictures, along, of course, with editorial and politicians' commentary.
14
The affluent are cozy and comfy. The worker might get $10 an hour. The affluent dine at hip and trendy places. The worker grabs a coffee at Dunkin' Donuts while pumping gas at inflated prices to keep the affluent cozy. The affluent balk at the 'lazy' worker and demand the end of unions. The worker ploughs ahead and hopes to pay his rent. The affluent hires landscapers with brown skin at a low price to tend the gardens by the pool then curses the 'immigrants'. The worker takes a second job for $7.25 an hour. The affluent head south for the winter as the worker goes to the emergency room because he can't afford health insurance. The lie of a great economy stares us in the face as people continue to lose their homes and their hopes. And this is only the beginning.
26
David, you should share your findings on Labor Participation Rate with Paul Krugman, because he has been claiming for years that Baby Boomers simply opted for early retirement during the Obama presidency. I suppose that thesis will be reviewed under a Trump administration, as long as it in no way confers any praise or benefits on White males, especially those without college degrees.
Most of the comments and articles in this newspaper reflect a very small slice of the country, and a wealthier slice to boot. But to make this a critique on the recovery, and therefore the Trump presidency, overlooks the many programs (women, go to work and leave your kids in day care you cannot possible afford) pushed by affluent Liberals on a nation unaware.
This is the argument Presidential candidate Donald Trump made, albeit in a way neither as nuanced nor as intelligent as this column’s explication. Then he became President Trump and now seeks to take credit for the levels of these ‘fake’ indices. It beggars the imagination, or at least it used to.
3
An estimated 1 in 8 American citizens are food insecure (i.e., no idea where next meal is coming from).
Nearly 50 million Americans, including millions of children and the elderly, know what it's like to go to bed hungry.
For me, those are the most underreported and most important stats on the economy I need to know.
9
Our economy is still based on a New Deal construct. A New Deal that is now almost 80 years old and dangerously out of sync with Modern Times. A creaky old time democratic-socialist system that worked extemely well.....creating an actual prosperous middle class, based on a cooperation between government, mass production industry, and the military. After WW2 our American New Deal was spread with evangelical zeal across the globe. Today, we americans continue to conceal "americanism" under the label "globalism"........the reality is a little harder to accept......A peer-peer network system has evolved, Electronic Communications and Compter Networks, allow instantaneous trades between Complex organizations that alternately compete and cooperate.....much as the brain and the heart rely on the same body for life, but each organ has its own priorities. Planet Earth is no longer one single cell American Organism. The Wall Street Crowd is oblivious to this...yet they all mindlessly take advantage of it,,,an new form of oppression.
Edward Tufte's wonderful book The Visual Display of Quantitative Information explains how NASA knew, prior to the Challenger launch, that its O-rings would fail at a certain temperature. They did fail and were cited as the cause of the explosion. Had that data not been obscured, but better displayed, Tufte argues, the tragedy could have been avoided.
David Leonhard's article points to a similar myopia today on the part of politicians and the media vis a vis the economy. We ignore what's really happening out there at our own risk.
6
Thank you for reconciling the misleading numbers and the realty we see daily on our streets. I've never seen elderly women on the streets. It clear the majority of our current leadership is more interested in themselves. I will be voting for leadership changes every election that comes my way, watching out for liars and hypocrites as they are the worst.
8
A return to taxing the rich would go a long way towards correcting income inequality. Labor should be taxed at the lowest rate and dividends and stock market gains at the highest. Corporations should should have 50% representatives from the lowest 50% of paid workers. Citizens United needs to be overturned. But then Americans voted for a racist talk show host.
10
I just noticed long lines of parked cars on the main drive with for sale signs and I got a flashback to 2009.
So how do these better indicators get adopted?
1
Politicians as well as Trump often cite the stock market as a barometer for judging the strength or weakness of the economy. I suppose that's true if you are targeting the economy for corporate America. Most Americans do not even own a single share of stock and have not participated in the substantial growth of the market since 2009. The middle class were the hardest hit due to the greed and avarice of investment bankers, yet they received no bail-out. The bankers got it all and now find themselves riding high with their newfound power. I read they are at least 30% larger and more powerful than before the 2008 financial collapse. The economy for corporate America and the economy for the middle class are on total disconnect. Corporate America is riding high and the middle class is languishing. Shame on all of you politicians who brought us to this severe inequality which ceded power and control to an extremely dangerous individual. This dangerous situation we find ourselves in was man-made and the corruption is vast. Oligarchy here we come, that is of course, if we are not already there.
5
The last thing the wealthy want you to see day after day on the evening news is how stuck you are. And how they are not. The stock indices are useless for the average person. Employment numbers don't reflect the actual reality on the ground. And that is: why would non working poor people go from a non working life of poverty to a working life of poverty. The notion you will be so much better off if you get a job is utter nonsense. Any financial gain you achieve will be gobbled up by expenses like health insurance. And the Republican response is to take the non working poor and force them to get a job and join the rest of the poor working Americans. Who benefits? Business and corporations. They have gotten a huge windfall and what have they done with it....enriched themselves. And now the working Americans will pay for that with taxes and/or loss of social programs. The working poor will have to figure out then what they will do when the labor market gets flooded by many more people competing for their jobs. Home grown immigrants as it were. They certainly won't have the non working poor to kick around anymore. But, hey, we will always have the Dow to make us feel good.
14
In all the talk about the economy, why is NOBODY bringing up the National and Global debt? We are heading for a precipice that is being swept under a rug......
7
The Republican Agenda for their super-rich masters:
America reduced to a 3rd world country. A nation of sweatshops where compliant workers live in ignorance, fear, illness and poverty, while the 1% bleed us and invest tax-free overseas.
You don’t share this dream?
That's what the 350m guns are for.
2
Bill Gates walks into a bar. All the patrons immediately begin to cheer.
The bartender asks: "Why all the cheering? Do you really like him that much?"
"No" says one, "But our average income just went up 10000%."
9
That even PBS news provides daily reports on stock market results is indicative of the gap between the economy of the affluent and the rest of us. Wake up.
3
I remember an old cartoon showing a politician boasting at an august celebratory dinner "Millions of new jobs have been created under our administration!" Behind him we see a busboy clearing the dishes thinking to himself, "I know--I have three of them."
23
"The Labor Department could change the monthly jobs report to give more attention to other unemployment numbers. "
Remember Tramp discussing it during campaign and been called names because it were Obama's numbers?
And That is the point of the article:
Twisting the numbers to suit political agenda.
Call it what it is: manipulation of the public opinion.
1
We are measuring the economy in a reasonable and accurate manner. Not much different than we've ever measured it. GDP, debt, unemployment, the markets, the dollar, etc. People like Leonhardt are devoid of market understanding relative to the emotional fluctuations it can experience - as a result they don't see anything wrong with writing a negative article like this one. Please believe that Obama would not have attempted to take credit in his recent speeches for an economy that we are "measuring all wrong". The underlying problem is that we have a progressive leftist political party that cares more about social issues than it does about the economy and has become hopelessly entangled in their hatred.
David Leonhardt often stimulates discussion about political and economic issues in our country - the present article as example. He is thoughtful and more often than not I share his opinions.
As other respondents have indicated the measures reported in the statistics do not reflect their own experiences - the ‘boots on the ground’ outcomes. In the history of our country such statistical results have evolved to reflect the tools of those who would use them for ‘political’ advantage.
I have recently heard (and read) much about the interaction between our ‘political’ system (Democracy) and our economic organization (Capitalism). Titles such as “will Democracy survive Capitalism” come to mind. Our founding revolutionaries hoped to achieve a “Republican” form of government embodied within a mercantile economic environment. A Republic has three elements: (a) a representative legislature chosen by ALL citizens; (b) representatives responsive to its citizens; (c) representatives acting for the benefit of ALL its citizens. That noble goal has deteriorated over our history. (Indeed, we were founded on slavery and corporations were present from our birth.)
In the course of our dynamic history, economic factions have come to dominate our political structure. (Governor Romney, regrettably was right - ‘corporations are people my friends’. Corporations now have the constitutional rights of ‘people’.) At present, mechanists dominate our nation and statistics serve their purposes.
1
We the people are beholden to The Economy, but it cares little for us and our needs. The Market Preachers sell us Paradise and salvation by telling us to give all we have to The Economy. Give all in our work life, in our need fulfillment, and social life. If we're not working to elevate the economy, we should be consuming more and more to keep it moving.
We are told we must serve The Economy, and should we do things right it will let us have some scraps. And should you already have wealth - it will protect you and serve you from the gourmet kitchen. The Economy serves a select group of winners.
Serving The Great American Economy and its big winners, is what we the people, in rural or urban America, are told is our duty. Its our patriotic duty to grind our noses, pull harder and harder on our frayed or long broken boot straps to serve The Economy - even if its not serving us at the same time.
As long as someone is winning, even if that number is small and distant and manipulating things in their favor, you are doing your patriotic duty by your servitude to a system that makes them winners. Its your moral obligation, and you earn your good citizen badge, by giving your all to The Economy. No matter how little it gives you back.
No matter how booms or busts are measured, its become clear that the positive outcomes are focused and delivered more and more on the few.
We the people are beholden to a system that is not serving us any longer. That has been skewed not to
6
Thank you David. This is really important and I agree with others who maintain the New York Times should do everything in its power to keep up this kind of reporting.
2
As an undergraduate student majoring in economics who is old enough to remember Kennedy's inaugural address, this essay rouses from me an enormous HALLELUJAH! I understand why we need to learn and solve the models, but every time I hear "more is better" I cringe. We don't need more, the Earth cannot bear to yield more, we need to shift focus from "more stuff" to "more equity". If a given policy grows the economy but increases inequality that is not a good, it is a bad. I fear that only an aware public can force that shift, because the politicians are there to serve the interests of the contributor class.
6
Inequality doesn't bother me that much. What bothers me is poverty, lack of universal health and dentistry care, lack of education and employment opportunity. People get tossed around by all kinds of forces--bad choices, bad households, messed up neighborhoods, failed relationships, and on and on. Weeding out discriminatory practices and and reforming discriminatory institutions can solve some problems, but only some. But we can put a floor under people--a basic decency floor and an opportunity floor.
We already know most of the things Leonhardt wants us to pay more attention to, and I don't see what making measurements "official" can really do except to reorganize the politics a little. And, anyway, the idea that we can find the magic economic policy formula that will by itself solve our problems is not believable. Besides, we know what needs to be done. It won't end human suffering, but it will fight back social hopelessness for almost everyone. We just need to do it.
5
But if more of Trump's base were aware of just how much money the very wealthy make from stocks, they'd be screaming to have capital gains taxed at the highest levels that payroll incomes are taxed. The Koch brothers etc wouldn't want that! Nor would all the bought-off politicians in Congress. How do you help them understand that they've been robbed?
12
Excellent analysis. Please keep it coming. The country needs more of it.
5
Statistics are only as good as the assumptions that underlie them. Current economic theories do not interpret the human experiece. They count, in multiple ways, the circulation of capital, the movement of labor and the production of goods but each analysis is designed to replicate a functioning state. Take inflation as an example. Any American will tell you that this marker does not reflect the prices they experience. The low rate of inflation has already factored out the very things that make our costs increase and so is relevant on a macro level if you want to maintain the status quo, but completely devoid of truth at the level of personal experience. I would love to read an economic theory that was not merely reflective of the needs of profit, but cared for different core values: community, health, and yes, the hated word: happiness.
3
Great article.
One other important aspect that is not widely published: 60 % of jobs in the US pay less than $20 /hr. You can't raise a family today or have a quality life on this amount.
14
I live in an affluent suburb of Atlanta. The housing market here slump. There has been a marked slowdown in house sales this year. Inventory sits and sits regardless of price point. Other broader indicators are ominous. My family is preparing for a crash.
2
Yes more wealth but less distribution. This is the major problem. Can government help? Fair income taxes, reverse the tax cuts, single payer health care, lower college costs, increase retirement benefits, child care for working mothers. All of these things would offset the unfair distribution of wealth. A major problem is also the ability of the wealthy to buy and control the governments for their own use.
The recent tax cut resulted in over 80% being used to buy back stocks enriching the wealthy even more and a increase in debt and a decrease in revenue for government services.Less then a 15% help for salaries and jobs.
6
It is my understanding that if the Federal minimum wage of $7.95 an hour had been linked to inflation, that "minimum" wage would now be somewhere over $20 an hour....That's "minimum" wage.... If this is indeed true, then information such as this should be made very public, and repeated as often as needed to get through to people. It's simple to understand, and additionally makes the $15 per hour wage touted by those far left "crazy" liberals and socialists like Bernie Sanders, seem insufficient. And, $20 an hour is all of $800 a week..... If Americans should not spend more than 25% of their income on rent -- where can a person get a decent rental for $800 a month?
6
an exceptionally well written and well articulated position. we already see growing signs of the raw edge of the unequal distribution of wealth -- divisions everywhere, political dysfunction, the huge growth of debt, the rise of the far left and far right, anger, vulgarity, and vitriol. i think the next economic downturn will wreak much more social fabric damage than financial damage. like the author, i think American Democracy and Exceptionalism is being challenged and is no longer up to the task.
3
Even days before the great recession struck the US and the world the economic and financial experts, save one or two like Raghuram Rajan or Ruchir Sharma were certifying good health of the economy,to the extent that the leading credit rating agencies like Moodi's had assigned A+to the US just ahead of the Lehman Brothers collapse bringing in its wake the global financial crisis. The politically destabilising populist wave sweeping across the world today and the slow pace economic growth benefiting only the filthy rich and the skewed economic policies clearly suggests that the crisis is not really behind us. And the way debt and deficit are piling up or the asset markets are hotting up, it can safely be predicted that the another financial crisis is around the corner.
3
Thanks for the article. I think our current measures perpetuate the lack of information to the advantage of many financial institutions. Better information makes us better investors. Better investors would make our financial institutions better. In my recovery from 2008, I found many of these institutions did not follow good or even acceptable business practices. I think the root cause was lack of competition. Thanks for noting Piketty and friends. His book on "Capital,,," provided answers for many questions in flux today. I wish you would develop an article to describe why many of our institutions sit on their hands and avoid the necessary improvements in our financial process.
Our statistics have largely been based on consumption. On a planet that is fast becoming unlivable because of pollution, resource destruction, and other vital environmental factors, we need to find some new metrics based on NOT consuming, but rather conserving and distributing more EFFICIENTLY in order to meet the needs of the living needs of humans and the struggling planet. Your GDP doesn't matter if you have no clean water, air or good soil. A raging stock market is useless if we have no water to drink. Trust me. I live in recently drought/fire/mudslide ravaged California, all situations that didn't occur at present extremes in our state for my first forty years out here.
I'd like to see a new standard that is based on how well we meet basic needs of citizens, while creating new, sustainable systems and environment.
Al Gore had some good suggestions on how we might approach that in his book "Earth In The Balance".
6
“They are not working, not looking for work, not going to school and not taking care of children. Many of them would like to work, but they can’t find a decent-paying job and have given up looking.”
I love these two lines. First, assuming it’s true, why is it tolerated? Only a child would use this logic especially in a time where the economy is adding jobs. The truth is that some people won’t work when they can receive enough money and benefits not to. I appreciate that people can be “down in their luck” (as used to say in the old days). That can happen to anyone. Instead our country has created a sizable number of “idle adults” who just won’t work. Nothing will change until that’s no longer tolerated and a return to encouraging and expecting a true work ethic is back.
2
Great point!
There are all manner or good or better statistics out there. If the current ones are so bad, "the media" will have to find and promote better ones - AND demonstrate why they are better.
The problem with statistics is you can always find some that fit your "facts" and "narrative" - that is a real risk in opening the box you suggest.
As usual, who do we believe and why?
Generations of economists have been trained to sustain the status quo statistical reporting we se on regular intervals. Thomas Piketty rocked the boat with his long period study that explained how the wealthy increase their proportion of total wealth reletive to other lower income classes: the wealthy access opportunities that result in higher returns. Leonhardt's opinion is like similar 'voices in the wilderness' - many economists know that stratums (classes) within the economy exist and that the top income earners rarely, truly, lose. Economists prefer to exclude discussion or statistical tracking that isolates the undercurrent of distinguished wealth growth by the top income earners. In a capitalist society, those with capital count more than the lower stratums of society that, like Mitt Romney's 47%, are not the movers and shakers of economic statistics, they are ponds in a game of chess controlled by alliegences within the Bilderberg Group.
1
I was going to quote Kuznets caution about well-being. Mr Leonhardt beat me to it. As did RFK.
How about measuring the employed who are under-employed, in a temporary (hopefully) position while looking for one in their field, or a better one in general. In the "I give-up, this is the best I can do" job. How about all the unemployed women, who are willingly such (homemakers), or those driven from employment by illness, or family healthcare needs.
For the suggested changes to be made to the various metrics used to measure our booms and busts, etc - we need a Congress with a will and leadership for change. We need leadership that accepts they don't know everything, that knows their ideology is pretty on paper, but in action isn't solving foundational problems. We need leadership with a compass, that doesn't point to themselves.
In other words, we need the sort of leadership that we are sorely lacking right now. What we have is the antithesis to what we need. What we deserve.
What we also don't need are more rich people - who helped break the system - coming forward as our saviors. Trump is bad enough, and he's really bad. No more CEO's and mega-rich company founders telling us they and only they have the cures to a system that they helped skew. These Elites are not going to save us...least of all from themselves!
We need leaders who can make real foundational changes to how we not only measure our problems, but with forward looking solutions that will raise all boats.
4
Over the decades, working people have lost their pensions, steady incomes, overtime pay and are now working for peanuts in the gig economy. Meanwhile costs for health care, college, and homes are skyrocketing. Write about ALL of it. We are drowning while the rich are hiding their incomes in tax shelters abroad and forcing Republicans to push yet another tax cut. Enough!!
12
I'm going to go out on a limb here (tongue firmly in cheek), and guess that elected Republicans will be unanimous in their opposition to the Democratic Senators' bill that would more accurately reflect what is really going on in today's economy.
Yes, as the article states, "The whole point of statistics is to describe reality." Reality and the Republican Party parted ways long ago. Reality means facts, and to Republicans, facts have a liberal bias. Look at the relationship of Republicans to Science or an honest appraisal of American history and you'll see what I mean.
8
There are a lot of good suggestions in this article. But suggesting we count "discouraged" workers is a cloudy subject. We don't know why potential workers don't take jobs. Perhaps they are choosing to full time care for young children or other loved ones. Perhaps they are writing a novel. Perhaps they are ill or drug addicts. The employment-population ratio for men has been declining pretty steadily since the early 1950's when it was 84% through today when it is 66%, declining through other recessions and never fully recovering prior peaks. This is not a recent phenomenon unique to the Great Recession of 2009.
1
Focusing on Inequality may be all wrong also. We have always had inequality and we have always had both upward and downward mobility.
If we had a good social safety net that wiped out poverty and provided the opportunity for all to get a great education along with a world class infrastructure maybe income inequality would be more acceptable.
Things like clean air, clean water, public beaches and parks create equal opportunity having nothing to do with income.
If we add more jobs and 10 million people loss their health insurance what have we gained. If there's a pandemic and the poor can't get medical care and the wealthy loss their children what is the benefit of that wealth?
Why do we decide to ban together to even have a government if it isn't because we recognize that we need each other to improve the quality of life for everyone.
The dirty reality of our government is both parties are spending our resources in pretty much equal increments even if taxes are collected differently. One of them is focused on transferring wealth to the Military Industrial Complex and the other is focused on transferring wealth to the social safety net and national infrastructure.
The economy or how we measure it isn't nearly as much of a problem as the utter contempt and greed of the current Republican Party.
5
What is articulated here is true, within the most widely used definition of the term economy. What is not said is far more important. Global warming has made it clear that we, human beings, cannot grow, nor redestribute, our way out of what is not a financial crisis - it is a civilizational, ecological, and economic one. We will have to redirect our economic activity towards what is already known about what economic prosperity is. Amongst the most important acts are to quickly, voluntarily, using incentives, bend the curve on human population growth until we are reducing our numbers rapidly, towards a sustainable ecological niche. Broadly, we must redirect our amazing technological capabilities towards ending the major economic activities that are feeding global warming. Perhaps most difficultly, we must confront, and civilizationally, come to terms with the reality that economics is not, and can never be a value-free, "pure" science.
The language of that transformation is not even known to most people, including words like ecology, sustainability, etc. Most fundamentally, we will have to leap into the largely unasked, and mostly unanswered - a simple question: What is an economy for?
2
Great article. These broad statistics need continual updates for relevance. The origin of their use and abuse as guidance for policy makers is important. I agree as well that the media has an important role in bringing analysis and interpretation to the stats. So often we debate and conclude in deluded, ill-informed, and irrelevant states of understanding. Perhaps The Times devote space to economy measures as an ongoing project.
3
We value what we measure. We measure what we value.
Every second we calculate stock prices. Every day we publish the DJIA. Every month we calculate the unemployment rate. Every year, we calculate poverty and the uninsured rate.
If we reversed the order, perhaps we would prioritize how we devote government funding and actually work on improving the lives of everyday Americans.
3
Over the last 25 years, companies have moved their hiring practices towards using Independent Contractors. These workers are not included in the unemployment figures when their contract ends and they are out of work until the next gig comes along....hence the term "gig economy". Every economist knows this, yet I never see this discussed or factored into any articles such as this one. Many of my friends, including myself, work in this fashion and since we can't collect unemployment insurance, we have no choice but to be self insured and off the records.
10
Agreed, the best place to hide a tree is in the forest. Aggregate measures hide the truth. We are not only measuring the economy wrong, we are measuring the individual corporation wrong. The Shareholder value myth, propagated by Milton Friedman, states the only goal of a corporation is the return to the investors. Hence the damage to the environment, and to employees should be ignored.
5
A great commentary that addresses the malaise and fear of most middle class people for whom the recovery never came. The existing statistics does not even address the actual condition of most midedle class people today, but these misleading statistics provide statistics for republicans in government to argue their economic propaganda. This needs to be remedied.
4
As long as Republican Party leaders refuse to acknowledge the impact of the last recession and Democratic Party leaders refuse to acknowledge their party's responsibility in causing the Great Recession and the 2008 financial crisis meltdown, then it makes no difference how you measure G.D.P. or anything else.
Globalization, automation, technology, education (or lack of it) and trade agreements that impoverish and cause unemployment of large segments of our work force are the prime causes of social and economic inequity. It is inequity that is growing daily.
Housing, healthcare, job security, child care, community safety, transportation, care of our elderly, are all casually dismissed by both parties. Ethics and good judgement in government and corporate government have failed all us. The mega-billionaires get rich, more removed from the ordinary citizen and disconnected from reality of the people who are struggling to make it.
There will another financial crisis. It will be ruinous to millions. Our nation will suffer and next time may not recover.
Unless there are vast changes in the leadership of our government the coming crisis is inevitable. There will social upheaval and great change, maybe even revolt by the masses. There is reason to be concerned.
3
Few economists seem to take into account the Malthusian principles leading to mankind's downfall and inevitable extinction. And the fact that robots are taking the place of jobs that people used to have is just going to lead to more unemployment. The biggest rise in jobs is in the health care industry, thanks to more and more sick and disabled people, many of them getting sick from environmental causes.
3
We often see how many jobs have been created but little is said about how good the jobs are. Many are "20 hours a week jobs" so that they need not provide medical insurance.
Often people who are struggling are working 2 or 3 of those jobs and perhaps there may be more than one person in the family doing that.
There should be a measure of how many hours a week are being worked by the family to meet the "family income" statistics.
7
This is a wonderful article! Thank you. Every time I see a pundit rattling off how great things are, I wonder what America they're living in. This explains so clearly what is ACTUALLY going on. I hope these measures are put into place.
5
I recall a statistic that said that the people in Minneapolis were as fit as the people in Honolulu based on gym memberships per thousand residents.
What's wrong with is picture?
The people in Honolulu are much more likely to exercise outdoors without a gym membership. If it's a tie, Honolulu wins by a landslide.
Statistics are reductionist by nature.
Income inequality isn't as important as some people claim. If someone has a zillion dollars, that doesn't matter as long as everyone else has enough to get the things that they need to have a good life. In America as in much of the rest of the world, you could ask "how hard does the average person have to work to get their necessities, and how much do they have left over?" By that measure, we're going backwards.
Stagnant wages and increased monetization of necessities such as health care and education have played hob with that statistic. Life is harder for many people.
As for housing, if your net worth is mostly in your house, all you can do is sell or refinance. If you refinance, your mortgage goes up, and if you sell, you have no place to live. If you don't own, your rent goes up. That is not as much of an improvement as you might think unless you own some rental properties, or are ready to downsize. Again, those who are already ahead get farther ahead.
It's a Gordian knot, and looking at it one strand at a time won't lead to understanding it.
7
All of the small and medium business owners that I know, and I know many, say that they can't find skilled people willing to work. A high unwillingness to work exists. The welfare net is too big and generous. Why work. Many are satisfied living on the least common denominator.
3
@Greg
But Greg why might this be so? Surely work is satisfying and at least somewhat profitable and so is being skilled at something useful. Why would any sane person settle for the "least common denominator" when they could be enjoying a much more interesting and secure life? Are many of the "undeserving poor" spending their lives at home caring for their grandkids or a disabled spouse or parent? If that is the case then they may be doing work that saves the state (you) huge amounts in tax dollars but receiving nothing in return except God's blessing. As noted elsewhere in comments the work that they do is 24X7 and might cost well into the six figures if they were not doing it.
Would it be foolish to pay them enough that they actually see their net worth increase?
1
@Greg
Yes, but did your business-owner friends reveal how much were they willing to pay for these "skilled" workers? It is easy to state there is a lack of "skilled" workers when you put the requirements to the roof and is willing to pay well below what big business is offering.
From my experience, everytime there is an economic crisis and unemployment grows (which it isn't even the case now -- that Phillips Curve is gone), business owners (i.e. capitalists) start spreading in the media that there are lots of vacancies, the fault being the working class not being capable enough to fill them (what the Keynesians call "skill gap").
1
Tell your friends to offer good pay and benefits for those skilled jobs and they will be surprised how many people will be interested in them.
2
I wish you would give your article to your colleagues, they keep referring to the economy as humming, instead of referring to it as the economy is humming for the 1%.It would make those of us that fear the economy will help the Republicans keep their
Majority in the House, in the Mid Term Election.
3
GDP includes all of the income of Wall Street denizens and investment banks that received QE and sold foreclosed properties to the Fed with the approval of the Wall Street-led US Treasury Department.
In 2009 and for several years afterward the Sectoral Balances data shows that the Private Sector received about $26T from the Government Sector (See https://en.wikipedia.org/wiki/Sectoral_balances) which was accomplished through deficit spending (borrowing). All of this money was distributed to Wall Street. The recipients do not spend their income in the real economy. It goes into other high risk crooked speculation. Main Street never saw any of it.
At a bare minimum this shows that GDP no longer is an index for general prosperity.
1
One thing holding back workforce participation is the burden of payroll taxes on the employer-employee relationship: FICA (both halves), federal and state unemployment taxes, workman's comp, local head taxes in some areas, federal, state, and local income taxes.
The current system makes the employer our tax collector, which is cheap for the government to administer. Just imagine what would happen to tax collections if everyone were "self employed" and responsible for voluntarily reporting and paying taxes. (We may just find out with the advent of the "gig" economy.)
But all those taxes make up a 15% - 30% threshold that workers have to clear when they come in from the twilight of off-the-books activities into formal employment. Meanwhile they are out there, doing something, existing somehow, uncounted, invisible.
4
No free market economy will ever be one that develops economic equality as progressives dream of it. The history of the US has been one of most boats rising but everyone is not in the same size boat. Economies with wide equality are ones like North Korea - everyone is equally impoverished.
This notion of now reshaping statistics is one that merely seeks political advantage. The left doesn't want to admit what most people now know - the economy is doing much better under Trump than it did under Obama. It's not perfect of course but we've been waiting a long time for a government utopia - hint - it will never happen.
Our economy is fine except for debt. The Federal Government simply will not take steps to effectively manage deficits & debt and this applies to both parties. Otherwise the private sector, which is the engine that allows government to operate in the first place, is doing quite well.
3
Keith, a review of both the GDP numbers and unemployment numbers demonstrate actually that the economy is not doing better under Trump than Obama. Last quarter's 4.1% annualized growth rare - revised this month to 4.2% - while Trump's best quarter, would be only the 4th best of Obama's quarters. And less new jobs have been created in Trump's first 19 months compared to Obama's last 19 months. These are the facts.
4
You mention North Korea. Why? You could have mentioned Western Europe, Japan, Canada and a whole host of other successful mixed-system nations - including The US from the 1940s to 1980. But then, I suppose, your preconceived notion that unfettered markets (or rather, markets that fetter all except the 1%) are infallible.
Living in a small town in Northern WV should tell the entire story, but let me explain anyway. The entire state has had so much unemployment that the occupant in DC seems to think coal will fix it all. This is as far from true as it can possibly be. Where i live, the region has been inundated with gas drilling and all that comes with it. The town has pretty much been changed from quaint to destroyed. The greed of so many here has affected so many in one way or another, but the only thing that the so called leaders in this state see is dollar signs from all of the drilling mechanisms that have polluted this entire region. There is a very large group of the population here that live far below the poverty levels and the disproportionate few that are filling their pockets make it seem like we have a boom economy. Not true. Fast food and retail dominate here and they pay minimum wages and offer little to no security or insurance. So many go without, live in hovels as homes and they do not get counted or really survive well. The destruction of this state is sickening. So many creeks and water have been poisoned, animals are dying off as are people. The cancer rate here is astounding. You can count on as many as 10 funerals a week from cancer here, but hey, as long as this gas drilling and all of the OUT OF STATE people who are working here is making some rich, well, need I say more?
16
Well said. I’ve noticed the disconnect between the articles on a booming economy and the temperature of my household, where our wages have remained flat for 5 years but our health care costs have risen to $20,000 per year. I’d encourage the writer to communicate with the political corespondents at the NYT, as they all seem to pin the prospects of a blue wave on Trump’s unpopularity. I think the issue is more nuanced. My bet is that it’s Trump’s unpopularity COMBINED with the true economic anxiety reflected in these statistics. Let the GOP keep its head in the sand, a reckoning is fast approaching.
8
Comparing stock market growth to the growth of net worth to support how net worth is lagging is not a good argument. Presusumably gains from the stock market would be included in the growth of net worth as would be the impact of real estate value changes, but gains from both could have been consumed and not saved which would cause net worth growth to lag. It would have helped to graph the growth in real estate value to see if its trend might have had a negative or positive impact on net worth growth. In sum, a graph to support a point in the article, but one that is spurious.
2
IMO, the graph measure an aging workforce and technology advancement that has left most workers behind. Technology has also made anything more than six months worth of experience irrelevant, decreasing worker value and compensation.
This is nothing new - for example, the shipping canals that were dug by hand in the first half of the 1800s were obsolete by mid-century, surpassed by steam engines and railroads.
If I’m right, we need an influx of immigrants and a complete reimagining of public education. Easy to pay for this. Reduce defense spending to the 2% GDP most of our NATO partners aren’t even reaching.
3
The men (yes, they were mostly men) who invented our economic statical concepts had pen, ink and paper to work with. We have server farms. If we are not doing a better job of reflecting reality, it's because we don't want to.
5
There is a large hidden economy in America. Its not listed on the internet; doesn't have a legitimate website or any formal advertising, but it is there nonetheless.
You can see this economy working in the streets. I have been looking at it for the past 6 months or so. One day I saw a small group of people repairing a car parked on a residential street. They were there for a day or so and then disappeared. It looked like a guy working on his car in front of his house
The next week I happen to be walking my dog Molly about two or so miles away in a completely different residential neighborhood. Same guys, different street, all working on someone else's car.
It wouldn't mean anything I suppose, except that I saw them again in a third area, this time when I was driving to go shopping in a neighborhood across a parkway from my area.
Later on I began driving around looking for other groups, and I did see them; different people working on cars in the streets.
I don't think we are dealing with licensed mechanics or anyone paying sales or income taxes regarding the work.
Many people work in this economy and don't contribute anything to the overall economy in a formal way. Yes, they do get your car moving, or I suppose repair things in your house and thus contribute, but this is where part of that large group of the unaccounted unemployed really are.
These people should be a large part of the statistics too. They have always been there, perhaps just not of this magnitude.
6
“After all these years, though, we haven’t solved the problem. Maybe it takes a financial crisis to do so.”
Or we could try a system where the wealthy can’t buy off our politicians.
13
We like to think that our form of government and our economy are the best in the world. That's debatable. Is there anything better than capitalism? That argument was made before, and the alternatives that have been tried so far have been terrible. On paper they seem reasonable, but in practice people got seriously hurt. The Soviet Union was so bad that just adding the word "democratic" to "socialism" doesn't convince anybody not to be angry anymore. So, if we are going to stick with capitalism we have to make changes to it to make it work better. The main problem with it is that it is based on competition. There are winners and losers. There is a harmful psychology to it allowing people to pass judgment on each other based on how much they possess. Money equals power. People compete for how much power they have, use that power to disparage each other, and never are satisfied when they have power that they have enough. Then the ones with power blame the ones without power for their failures. As long as they are on the winning side, they think that's fair. Meanwhile after FDR and LBJ created a social safety net, 53 years later we still have poverty that should have been eliminated by now. If we could reinvent capitalism to be cooperative and not competitive where everybody wins and nobody loses, then we will accomplish everything we want. My motto is, "it ain't what you got, it's what you do with it." (©Me) We need a system whereby we all live well and happily.
5
Employment figures should be parsed. How many people are given benefits, including healthcare? How many are contract employees?
5
Along with statistics that better measure the economy through the lense of inequality, we need indicators of the true cost our economy has on our ecology.
4
We’ve known for some time that our economic measures don’t describe life for most. As describes here, Keynes was onto it (https://gpbrockway.wordpress.com/2012/07/04/appearance-and-reality/). We all feel it. I’d like to see std economic numbers presented in a weighted average form based on the number of households or individuals for which a given measure or holding has a material contribution.
Good intentions and political promises are not enough.
What's needed are useful metrics and distributional GDP is a start. But not just economics or inequality or education or health - also happiness. This idea will make politicians accountable and must be part of every Progressive agenda.
By useful, I mean real life metrics by which we can rate and rank politicians, like the metrics and goals that corporate managers and sports stars have.
Every politician must have a real-time online dashboard into which one can drill down for the causes of poor performance.
By comparing political metrics one can determine best practices. Such numbers would make Democrat vs. Republican obsolete.
Imagine national rankings of the best politicians. Tie their pay to performance.
China, where the performance-based politician/managers all have engineering degrees (rather than law degrees), has something like this.
"That which is measured improves. That which is measured and reported improves exponentially." - Karl Pearson
Also - if it's not measured, it can't be improved.
1
Rating politician's performance, in a fashion similar to that of corporate executives, will yield
similar results. Somehow too many top people get great rewards regardless of performance.
3
Fascinating. I have long wondered why people no longer searching for work are not included in unemployment statistics. Thank you Mr. Leonhardt. This was really an eye opener. I'm certain the Republican party, asa they are out of power, will be calling for the new statistics to be applied across the board. One can only hope one party or the other gets these far more accurate optics into the national conversation.
3
What percentage of credit scores have improved during the past year when people were reportedly “better off”?
Do more Americans have better debt-to-income ratios?
How many Americans pay 40% or less towards their housing costs, including utilities?
That’s how you measure the economy. Number of new low-paying jobs is meaningful, but it isn’t the harbinger Republicans want to make of it.
4
If you are really interested in government unemployment for the population as a whole you will track U-6:
"Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force."
As of August 2018 U-6 was 7.4%.
https://www.bls.gov/news.release/empsit.t15.htm
A good discussion of the various U-levels can be found here:
https://unemploymentdata.com/what-is-u-6-unemployment/
Shadowstats places the REAL August 2018 unemployment at
at about 21%.
http://www.shadowstats.com/alternate_data/unemployment-charts
It seems that some people are measuring parts of the economy realistically.
5
The political writers at NYT would do well to read this article. It explains why the current "strength of the economy" is not lifting Republican voters.
The top 10% is doing great. The 90% of everyone else is not. White, rural, non-college educated voters continue to be left behind. And now the Republicans want to take away healthcare too? Political suicide.
Democrats need a Truman or Johnson-esque leader for the common man. Education, welfare, healthcare equality for all. These are basic governmental functions and civil rights for all people.
10
It's one thing to measure economies and their attendant financial crises in statistical terms yet quite another to measure them in terms of the acute and chronic traumas they can cause.
What happened globally in 1929 still haunts us through the gauze of recent history. Let's hope the same can be said of the current
aftermath generations from now.
While remembrance and anticipation can't ever avoid history repeating itself, they sure can help temper the results.
2
The primary asset of many Americans is their home. That asset is taxed annually. The wealthy have their assets in stocks and they are not taxed annually. The income of average Americans is taxed to support Social Security and Medicare, but stock dividends don't get taxed for that.
Our economic growth is based on loans. The tax cut for the wealthy and business created a huge jump in national debt. It is that tax cut that is paying for the stock buybacks that are creating the wealth for the rich while driving interest rates up for the middle class.
We need a new economic tool that measures comfort and safety of all Americans not just the rich. How well can people afford: safe housing, a decent education, healthcare, and other life costs like food and transportation? Measure that.
11
Great, much needed piece David, but I’m surprised you didn’t mention Joseph Stieglitz’ recent work describing new indicators that could go far beyond GDP.
7
In discussing these economic metrics, you have hit on a tool that the Democratic party could use to mobilize the working-class and middle-class to vote their own interests. Rather than focusing on identity politics, Democrats should stress these statistics and what they imply, and then they may actually have a chance to again become the majority party.
13
@ron l
"and then they [the D Party] may actually have a chance to again become the majority party"
They actually are the philosophically majority Party now. They are obviously NOT mostly the majority Party based on election results.
Mostly because the MAJORITY does not vote as often as the MINORITY does. It takes about 64% EVTO at least for Ds to be competitive generally speaking. At 80% EVTO the current GOP would be relegated to few and far between small population areas.
Truly the GOP is the 42% Party overall. But they win elections and capture things regionally because some regions are just more GOP prone but overall mostly because a much larger percentage of that 42% votes and votes more often.
Of course gerrymandering and voter suppression helps the GOP.
But the weapon they have honed and use so expertly and ubiquitously is propaganda that not only motivates their base to vote (red meat rhetoric) but also importantly that masterful gaslights issues to breed complacency, apathy, cynicism, confusion, and hopelessness in the 58% so they do NOT vote.
The GOP is the MINORITY Party overall - but so was the NSDAP in 1932.
Elections do not always reflect the MAJORITY's views - but they do usually favor about 42% of the population - authoritarians being about half of those - for a variety of reasons - some unsavory and some because we don't take voting seriously enough.
1
Unemployment rates count you when you report that you're looking for work because you're drawing unemployment insurance from a recent job. If you run out of unemployment insurance and qualify for some welfare benefit then you'll again be counted when you report that you're looking for work as part of the process. When you're employed you show up in the payroll reports.
You aren't counted when you're just sitting at home living off your savings, trust fund, etc. You're not counted if you go broke and decide to live outside and eat from dumpsters. It's actually pretty hard to get to a point where you're not accounted for when you're actually looking for wage employment, and easy to be missed on the counts when you're an entrepreneur a.k.a. self employed.
In short, the stats are valid when looking at the overall state of the economy, that's why they've been used for so long. Nobody needs a month by month breakdown of wages by economic class, just watch the sales numbers on consumer goods. That will be a leading indicator anyway, since people will buy a Coke and a steak before their payroll is reported.
3
"...the current indicators are not a naturally occurring phenomenon. They are political creations,"
Obviously no data series is a "natural" phenomenon. Politics determines what human activities are measured, What IS a very natural phenomenon, however, is the unequal distribution of human productive activity. The Pareto distribution is everywhere, from athletics to the arts to economics. The simple fact is that differing circumstances, attitudes, skills and effort produce very different real life outcomes. Measuring this natural skewness, as the author suggests, is fine. Focusing on it for political reasons in order to remove the "skew" is a dangerous path, however, for it is a very natural function of the capitalist impulse. Kill it, and you kill the greatest system for wealth creation yet invented by man.
3
GDP measures activity. It doesn't measure waste.
If half the people dug holes and the other was filling them up, then there would be 0 unemployment and high GDP. But it's a 100% waste of effort.
3
Wright’s school of thought is the “Together, I can go far” school of management. Taught by the successful and imitated by the wanna be. Break free of the chains! Vote for democracy.
2
I think only trying to fix the inequity in the United States is not going to work. Theirs Farm or inequity around the globe that in this country. if we are going to have an equitable trading system and jobs for people around the world then the focus has to be much bigger. I don't see that happening.
A very interesting and informative (“ I didn’t know that!” ) article. No reason why the current collection methods can’t be tweaked a bit to more accurately reflect “ the true” state of the economy regarding the common man. It wouldn’t change our retiree asset allocation (45/55) much though, if any.
1
Will a paradigm shift in economic data analysis and newer models occur only with a revolution or “a financial crisis” as the author concludes? He does mention some economists and members of Congress who are looking at different models that capture economic reality, though it sounds like a baby step! It is up to journalists and TV pundits, such as on CNBC to learn up on it and bring it to people’s awareness.They rarely even talk about the PQLI!
1
Are we sure that people necessarily care about income inequality, or just lack of access to retirement security, high healthcare costs, low to no wage growth amid increasing inflation, and higher education costs? It’s important to distinguish between these. I would care deeply about Bezo’s wealth if I couldn’t pay my bills, but I don’t know if I’d care as much if my financial future and that of my loved ones was very safe. Regardless, many Americans don’t have a secure financial future and we need to address it.
3
I see your point, but I’m not convinced the two are unrelated. GDP and productivity growth have gone to financial services and the top few percent. As such, at least in the current era, discussion of inequality necessarily involves those who benefit, above and beyond my envy of Bezos.
2
I've always thought that job numbers were especially unhelpful. Especially when the newly created jobs are often entry level and you have people working two of them to get by on a subsistence total wage.
9
While inequality has become a self-reinforcing process, and different statistics may be enlightening, we need to be careful about enacting policies aimed to correct it, while always making sure that we take care of the sick and the poor.
History has shown that equal opportunity, not equal outcome, is the only practical goal for a society if it is to stay viable. Honest hard work and the ability to delay gratification are the keys to success in America.
17
It is human nature to seek data ( informative facts) that confirm what the collector of data seeks to validate. Psychologists term this human error confirmation bias. In science anomolies are more important than data compatible with an hypothesis. Plainly put data that fails to confirm an hypothesis should be explained by modifying the hypothesis or by refuting it. Discard the hypothesis not the anomolous data.
When the data are time series selected by human economists, group confirmation bias is hidden. When these series are created by those invested in convential economic wisdom , it should be no surprise that the time series data confirms conventional economic theory. Change the observers’ lens—their own personal and group bias—and the time series confirms a different point of view.
I take it, Professor Krugman is arguing that if current times series of GDP, unemployment rates, family income and net worth are inconsistent with time series variables that measure the general welfare of the population, then, this anomoly—this failure of transmission—needs to be explained. To do so may imply an entirely new construction of old time series indices or the creation of an entirely new series that mirrors the economic gains and losses of the broad population. Now, is the time.
4
How could anyone possibly think that going down the path of neoliberalism would be a bad idea?
Look at how many people there are who have very publicly benefited from that decision.
2
Terrific article. To get to the right knew data we need to change our framing of economic issues. We are stuck, for example, thinking in terms of 'real wages', 'real income' etc, measuring wage progress relative to changes in the cost of living. Yet extreme inequality is the result of wages etc not keeping up with the economy, i.e. overall productivity. We need to replace 'real wages' with a measure of 'wage progress', adjust wages etc to productivity per capita.
1
I think the real takeaway here is the New York Times won't concede that the economy is doing well until and unless a Democrat is in the White House.
8
@Jon
You need to get past that notion, because the issues in this article transcend party and it has been well documented for some time. In fact, this article barely scratches the surface of the inequities in this country, party of why Trump got elected, though he has no clue what to do, just how to lie.
3
Seriously? That is your “take away”? While the article may have some flaws by not citing the non-participation rate currently published by the BLS, it does make a valid point about the disconnect between GDP, the Dow and actual income, differentiated by “class”.
4
Did u not read the article? The economy continues the trajectory started under Obama. The benefit has accrued primarily to the top tier people who already have enough.
If you have no patience for reading, look at the charts.
4
Some time ago The Weather Channel took it upon itself to begin naming winter storms. Why doesn’t the Times, Bloomberg, the AP, CNBC, and these economists team up to create a custom, more honest monthly report and focus on that instead of the usual blah, blah, blah?
5
I tried to read "The Will to Power" by Friedrich Nietzsche, and haven't been able to grasp the concept through all the noise of the interpreters, his sister and the like. Surely the problem with unfettered greed is based in this "power", one person over the masses, right?
I also know a little about addiction, and the Bezos', et al. are certainly adfictd to their millions, right?
Finally, I did some simple arithmatic on some corporate numbers and was astiunded by just a couple of them: $400,000,000, if divided by 10000 = $40,000.00, right So, if, instead of giving bonuses worth $400,000,000.00 to 5 people, I could use that same amount to pay 10,000 people, 40,000 a year to work, right?
Look at some other arithmatic: $1,000,000,000 (1 billion) divided by 10,000 = $100,000! So now, I can either pay 10,000 people $100,000 a year or 20,000 people $50,000.00 a year, for one year. That's a lot of people!
Interestingly, I just googled that there are 12,553 registered lobbyists in Washington. Hmm? I'm thinking maybe they are getting paid pretty well? I'll Google how much money was estimated paid for lobbying of "your" representatives. Be right back ... Ok, the number from 2011 was $38,000,000,000! Wow, 38 billion in 2011! I wonder if that number has gotten lower?
(Continued)
12
The ultimate irony is that those most affected, damaged and angered by the lingering financial crisis, are supporting and voting for the very politicians who created it. Moreover, in spite of their promises (broken), statements (lies), legislation (misrepresented) and recollections (wrong and self-serving), those politicians are perpetuating and increasing the damage and long-term negative effects on ordinary Americans, their children and their futures. One of the greatest frauds ever carried out in America.
16
I might vote for Trump if he ran against Stalin. And I agree with everything after your first statement. But you are mistaken about the income issue, at least as compared to HRC voters. It’s sometimes difficult, but I’m trying to resist the temptation to lump all Trump supporters together.
1
Excellent piece. RFK’s speech about GDP was essential. But I do believe the plutocrats who run the country would like to stick with the out of date measurements currently in use. In this country, a serious accident or illness will send a comfortable family into bankruptcy quite suddenly.
4
The statistics are there and have been reported for decades. The core problem is that those reporting and commenting on those statistics, like Mr. Leonhardt, either don't understand the statistics or are unwilling to do the work to find and analyze them in depth. In other words, the problem lies in an ignorant, lazy media's search for clickbait rather than truth.
2
Ok, so, $38,000,000,000 divided by those 20,000 people only making $50,000.00 a year equals ... WOW! Those 20,000 people can now get $1,900,000.00 a year! One-point-nine million. Ok, almost done. How many Senators are there; 100. Even I remember that! And how many congresspersons? Ok, 435, so, 435+100 = 535.
$38,000,000,000 divided by 535 equals $71,028,037.4 each. Sorry, I had to go check that this number, 38,000,000,000 was 38 billion.
Well, even if corporations are people (and therefore entitled to free speech. Speech which is green, by-the-way), I'm not sure that an individual American has a snowball's chance in hell of competing with those numbers?
Maybe after you do some arithmatic, you can also recall that the Constitution has been amended 27 times.
3
Isn't there a country that has a national happiness index? I think it's Bhutan. Maybe take a lesson from them.
2
It’s funny the Republicans are all in tizzy because Trump doesn’t tout the so called ‘great economy’ ahead of the mid terms. It’s already been pointed out that Republicans don’t talk up the tax cuts because it’s a loser for most Americans. The only ones that really benefited from the tax bill were the rich.
7
People who live in the U.S. today enjoy a high standard of living by any absolute measure. It is tiresome to see yet ANOTHER article about the “inequality issue”. Billions of people around the world would gladly trade places with just about anyone in the U.S. Inequality is part of human nature, and it always will be. The constructive way forward is to focus on how best to help EVERYONE improve their lot in life through education and personal development. Simply fantasizing about taking “rich peoples money” is a distraction and a waste of time. Unfortunately this is an attractive narrative for the left, and a favorite of The NY Times.
5
Unfortunately Tom the reality of my Mr Leonhardt argument is that many Americans are not enjoying that high standard of living, that you mention in your comment.
5
You are of course correct. Would you suggest those who are unhappy with their share of the pie move to a country where they will be higher on the income ladder? Mexico, maybe? Sorry it’s such an offensive and socialist notion that many are concerned with how gains in GDP and productivity are distributed.
1
Thank you for replying. But I think you are missing my point, which is that even the poorest among Americans are still considered rich by global standards in comparison with the billions of people around the world who have far lower standards of living. To the average person in the world, these people would come across as someone saying “ I know I am 10 times richer than most people in the world, but it bothers me that there are people who are even richer than me”.
1
If you worship at the alter of free market capitalism, the distribution of wealth is unimportant. Galbraith explained to the nation in the 30's you will always end up with the kind of inequality we are seeing today.
Strangely, the people hurt the most are blindly buying into the Rand/Koch nonsense.
6
I am sick of the nonstop, breathless reporting about stock markets. The stock market is NOT the economy. Most people do not work for a publicly traded company. Most Americans don't own stock, either directly or through a 401k. The stock market is basically a casino for the rich. I would love to see us measure things like the portion of persons 18 and older who would answer yes to the following question: "If you felt extremely sick and had severe pain, would you go to a doctor despite the cost?"
24
I have one daughter doing work she loves at a vibrant, successful company that actually makes things. That company cares about their employees’ well-being and considers her a valuable friend.
Another daughter is a busy free-lance artist with a good clientele. The third is dedicated to a non-profit agency that provides care for developmentally disabled and is perennially underfunded. At least one of my children can be confident at her future.
1
Here's my nominations for new statistics, pretty much echoing Mr. Leonhardt's:
1) The employment rate (what percentage of Americans are working full-time). This could be broken down by age, sex, race, class, etc. as needed.
2) a)Household income--reported income by household.
b) Household net worth
Both of these could be broken down by age, how many workers in the household, and percentile. If by the latter, sources of household income (work, government payments (including Social Security), investment, and perhaps other categories) should also be reported. For each of these, publish the median and the interquartile range.
3) After-tax income by percentile of gross income.
2
The problem with our politico-economic system is that it takes one party’s administration to fix the previous one’s catastrophe, just in time for the guilty party to get voted back in and claim responsibility for the other’s good work, as they set about to wreck the economy all over again.
We know which party is which. It’s happening all over again right now.
Really sick of this scenario.
28
@joymars Half true and of course backwards. This administration is fixing many things Obama messed up. Not the least is how the military declined during his administration.
Wouldn’t a better measure of employment be documenting the qualifiers of what employment really is? For instance, people who work 30 hours or more “ usually “ receive benefits like vacation, paid holidays, sick leave, overtime pay, medical and dental coverage, 401K and so forth. While those under 30 hours are paid minimum wages with additional supplements for working evening hours or night shift, and usually no benefits. I believe Starbaucks may be an exception.
Point being, employment should be more than a yes or no answer. Just as there are many shades of grey between black and white, so too are there many shades of employment rewards for employees. So are there many employees realizing full benefit packages, or many who just barely make enough to make ends meets and pay for services with what’s left over after they meet their living obligations?
11
Unemployment rates and GDP mean little now. The nation's productivity goes to the top few, as does its political power.
Most employees don't belong to a union now, so have little input to employer policies that affect their basic financial security.
In our past, high union membership meant that even non union jobs had rising pay.
The ratio of CEO to average worker pay has widened greatly--- from , "from 30 times average worker pay in the 1960s to over 300 times more recently" --- The Guardian.
We need columns that compare families of 3 generations of Americans---for wages, benefits, job security, retirement security and socio economic mobility. Also for union apprenticeship training, and college tuition debt.
The contrast is vivid. Put people from different generations on TV cable news interviews and let them tell their stories.
9
Perhaps a better benchmark would be looking more closely at those who are working. Since 30 hours is the demarcation point between full benefits like paid holidays, vacation, medical coverage and so forth, measuring how many are fully vested and how many are basic wage slaves that make barely enough to get by would be more productive showing how well the wealth trickles down to the working public.
4
Only government can restore greater security to most Americans, starting with tax policy that treats all income equally and imposes far higher tax rates on wealth and inheritance. This change in course is essential to provide the revenues for basic government responsibilities, including affordable health care, first world infrastructure and investment in education with living wages for quality teachers. Tax revenues are also required to reduce the insane federal deficit. That the current crop of craven crooks who rule the land are heading in the exact opposite direction to what is needed leaves room for little hope - unless the younger generations step in and right the ship.
17
An administration that actually wants to help the poor out of poverty would work on the things that handicap poor people the most: day care for working parents, transportation to where they work, and health care to keep them well enough to work.
Solve these problems with good local transportation service and reliable day care centers— and HEAL Obamacare.
5
What would the metrics look like if the goal is to deliver a universal living wage life style of $300K to every couple that is willing to work 120 hours per week in meaningful social-environmental work, in a world where lifespans increase to +150 years?
1
What’s economic growth after all when people don’t grow economically. Economic growth doesn’t mean the growth of 1%. It’s the growth of 99% that should matter. What is the use of being called the richest country in the world when majority of people suffer and when there is so much of economic inequality.
I am writing this comment painfully after reading thousands of comments by Americans in this paper on economy, employment, college loan, health insurance and housing related topics.
13
And while we’re at the cost of living index should be revamped as well. At present it does not reflect the true skyrocketing cost of living.
8
From one of the hottest economies in the nation, the Seattle area. The job situation is abysmal. If you aren't a techie, a doctor or a construction dude, you can plan on a night shift warehouse job, a cheapo gubment outsource job or any number of menial low paying ($15/hour) taskers. Since a house costs around $700k, yes $15/hr is chicken feed. It stinks and will continue to stink.
19
The answer lies in your comment ... if you want to earn more you need to pursue education and training. Maybe the “doctors and techies” deserve what they are paid due to their hard work and dedication. People need to take responsibility for their choices in life.
Sorry, that’s a very hard-hearted reply. You should visit a community center or an employment office some day and watch the ones who can actually make it to the employment office.
Then visit the ones who can’t.
Visit the ones who are trained and educated but aren’t employable because they are over 55.
Visit the ones who would work but are handicapped in ways that severely limit their options.
I am really sick and tired of people like you who see the “workforce” as young, agile, and adaptive. Strength rules, right? Everybody else should take a hike because you don’t feel like helping them.
5
https://www.amazon.com/Common-Good-Redirecting-Environment-Sustainable/d... Has an excellent suggestion for a measure better than GDP to measure common well being by John Cobb and Hermann Daly
Of course standards of living are being pushed down in Western countries as developing nations provide cheaper labor.
It's a great time to be an investor, but it's a race to the bottom for regular workers due to tax cuts and scaling back in social services and investments.
All aided by the complete breakdown of any social contract.
4
Great points but would David have written this before 2017 when he made clear his political leanings.
He did, most assuredly. But this administration has codified the republican hostility to anyone who is not already rich. How many jobs programs were passed by the Paul Ryan House under Obama? How many much-needed infrastructure projects were funded by the deficit hawks in the GOP? What happened to requests to raise the minimum wage?
At least Obamacare passed—and now they are taking their knives to it.
3
Census department Gini coefficient inequality measure:
https://twitter.com/mark_j_perry/status/1039890751625351171?s=21
Excellent observation sir! I think this should be becoming quite obvious to most people by now...
This is an important column that I hope will bring about better information for creating better public policy and a better-informed public to choose between policy alternatives offered by the elected representatives. I see nothing but good coming out of this initiative.
I recommend that at every opportunity the NYTimes report the data and charts from time to time write about the status of this initiative and data compilations to date.
I think this will help reduce the income gap as people come face to face with the real conditions in the country.
What you have done today including the history vignettes is very interesting and is very important because of the contrast between the hype on the benefits of the Tax Cuts and the realities of America's living conditions.
BZ
3
The question is, should we evaluate total wealth or evaluate the median standard of living. If we take as true the assertion that more wealth=higher standard of living, then the median standard of living is still way below 2007 levels due to median household worth still being down 20 percent.
There is certainly something to this argument. If the government acknowledged that there is still a long ways to go before regular Americans get back to the same level they were in 2007, then perhaps there'd be more legislation aimed at regular Americans instead of tax cuts for the wealthy. Moronic tax legislation like the cuts last December pump ever more cash into corporate coffers, which in turn bumps up the price of stock, which in turn increases the wealth of those lucky enough to own stock. With the focus on total wealth creation rather than a nuanced approach that evaluates the median wealth of regular folks, Congress has dumped a pile of cash on the 1% while the rest of us suffer far lower net worth than a decade ago.
Measuring the wrong thing, unsurprisingly, leads to poor decisions.
4
Perhaps The NY Times could start publishing the numbers you are suggesting. That will make it easier for more people to use these numbers and add weight to their broad adoption.
3
Thank you for finally telling the truth. Too bad you can't do it while a leftist is in office... You are 8 years late reporting this type of stuff.
The story is largely true, but it is largely because of the two things. 1. The materialistic and frivolous spending habits of current generations of wage earners. 2. Globalism.
1
I wholeheartedly agree with the article. Yet it doesn’t mention that 4,000,000 baby boomers are retiring yearly and not as many people are entering work force.This causes a labor gap and further distorts the unemployment rate.
The fact that a small percentage of people controls most of the wealth is hardly ever mentioned. This allows the wealthy to promote falsehoods about migrants, unemployed, unhealthy and poor regarding them as criminal, irresponsible and lazy.
Many Americans are so propagandized that they think government benefits are (gasp) socialism or communism. Things like health and child care, housing assistance are routinely provided in Europe but either under attack or nonexistent in USA.
Here you can lose everything if you get sick yet everyone claims we are greatest country in world. Our revolution sparked a change in world wide government but we have become the 21st century laggards because of unabated assaults by the upper class on necessary government assistance. They openly state that people getting SNAP (food stamps) are milking the system due to crime and laziness.
Until Americans understand the economics of today, we will continue our downward spiral.
5
The decline of the "wage" economy has been a feature of the past half-century. That decline will continue, perhaps accelerate.
The wage economy was great--invest in a lunch box, turn up at the appointed hour, grunt, and take home some cash. But not no more.
So, what's coming?...the "gig" economy? Many of us would find the gig economy brutally competitive, with social unrest to follow.
The People's Republic of China has a socialist-capitalist hybrid that is working pretty well. Is this our future?
Are statistics our salvation? (that was a funny-joke)
3
The decline of the "wage" economy has been a feature of the past half-century. That decline will continue, perhaps accelerate.
The wage economy was great--invest in a lunch box, turn up at the appointed hour, grunt, and take home some cash. But not no more.
So, what's coming?...the "gig" economy? Many of us would find the gig economy brutally competitive, with social unrest to follow.
The People's Republic of China has a socialist-capitalist hybrid that is working pretty well. Is this our future?
Are statistics our salvation? (that was a funny-joke)
1
Where I live most jobs are low paying jobs without a future. They count as a job and some people work more than one of them, but they don't provide intellectual stimulation and they don't provide a career path. Companies expect salaried workers to put in long hours without overtime. One place where I worked penalized workers for taking a vacation.
Then there are a few people like Jeff Bezos making more in ten minutes than his own employees who are expected to answer emails 24 hours a day.
Maybe we need an employment number that represents the number of good, high paying jobs with a career future that people enjoy doing and feel empowered doing. I believe these jobs could exist.
At the same time we need to eliminate current GDP as our goal because it is leading to environmental destruction of the planet and replace it with a number that adds the benefits of products and services produced and then subtracts out environmental destruction caused by these products and services so we don't think that a high GDP represents a healthy society. If we subtracted out the cost of the latest severe weather linked to climate change it would provide a more real picture of how our country is doing.
1
The single greatest event that created the modern dysfunctional world was the election of George Bush over Al Gore in 2000. Think about it: If Al Gore had been elected president, we would not have had Bush's deregulation of financial institutions and the "ownership" society that laid the groundwork for the collapse in 2008, creating the disillusionment in elites that led to the rise of Trump populism. We would not have had Bush's tax cuts that put the debt and deficit on a dramatically higher trajectory. We would not have had the invasion of Iraq, thus creating ISIS and the metastasizing chaos in the middle east which led to the mass migration of people into Europe, destabilizing it and laying the foundation for the right wing populists to gain traction. There would have been a liberal majority on the supreme court resulting in no Citizens United ruling which allows the Koch brothers to hijack the political system and turn America into a plutocracy. So everyone who voted for George Bush because they wanted to have a beer with him (instead of the sterile technocrat Gore) is responsible for the mess that America and the world is now in. Thanks a lot!
44
Excellent! Now, just like we compare how other countries handle healthcare or education, how do they report their economic statistics?
1
inflation is another critical statistic that needs revisiting. Forgive me for not citing it here, but I believe there's ample data to indicate that while the core basket of goods has not increased much in value, the cost of services and rents that affect most Americans' wallet share definitely has. it doesn't take much economic imagination to divine why the public feels pinched
9
Pretty funny measure Obama by the old yardsticks measure Trump by newly updated ones.
Otherwise i totally agree the measurements are not upto date.
So be fair measure Obama Clinton and Bush by the newly updated criteria then measure Trump by them.
2
I've seen the stats, and Obama had started to lower inequality. but once Trump and the Republicans came to power, that trend ended immediately.
1
I’d like to see the number of households where the total hours worked per week is ONLY 40 hours and are they living a solid middle class life. That’s the MAGA that people are looking for.
12
Mr. Leonhardt says "But wealthy households own the bulk of stocks." It doesn't sound like he took into account the huge pension funds (like CALPERS) that hold a lot of middle class retirement savings. If he didn't, I would submit that the stock market money in pension funds needs to be counted in any new proposed economic measurements.
12
Too bad nobody told them the stock market is a casino. And lately a big scam of a bubble.
First, CalPERS has a range of investments, including some that are not in the stock market. Second, since many CalPERS members are in occupations with total compensation in the 150,000 to 350,000 range (doctors, lawyers, correctional officers, police officers, managers) many of them ARE the wealthy. Lastly, I've seen research that explicitly takes into account retirement plan stock ownership and even with that factored in, most Americans still are not in the market. This makes sense when you consider that the vast majority of Americans report that if they were faced with an emergency that required $400, they would not be able to pay it.
1
I wonder if there could be a statistic that measured the percentage of people that were employed/working to their full potential. This would count a person staying home to raise their child as a working/employed, but it would not count a person who previously worked in a factory and now unhappily greets people Walmart.
3
Thanks for such a well thought out and clear analysis.
“The whole point of statistics is to describe reality.”
“... Robert F. Kennedy liked to say during his 1968 presidential campaign that G.D.P. measured everything “except that which makes life worthwhile.’”
Just so. On the other hand, there’s the old saying that there are “lies, damned lies, and statistics.”
It’s a good idea to pay attention to this sort of battle.
3
And the article even misses the point that, periodically, the government changes the data it gathers and the way it is gathered. This is almost always when the government doesn’t like the results of the existing system. By cherry picking the available data, they can show almost anything that they like.
Yes, the American people are getting screwed, but the numbers are so skewed that it is hard for them to understand what is happening
To them.
N
5
Well said. The growing numbers of homeless people I see make it clear that our official numbers measure only part of the economy.
1
I am well aware that nobody will care, but what a bunch of whiners are americans. Even here, except for greed, without anything else changing, it would nevertheless be a whole lot better for a lot more people. Except for greed.
Open your eyes. Look at the rest of the world. We have it made in the shade.
2
YOU look at the rest of the developed world! Compared to most, our social mobility is lower, our life expectancy lower, our literacy levels lower, our infant mortality higher, our homeless numbers higher, our healthcare costs, including drugs, insanely higher, and our drug dependency levels much higher. G.D.P. is a poor measure of the real
economic health of a society. So yes, I’m whining. I should be screaming at the top of my voice!
5
I agree with the main thrust of this article. But a follow up article (addendum?) could be called "We're Conceptualizing the Economy All Wrong".
It's as if a young scholastic, let's call him St. Leonhardt, in the 13th century were to write about how the recent return of the number of souls saved from hell and purgatory to higher levels wasn't quite taking into effect the upsurge in the selling of indulgences to those with connections and the twin upsurge in licentiousness.
That is, if you don't place this analysis in a larger context of 'political economy' you are much like the young scholastic just mentioned. Today we would say, St. Leonhardt is missing the point , the whole feudal system is predicated upon assumptions and a worldview that today we find abhorrent.
Nowhere in the article is the concept of capital, or capitalism, mentioned. Capitalism *is* the social system by which we meet our needs and it has spawned an entire intellectual discourse , economics, whose job it seems to me to discuss just these kind of 'salvation rates', without discussing the underlying social system, akin to scholastics in feudalism.
Capitalism *produces* crises by its competitive nature, both in the direction of overproduction and monopoly. And now it threatens the biosphere because 'economics' cannot account for these costs with its conceptual toolbox. Ok, we lost a lot of deck chairs in the last crisis, maybe if we just rearrange them the ship will correct itself ...
10
A few posts here mention the uncounted, unpaid work done mostly by women, such as child care, elder care, and housework. While I believe such work is highly important, is it really supposed to be included in any measure of the economy? Regardless of gender, pretty much everyone, whether employed, unemployed, or underemployed, is doing some kind of labor that contributes to the household and in many cases saves money. Including not only the above, but yard maintenance, home gardening, home improvement projects, making and mending clothes, and other tasks. Should all this work be counted as a measure of the economy? And if so how?
1
Whether or not an economy can support the reproduction of labor is certainly relevant. The work cited is necessary work.
Thank gods for this article! It's long overdue. The economy is static, has been since the mid-80s when I graduated college. The realities of college debt, lack of reasonable health insurance, low-paying jobs, ageism/racism, the disappearance of middle-class blue collar jobs, and a whole boatload of crap jobs out there make this the worst economy in my lifetime. It has not gotten better and arguably has gotten worse as wages are stagnant and service jobs proliferate. But the power elite (including academics and economists) don't get it because they don't live it. There are also stark regional differences. I live in one of the worst economies in the US, in a poor state, where as a teacher with a master's degree I make the same salary as fast food workers in Seattle ($15/hr). Folks in CA making three figures struggle due to the cost of lifestyle there. We desperately need to media to be more real about how most people - formerly known as the middle class - live.
20
What happened is simple: for the first time in the imperial era of the USA (1945-present), a rise in indebtedness of the country (including a botomless military spending) is sacrificing its own people life quality, measured in consumption capacity.
In the good ol' times, the USA could simply put the interest rate to the roof and, literally speaking, export the crisis to the periphery (Third World): capital would come back to the USA, while starving the peripheral countries in endless cambial and debt crises (Latin America and SE Asia usually serving as the punching bag). The IMF then entered and imposed austerity over these countries, giving moral lessons to the conquered about how they were "lived above their means".
That is simply not happening anymore for the simple fact the Third World is already maxed out: you can only exploit a slave until his heart stops -- that's what happened with the "shitholes". Now, mass immigration is happening, analogous to the "Barbarian Invasions" that eventually bring an end to the Roman Empire.
2
All excellent points; many should be receiving a great deal more emphasis in media analyses of our society's economic health.
They also explain the political disconnect that causes many Americans, including many Trump supporters, to believe that "if only 'x' would be fixed" (with "x" standing for one or more of; Immigration policy, their tax burden, the "swamp," government expenditures, health care, crime, restrictions on business and industry, etc.) they themselves could participate in what's cited by out of touch institutions, politicians (whether terminally myopic, oblivious or cynically self-serving) and wealthy investment experts, using these outdated metrics, as a phenomenal economic "recovery."
4
There was a radio commentator who once quipped, "We don't need to know the change in the Dow Jones Index we need to know the changes in the Doug Jones index."
Repetition does have persuasive impacts and repeating an index multiple time every day does influence what people consider important.
We need to create a derivative product for the wages of an average factory worker in the next 6 months. Then right after the stock market report the news could go on to say, "The Doug Jones Index of factory wages decreased by 2 points today, less than a half percent drop." We need that stated every day and not yearly when the ACS numbers on median income come out.
4
What about unemployed persons that fall into the gap between prime working age (25-54 years old) and retirement (65)? They are not included in the unemployment statistic or the Seniors statistic. Leonhardt makes some good points about the measures but misses this decade-spanning group who ought to be at the top of their lifecycle income. This group, despite being relatively educated and technology savvy, still job searching or having given up, face systemic ageism in the hiring system.
7
As my dad used to say, "Objectivity is the delusion that an observation can be made without an observer." Data will be harvested in accordance with what the researcher finds important.
4
Very well laid-out, thanks.
Hopefully, these suggestions will be implemented, at long last, and will contribute to policy changes benefitting the bulk of the population.
1
Mathematically, he problem is simple. The extremes determine the means. In other words, extremely high incomes or wealth raise the average without shredding any light on what is happening to most people.
It is not so much the official statistics that are the problem. There is plenty of data. The problem is that global corporate mass media tends to ignore anything it doesn't want to know.
Global corporations just got a massive tax cut. They don't want their media subsidiaries pointing out that most workers incomes have gone down since then. Better to leave the details buried under the increasing wealth of their shareholders.
Centrist liberals are shocked that fake news coming from Breitbart and other alt right sites are convincing people to vote against their own interests, but these sites are really just niche markets in the broader not quite real news problem.
Mass media is owned directly by billionaires or by global conglomerates. The mega rich own controlling shares in these corporations. The boards know what their shareholders want. The CEOs know what their boards want, and the producers and editors know what their CEOs want.
Yes they let the matter determine much of their content. Americans love useless news about celebrities and murdered blonde children. There goes the first ten minutes of the evening news. Next comes.corporate press releases about the new McDonald's breakfast, then who is ahead in the latest poll (not campaign issues),
Real news is ignored.
5
"Figures don't lie, but liars can figure."
3
"After all these years, though, we haven’t solved the problem. Maybe it takes a financial crisis to do so."
We've wasted virtually every crisis we've suffered to date. FDR was the last to create positive change after a crisis. If changes are not made we will get another round of apathy, forgetting, no corrective action and surprise when it repeats. Rinse, repeat...
A brief scan of the comments on your column indicates that a bunch of us would like to see the Times print non-elite economic measurements, e.g. those in your column, on a regular and frequent schedule... on the front page.
4
It is actually simple to measure an economy. The problem is those that like the old traditional measurements on Wall Street and in the Beltway don't want to be measured on these simple metrics.
1) Affordability. What percentage of people can afford something (e.g get a college degree that grants them the same entry level job that in the past only required a high school degree, get a hip replacement surgery, etc...) and maintain or improve their quality of life.
2) Sustainability. Is the lifestyle sustainable for the planet? The American Dream is definitely an unsustainable platform and a recipe for environmental and societal disaster which we are clearly seeing now (in climate change, resource shortages, and out of control costs)
3) Accountability. The Global Financial Meltdown showed and continues to show that the rule of law is different for the 1% than it is for the 99% and representation in our democratic government is also disproportionately misrepresented, so much so that many argue the US is now an Oligarchy and not a Democracy (not that it has ever been a democracy, it is a Republic after all)
4) Mobility. The ease of upward mobility is no longer a reality for even more than prior to the financial crisis, especially when compared to the ease of downward mobility from something as simple as a child born with cancer, a primary breadwinner getting crippled in a car accident, a worker getting a permanent back injury at work and suddenly addicted to opioids.
5
A key factor ignored in the unemployment gains is that people who lost a job paying $30-40 hr are now reemployed in jobs at minimum wages. How are they now better in this economy having lost a home, life savings and other items?
Obviously they are not and neither Obama nor Trump should claim any credits regarding unemployment. Wall Street needs to repay all Americans for what they did.
5
The 2008 liquidity crisis and economic collapse that destroyed a trillion dollars of wealth can be likened to the Great Famine that swept across Europe in the early 14th century. Sudden, unexpected and long-lasting rains destroyed harvests and dams and washed away thousands of watermills. The rains drowned cattle and people and created long-lasting secondary decay that took a century to overcome.
Perhaps we have been more fortunate that the duration of the Great Recession has not undermined our economy; it has rebounded. Yet, millions of us lost personal wealth through greedy financial institutions like Lehman Brothers. Lehman borrowed other people’s money to finance mortgage-backed securities that proved disastrous. Older people – retirees – living on fixed incomes have not had a chance to rebuild their retirement nest eggs and probably won’t regain their earlier financial security. Greed and corruption ruined people’s lives.
1
You mean that our government would use statistics that make government officials look good but do not fairly reflect economic conditions? Shocker!
Don't we always vote for honest people?
2
So Obama was just bragging the other day that this great economy isn't really Trump's economy. Do you mean to tell us that Obama's great economy wasn't so great!
He won't be too happy to hear that.
Ironic that it's under Trump where the left says he have to re-invent the measurements.
1
One immediate adjustment in financial reporting would be to introduce a running, four-year data portrait of GDP, instead of relying so much on short-term quarterly reports. A benefit of this change would be to at least partially remove the political quotient that allows Presidents (of either Party) to claim that their “policies” are the driving factors of economic growth.
1
It depends how you look at the California is the fifth largest economy in the world. It leads even Europe in Utopian Visions of ecology and the way people should live and what they should think. Yet it has the highest poverty rate in the country. Higher than all those backward fly over States and they blame the poor. The left will applaud their greatest when they become number one in the world as the richest and most impoverished in the world.
What happened to the left when they cheer the loss of Americans manufacturing jobs? Say American auto companies should go bankrupt they deserve it for building what people want. When American presidents sit down with CEO'S and then let's more H1-b workers into the country take American jobs. When business won't hire experienced skilled professions after they reach their fifties and sometimes their forties. When they scream racism when you disagree with open boarders. It won't take their jobs away.
No its not the Republicans. It's you.
They and I do use our homes as the base of our net worth but as I age into the big 50 my 401k is surpassing 75% of my homes worth. I have also invested in my home recently. I have hired a local painter to paint a steep stairway I have been putting off for years. He was paid well and I love the way it looks. I also hired a handyman to replace some windows and rebuild a railing. He was paid well and he did a better job than I would.
When I see my personal wealth climbing I feel at ease to tackle other things I have put off. I overhauled the snowblower and replaced the garage door. (love It) The middle class income numbers are above 61,000 and we are all seeing hundreds of job postings for your specific career.
This opinion is an ad hominem attack to help the left at the mid terms. Racist? haha
As everybody knows, we are living in the Obama economy, not the Trump economy. Where we are is all based on Obama's policies, so we should all be happy.
1
you need one more chart: percentage of Americans whose eyes glaze over when confronted by statistics, either due to poor education or Koch-funded 'talking points' ('class warfare', 'socialism') confusing the issue. I'd put the number at 90+%
1
In the article in "The Upshot" on the reason why there was a popular backlash against the owners and managers of the political economy was explained as anger. Yes, we are not going to tolerate being treated like livestock, hired hands and robots any longer, we will take our sovereign human rights as agents of our own lives back from the owners who view our hard work and shopping as their financial resource from which they can sluice excess flows of our capital.
In case you haven't read the article, here are the cliff notes:
“It’s hard to overstate how deeply Americans despised their government’s response to the global financial crisis.”
“The engineers of the response succeeded in their immediate goal, to preserve the financial system.”
“The crisis response may well have been a Rubik’s Cube of political and economic challenges too complicated to solve.”
“Mr. Bernanke said. “I think we all tried our best to explain what we were doing and work with the politics, as difficult as it was.””
“...technocratic policymaking that seeks to tweak and nudge existing institutions toward better outcomes.”
“It turns out, when you throw trillions of dollars at rescuing a system that most people don’t like very much in the first place, the result isn’t relief.
It’s anger.”
4
The BLS publishes every month, at the same time, using the same sampling and methodology six (6) different measures of unemployment (U1-U6).
Specifically, U-6 measures everything that the author claims needs to be measure. It is the media, including this newspaper that chooses to publish U-3 vs U-6.
All of the data is collected and available, including those used to create the data tables in this article. The issue is that the press is largely illiterate when it comes to economics and statistics.
Here is the definition of U-6:
U-6: Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
NOTE: Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job
2
The indefatigable Paul Krugman and the Luxembourg incomes study institute works constantly to show the dimensions of inequality. It is wrong to use the word medieval to describe this maldistribution since the medieval world was more egalitarian than the current parasitic plutocracy.
3
Quick we can't acknowledge the economy is doing well while "the evil doers" repair what the last administration(s) destroyed. Everyone look up, the sky is falling.....
The unemployment index only counts the percentage of folks actively looking for employment. Most folks who want a job can find a job now. Folks that are not working are often not working by choice having decided to stay home, to take care of others, or to retire, to work part time in the gig economy, or those who are disabled. The unemployment statistic most used should reflect the relative availability of folks who are actively want and are looking to find a job. Add in folks who are home by choice for any reason and not actively looking for the job and the category expands into lots of folks who are not in the labor force. Count them in a different unemployment figure but not the headline number just as it is now.
1
@Tony As far as I can tell, many discussions of unemployment assume any person is qualified to do any job in any geographic area. Which is not at all true.
2
I’ve also seen written that there’s another indicator we don’t pay attention to: weekly dollars paid by employers to the IRS in payroll taxes. Wouldn’t that give us a good sense of what’s happening on a timely basis?
2
I remember that when under Obama the economy started to recover, many pundits shouted loud and often about the U6 being the "real" unemployment number.
Which is still over 7 %
Tax cuts have stimulated economic growth, and as such, deficit spending and government debt should be decreasing if the US is experiencing a healthy economy. However, the rate of deficit spending and household / national debt continue increasing. Another economic crisis is being created by current economic policies.
3
Piketty recommends a worldwide wealth tax on the billionaire class since their tax evasion shocks the conscience.
But when whistleblowers like the systems engineer at HSBC Switzerland releases millions of documents on the pervasiveness of tax evasion, it is the whistleblowers who get charged, not the economic criminals of the ruling class.
17
What’s the purpose of an economy? If it is to serve society, then society is best served with comprehensive, honest economic information. If, on the other hand, the purpose of an economy is a neo-liberal one where the economy serves business, then it makes sense to disguise the actual economic performance so society at large doesn’t know what is really going on.
2
The only reason to add a new stable of employment, or income, or wealth (relative) stats is to ensure the decision makers in our Nation are accurately informed of real time economic circumstances so that good decisions about direction for the improvement of economic circumstances for all citizens, to reduce the income inequality we are struggling with currently.
2
Great experiments do sometimes end in failure.
Fortunately for the few, our great societal/governmental/financial experiment is ending in failure “only” for “just” the many others.
I mean really, the upper one tenth of one percent need fewer and fewer “others” to continue their accumulation of wealth. In the near future AI will be used to excess by the few in their greedy pursuit of more, and more, and more, etc.
"These changes may sound technocratic. They are technocratic. But they can still be important." - Why is 'technocratic' considered to be a pejorative term? The alternatives to 'technocratic' strike me as essentially folk religion. So I'm willing to admit to preferring the technocratic approach.
2
There should be a statistic outlining the rate of employment for full time jobs with benefits. Part-time, low paying jobs do not support a basic standard of living if there are few hours and no benefits and falsely inflate the employment rate.
3
As long as we have the daily discomforts and distractions of climate change messing up our heads and major results of our neglecting to confront its challenges: Arctic icesheets raining on the Carolinas and gas explosions in Massachusetts, we will have dishonesty in all quarters. The big lie is that the climate isn’t changing drastically because of human activity. The smaller lies and “miscalculations” follow from the big lie.
2
I ask Mr. Leonhardt to explain why if unemployment is still a major problem in the US as he posits, as reported this week, the US currently has vastly more job openings than it has people to fill those jobs. This is attributable to a skills gap and it's partly attributable to technological advancements and the decline of manufacturing jobs. This is an education and jobs training issue and Mr. Leonhardt ignores it. As for the assertion that only the wealthy own stocks, Mr. Leonhardt should consider how many American workers have a 401(k) or 403(b) account. Any American who does is benefiting from the surge in US stock prices. Yes, those with the largest balances are benefiting the most, as the laws of mathematics require, but they'll also take the hardest hit when the next correction inevitably comes.
Our town has a business that is begging for people to fill full time manufacturing positions. However, there are two problems; It is hard to find people who pass the drug test and those that are hired don’t want to work 40 hours a week, call out all the time and then get let go. These are not immigrants, these are native born American men that are presenting with these issues.
2
Thank you, thank you. Finally, some common sense...
BTW could you do a essay on the fairness of a luxury tax -- such as we once had.... and taxing capital gains at the base rate of the tax payer given the current economic climate??!!
Thank you again.
2
We don’t have the financial crisis. That’s just a symptom of what’s hidden under the surface.
We have witnessed something far more dangerous – the social crisis, the morality crisis, the leadership crisis, the free press crisis, the parental crisis, the educational crisis and the self-control crisis.
The indicators of those crises are the complete lack of trust and confidence in all elected leaders, in our electoral process, in the Supreme Court decisions, in the reporting of our media outlets and their shameful dependence on the global corporations and their advertisement dollars, the colossal national debt and inability to pay for the benefits we expect to receive, the next generations that are brainwashed by the sleazy TV shows, global corporation agenda and the Hollywood moguls, the parents that focus on their professional careers while letting their toddlers and babies being cared for by the complete strangers, the students that know the professional athletes, the celebrities, the tattoos, the body piercing, the dance moves, the social media and the countless selfies much better than the multiplication table, the mathematics and the physics, and the epidemic addiction to the drugs, alcohol, food, gambling, video games and other blue screens...
204
@Kenan Porobic I really don't think there is a moral solution to economic problems. Things like (paid-for) dance lessons and getting tattoos actually contribute to the economy rather than otherwise.
2
@Frances Grimble
The deterioration of social morality is the cause of the economic problems and financial meltdowns, have no doubt about it. By the way, let's balance the federal budgets and see what's going to happen to the jobs you mentioned. During the periods when the budgets were balanced those were just the hobbies meaning if we taxed the citizens to pay for the services they demand a lot of disposable income would disappear as well as the jobs dependent on the excessive borrowing...
@Kenan Porobic. You're describing the long-term effects of the bread and circuses that the cynics who have been working Lewis Powell's infamous blueprint for handing big business and great wealth complete control of the American experiment have been feeding the rest of us for going on 40 years now.
Diversion, distraction, deceit, dishonesty, destruction, and, ultimately, despair.
What I don't get is what kind of a society they expect to flourish and enjoy life in. Certainly not the one their callous greed is creating.
2
Our economic indicators, like our economic policies, are for the benefit of capital, not for labor, not for people.
For months I couldn't understand why people kept saying the economy was soaring - I lost job, home and life savings during the 2007 - 2008 crash and now live on my Social Security - Thank goodness for NPOs like Habitat that are doing all they can to take up the slack that a truly healthy economy would prevent.
Thank you for laying it out so clearly, for helping me feel sane and explain my deep poverty to old friends, for helping me feel both sane and hopeful - Thank you for naming the problem and describing a clear, just and simple solution.
Respectfully, Jenny Justice
4
Inequality is THE issue of our times. Our economic metrics don’t address economic inequality and related issues of disappearing upward mobility, soaring costs of education and an the increasing necessity of working harder and harder just to survive
It is becoming increasingly fashionable to identify ourselves with smaller and smaller tribes and to opt out of larger sources of collective commonality. The new American credo seems to be “we’re all in this separately”. We have lost a sense of collective identity as Americans and with that a sense of collective purpose as a country.
As a society, America will continue to face crisises that test our willingness to care for the least of our brethren. These are defining moments. American selfishness is not the solution. Rather it is our willingness to give selflessly that can deliver us from our current sad state.
2
Missing from this article is any consideration of the “unpaid work” done by the environment. Any measure of progress that does not account for environmental costs and benefits is meaningless, especially as we move deeper into this era of climate change. Check out Kate Raworth’s Doughnut Economics for much more meaningful metrics of “progress.”
2
my college educated kid was laid off from new job in April as the client cut the budget and since then cannot get a new job. Facing large numbers of candidates for each position and there a very slim pickings, so no sure what jobs are being added, bc they are not in the media industry. on top of that my taxes have gone up and we have again cut back discretionary spending. so what economy ???
3
Lest I leave the wrong impression by my earlier comment, I think this and other articles written by NYT staff are visionary and real and true and heartfelt and needed, and worthy and compassionate and brilliant and above all, morally driven by an ethical system that is really our only hope: the people matter than the political economy they live under.
4
These ‘new’ statistics demonstrate what those who love to chatter on about 'wealth creators' don't grasp (or don’t want to acknowledge): wealth is created only by labor. The arguments against this reality suffer from the same fundamental flaws of logic (e.g., “tools create wealth by allowing people to do more work” – this reflects lack of understanding basic physics, since tools are force multipliers, but they do not multiply work) which rely on deceptive, and faulty, ‘common sense.’ No matter how you slice it, people create wealth, and even the most productive person alive cannot possibly do more than a couple times average.
Yet some people end up with immense accumulations of wealth, while the vast majority struggle to get by - how? The rich claim some portion of the wealth created by others as their own – if a million people each sacrifice (willingly or otherwise) a tiny fraction of their own earned wealth, and it all goes to ten people, those ten people will be very wealthy indeed. Most wealth ‘created’ by the very rich is obtained this way, and most people (both ‘haves’ and ‘have-nots’) don’t fully realize it.
As with many aspects of civilization, we accept certain social contracts which account for willingness to play along with some degree of inequity, in exchange for job security and promise of shared public benefits. The current Gilded Age renewal has abandoned those understandings in pursuit of pure greed, and the gibberish used to rationalize it is insulting.
7
The financial elite who own the government could do two simple and obvious things that would quell public resistance to their power. 1 Pass single payer health care. 2 Expand social security.
People want basic security. Everybody wants that. Everybody needs that. Actual work is radically undervalued in our system so there are vast numbers of people who work their entire lives who will end up with less than nothing. Not for being spendthrifts, There is no possible way for that to happen, but for being undervalued. They are eventually going to check the right box for actual political change (grassroots anti-corporatist democrats working to wrest control of the party from the financial elite) and if the change comes in that manner it Will be radical.
18
The country elected a racist reality show TV star who has thrown the country into chaos. No need to read any further because clearly this piece is not about economics but more about left leaning spin as Democrats worry over who will lead their party come November....Leftist socialists who will surely make our economy boom. Not likely.....
3
The Bureau of Labor Statistics regularly publishes a much broader measure of unemployment termed U-6; the official rate is U-3. Briefly, U-6 adds to the official measure of unemployment (1) estimates of discouraged workers; and (2) the number of people working part-time but would prefer to work full-time. The U-6 rate is approximately double the official rate. This helps explain the slow growth of wages. To paraphrase Karl Marx, this is the reserve Army of the underemployed keeping wages from rising.
Note to Dave Leonhardt: There is an army of underemployed graduate students in the numerous universities around NYC that can navigate the BLS website for
2
@Dismal
Yes, as universities hire PhDs from abroad to fill those roles.... and the H2B visas.... (and the idea that citizens from other countries studying in the US should be given green cards -- altho they could marry a US citizen and get one that way....) Diversity is wonderful but it can bite you. (When I can easily have E.U. citizenship and work there or in Australia or China -- then maybe I will consider things to be fair.)
I am sorry but I stopped reading after "The United States elected a racist reality-television star who has thrown the presidency into chaos." This takes credibility from the author and the NYT. Please keep to the subject of the story and try to keep your politics out of it.
2
@Scott It's an opinion piece. That happens to be his opinion of the President.
1
@Scott
Are you denying the president is racist and a reality-tv star?
It is the truth.
2
@Scott: Truth hurts, but Trump IS a racist reality-television star who has thrown the presidency into chaos. And a mendacious conman and a dolt who mockingly imitated a disabled reporter in his audience.
3
Last year, I could buy two organic chicken breasts in our local supermarket to provide a healthy supper for my husband and me for about $4.00. That cost has doubled. I need to spend now about $8.00 on that same item. We are elderly and on a fixed income that does not grow to keep up with rising costs. This is the kind of detail that should be included in any study of our economy.
5
Great idea. We know wages are stagnant, but why? Perhaps better incators would show where income inequality originates and how it grows.
As for unemployment numbers, there are a lot of people working 60 hours per just to get by. A lot of full time jobs don't pay livable wages. Add student loan and credit card debt on top of a low wage job, and one might never escape poverty.
Meanwhile we see in these graphs how nearly all of the GDP gains went to people who were already wealthy. We need to make the economy more supportive of the middle class, of getting people into the middle class and helping them stay there.
4
@Mary M
Wages are stagnant because they can be.
Much of the work formerly done in the USA is now done abroad by English speakers (Filipino and Indian phone banks -- used to be in the USA) or by non English speakers in factories bearing the names of American or International corporations.
Food and clothing are both pretty cheap.
Telephone and computer service less so.
Rent is a big expense... as is maintaining property that one owns and acquiring real estate can also be very costly (or cheap) depending on location.
One could add the power of unions has also been mightily diminished. OTOH what is fair? just? Should everyone be paid almost the same amount? (shockingly Marxist!) Certainly, income from investments are tax advantaged... and maybe they should not be.
BTW if wages go up too much, many more people will be less well off than now. (how much can one afford to pay in one's dotage for home help? a nursing home or assisted living? a babysitter? etc.
Shame on the Times for printing an opinion piece based on 2014 economic data! Six months can produce significant changes in labor data, and we're being presented with data from four years ago. Ridiculous.
If the writer has been following the monthly labor data coming out of the Federal Reserve, he would know that the numbers of long-time unemployed, i.e. those who gave up looking for work, have been steadily decreasing as the quality of job opportunities has steadily increased.
There's even data tracking the numbers of people who are leaving disability status and coming back to the workforce because they can now find jobs that pay more than their disability payments did. This is a significant development and one I've not seen the NYT comment on.
I'm sad to say this piece is just one more bit of drivel published by the Times as part of its relentless effort to divide this country up and persuade people they are worse off than they are, i.e. constant victimization. Doing it with four-year old data is especially galling.
As for the men I'm being asked to feel sorry for, the men who grew disheartened and gave up even looking for a job, I'd like to know how they managed to survive without gainful employment before I shed any tears.
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@DeputyDog
Did you read the qualifier about the four year old data?? share of income flowing and to whom!! not labor numbers which as one comment noted the government changes its methods of counting at various intervals... so the new numbers from the 21st century , e.g. cannot smoothly be compared with numbers say from the 1980s. (A change of some sort I believe took place in the 1990s-- may have something to do with Bill Clinton who liberated Wall Street but that's another story or...)
@DeputyDog
Mechanical Engineering.
I will continue to believe that statistics are meaningless as they can be manipulated for a variety of reasons, politics is one of them. Always cynical but never a fool.
2
This article is just nuts.
To blame Trump, Brexit and everything going on all over the world to what happened because of bad mortgages, fostered primarily by the likes of Vlinton, Cuomo and Frank is just crazy.
3
It is refreshing to have a prominent economic policy journalist not parse words and state the truth that “The United States elected a racist reality-television star who has thrown the presidency into chaos.”
5
Welcome to the age of algorithms on steroids.
On the mark!
An excellent answer to Neil Irwin's 9/12 Upshot piece, The Policymakers Saved the Financial System. And America Never Forgave Them.
This shows why.
3
Successful politicians tell us what we want them to tell us. Sometimes it's the truth - or a reasonable facsimile of it. But
usually not. Pogo, himself a figment of the imagination, was right.
We need MUCH more discussion about GDP also known as Gross Domestic Problem. We should be seeking better indicators of human well-being. A good start would be to use MEDIANS as opposed to MEANS.
How many Americans are aware of the fact that wars, hurricanes, divorce, and pandemics actually make GDP go up? Hurricane Florence will actually raise GDP. Think about that? We need better indicators such as the ISEW (The index of sustainable economic welfare), and GPI (The Genuine Progress Indicator).
I tell a little story about Bees going extinct being good for the economy because it creates jobs, increases GDP, and raises tax revenues. https://geog.ucsb.edu/a-modest-proposal-kill-all-the-bees/
3
Forget that. If you read the stats carefully, we haven’t recovered from the Great Depression. Or the recession of 1982. I don’t care how good the economy is. We haven’t recovered and we need more government bureaucracy to finally fix it.
Gini index is simple and widely used, and has increased linearly since 1965. Once it hits 1 (one guy has all the money) in the late twenty first century everyone will realize what's happening - except they'll be dead.
1
it's probably true that stocks are held by wealthier households than by less affluent ones. after all, money invested is money that is not needed to meet immediate needs. you could call it savings, you could call it a side business or more, but you coud not reasonably call it lunch money. then, of those who could afford to choose to put money into equities, not everyone wants to play the market. and, for the tens of millions living paycheck to paycheck, having the extra money to invest in stocks is not remotely possible.
that said, I've heard that as much as 30% of the money invested in the US stock market comes from foreigners. big chunks are held not by individuals but by institutional investors including hedge funds, pension funds, insurance companies, and the financial sector for its own account.
therefore, even for the more affluent segment , the ups and downs of the stock market is not much of an indicator of anything. at best, it may say something about those at the very topwho recieve part of the income in the form of stock, warrants, options, and the like. iow, not people you're likely to meet standing on line at the grocery store.
4
"So who are you going to believe: Those statistics, or your own eyes?"
When will we trust our own direct objective experience over the dramatic narrative presented by the corporate controlled media and the government we elect but do not control ourselves?
It will only be when the din of the virtual realty dims and we can no longer see the light on our screens that we will revert back to our own recognizance and our own experience. To be clear, it will take hundreds of billions of dollars to counter the current media messaging system, and since it's those in control of the political economy who've got control of all those billions, we'll not ever be able to push back on our own.
Oh, but you say we can choose not to listen. Right, just like a car crash, we can choose not to look. There is not, nor will there ever be, a time when we don't look, listen and float away to the message that we are "to believe in something even if it means sacrificing everything," especially when it's believing that we are to express that solemn ideal by buying more shirts and shoes.
They want us to believe that everything we do matters to ourselves, when it really matters to their accumulation of our excess wealth. And it is the noble ideas of Piketty et. al who seek point out this charade: where does all their wealth come from anyway? I comes from us believing falsehoods about what we're all working and shopping for.
Until we realize this, we'll sacrifice everything.
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I don't agree. The billionaire class owns the major media outlets and can control the message. With ALEC and Citizens United, their corporate lawyers write legislative templates for politicians to introduce as bills and enact as laws...laws written to their favor. They've got the money to corrupt, and corruption has been largely legalized in the U.S. But there's one thing we have that they don't, one thing we have and they need...the numbers. If less than 10% has the wealth, they don't have the numbers to win elections. We, the bottom 90%, could win every election in a landslide. We could insist on criminalizing corruption and create watchdog groups to route it out.
Right now the nation is politically divided because the wealthy want it that way. Divide and conquer. But we can fight back. After all, we've got the numbers.
3
From The Hill, last March. I think this is the missing metric, and would drive appropriate policy infinitely better than GDP. The U.S. has dropped to new lows since Trump's election . . . .
" . . . The United States has dropped four spots in the latest World Happiness Report ranking. The U.S. now holds the 18th spot in the annual ranking, which is published by the Sustainable Development Solutions Network, a United Nations initiative.
The report, released Wednesday, lists 156 countries by their happiness levels. The rankings are based on results from Gallup World Poll surveys. Researchers used factors including income, healthy life expectancy, social support, freedom, trust and generosity to measure happiness.
Finland was ranked No. 1 in the new report, with Norway coming in second and Denmark ranking in third.
The report said that although the United States' income per capita has increased over the past century, "several of the determinants of well-being have been in decline."
"Social support networks in the U.S. have weakened over time," the report said.
"Perceptions of corruption in government and business have risen over time; and confidence in public institutions has waned."
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Thank you! As a part-time instructor in Seattle whose rent has tripled since 1999 (and who didn't receive cost-of-living increases for years as a result of the recession), I implore you to move these sorts of statistics from the Op-Ed page to the Front Page.
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It is about time that The New York Times published an article telling the real truth about the "real economy". No only in this story, but a few others this week. A vast majority of Americans have not seen a recovery. What they have seen are wages not keeping pace with inflation. Dealing with food prices that are about 20% higher than they were 10 years ago. Not get hired because they are 'too old" or "not a good fit". And, fro those who have jobs, they are making less, adjusted for inflation, than they did 10 years ago. If you are a senior, if your money is not in stocks, they you are getting well under 1% on your savings; well below the inflation rate.
The lie, not mentioned here, is inflation ignores food and energy costs out of he "official numbers". The inflation numbers do not measure what do not provide an accurate reading of what Americans really spend money on; the necessities; food, utilities, rent or mortgage, taxes, transport, and clothing. No one buys a car, house,computer, phone, boat or major appliance each month. But, these items dilute the real inflation for necessities. Congress, and Trump, wants to go to chained CPI, to dilute the CPI even more.
The New York Times needs to publish, each month, when unemployment and CPI numbers are released, the real unemployment rate, percent of adults who have jobs, and the real CPI, that more than 90% of Americans live paycheck to paycheck with. It certainly will not painta rosy picture.
18
What is amazing to me is that it took so long to come to the conclusion that GDP should be calculated for various income groups. Just another example of why economics is called the "dismal science." Economics is not so dismal as much as economists are just dim. The data are there; use it, don't abuse it!
1
And real inflation.
In California house prices going up 10% - at least - per year on houses in our area priced in the 800K level (median price!! And this is the "cheaper area" of the SF Bay Area!) That means 80K per year increase Per Year. Every Year. I could not begin to afford to buy the house I bought just 7 years ago and it is just an average 3Bd, 3Bath house on a small lot. I just hope the equity is still there when I sell and move somewhere cheaper on retirement!
1
I propose a simple two-step "2019 Income Equality Bill":
Step 1. Tax Capital Gains at 50%.....rather than the existing, absurdly low rate of 15%.
Step 2. Create income tax brackets that deter obscene incomes and rebuild the middle class:
a. income earned between 0 - 50,000
tax-free
b. income earned between 50,001 - 100,000 10% tax rate (5,000)
c. income earned between 100,001 - 150,000 20% tax rate (10,000)
d. income earned between 150,001 - 250,000 30% tax rate (30,000)
e. income earned between 250,001 - 500,000 45% tax rate (112,500)
f. income earned between 500,001 – 1,000,000 65% tax rate (325,000)
g. income earned between 1,000,001 – 10,000,000 75% tax rate (6,750,000)
h. income earned above 10,000,000 85% tax rate
For example, a household that takes in 250,000 would pay 45,000 in federal income tax. A household that takes in 150,000 would pay 15,000 in federal income tax.
As only 5% of households make over $250,000, the above tax brackets would benefit 95% of households.
I doubt any of our current Republican or Democrat politicians (who both represent Corporations and Billionaire donors) will adopt my simple proposal.
8
@rfmd1 Why would people take a risk investing if capital gains is taxed at 50%? Modern economies are capital intensive. Taxing gains at 50% would hurt basically everyone.
3
The stock market is a gambling business. No one owes those who play in it any consideration regarding their "risk." And, for the record, if you're really concerned about people and their tax status, then labor should be taxed a far lower rates than capital. Hard "work" is worth more than speculation.
1
@John
If you have money to invest, you're doing pretty well for yourself. Let's not forget most of us live paycheck to paycheck and retirement money is a mirage.
The next time a Trump supporter throws the line, "stock market up,unemployment down..." at you, ask them how they've benefited from that.
Odds are, you won't get a straight answer, if you get one, at all; even if you explained it to them like a five-year-old, they still wouldn't get it; they'll dismiss it as "more fake news from the liberal media."
As Mr. T used to say,"pity the fool."
2
I am no economist - I just play one on the message boards.
Personally, I think the real number that people should look at (that truly cuts to the heart of the matter) is the percentage (relative to income) that businesses/corporations are subsidized for their profits - or how much their workers are (on top of their salary) receiving social payments and the like ( like food stamps - snap )
THAT is the real number to look at it.
If (say 30%) of the working population is gainfully employed and working full time (let alone 2 or 3 jobs), YET they are still on social payments, (even though they are contributing to the massive output of GDP and lowering the unemployment rate), then that is wrong and needs to be addressed,
How can we address it ? Well, the simple answer is to raise the minimum wage to a living one. ($22hr minimum)
The other change in attitude, is that the tax breaks (in particular for the large box store/online behemoths) needs to be stopped, every time they want to expand, or even move BECAUSE they are not getting enough tax breaks. This is a ridiculous scenario.
States and communities need to stop competing with one another to poach those businesses by offering little or no taxes. The community ultimately needs a bail out (from you the taxpayer) in the end. Even more ridiculous.
Rant off.
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@FunkyIrishman Yes!!!!
Egad! Oh, the shame. Dare I trot out a worn, trite, weather-beaten cliche pertaining to government statistics: Fake news (and it didn't just start during the last presidential election cycle). And here we are...
Mr Leonhardt's well-focused admonitions against current misleading statics were espoused beautifully some two centuries ago in Dickens's "Hard Times", where the young itinerant, Cissy Jupe, having been 'rescued' to a rigid educational establishment, confesses to her friend Louisa how ignorant she shows herself to be.
Cissy reports that her teacher, Mr M'Choakumchild, quizzed her about National Prosperity, "And he said, Now this schoolroom is a Nation. And in this nation there are fifty millions of money. Isn't this a prosperous nation? Girl number twenty, isn't this a prosperous nation, and a'n't you in a thriving state?....
"I said I didn't know. I thought I couldn't know whether it was a prosperous nation or not, and whether I was in a thriving state or not, unless I knew who had got the money and whether any of it was mine. But that had nothing to do with it. It was not in the figures at all."
3
Businesses are going under wherever you look. I guess that aren’t special friends of the conman....
Look at shadow stats website; it represents reality.
This is the kind of intelligent, well-researched and insightful journalism that makes the NYT subscription worthwhile. A bill to provide economic data similar to the Piketty-Saez-Zucman work sounds like a good way to provide the American public with a more honest and useful perspective on the American economy. Kudos to David Leonhardt for this excellent article.
2
You lost me at the percentage of men not in the labor force. This is an inherently sexist way to view these data. It undermines your entire point, presumably about egalitarianism, to embed so many sexist assumptions marginalizing women's work in your argument.
1
Excellent article.
This is about class warfare, plain and simple – same as it’s always been. From the founding of the Republic, the challenge of the elites has always been about how to keep the greatest portion of the wealth – produced by the blood and sweat of average citizens – to themselves, and to keep those average citizens from recognizing that they are being bamboozled so that they don’t revolt.
One consistent elite strategy is smoke and mirrors i.e. controlling the language and the flow of information such as the interpretation of the economy. Similarly, they framed capitalism as an inviolable “naturally occurring phenomenon” – a rational self-regulating force that works best if left to its own devices. Yet another is for capitalism defy that very claim by insulating itself (”We’re too big to be allowed to fail”) from the forces of the market.
A favorite strategy: gross distortion and lies. Trump: “We've accomplished an economic turnaround of historic proportions.” Controlling the language and the flow of information is SOP for oligarchies and tyrannies. Cherry-pick information. Repeat lies until they become truths. Knowledge is a dangerous thing; keep the masses ignorant. Employ demagoguery. Keep economics an esoteric cult, best left to the “experts.”
But economic interpretation is much too important to be left to the experts who are often blinded by self-interest and ideology. A better barometer is the real experts who currently “aren’t feeling it.”
2
This type of information could open the eyes of those that are benefiting in this economy and at their jobs, which are typically not in rural America, and don't fully recognize how it is playing out truly in our economy. It's not all at the top of this pyramid of wealth don't care about others, maybe they just never hear or see the true picture, understandable data and assumptions matter. I hope to see the NYT continue this level of visibility, leading by example might inspire people and other news org. to rise up. carry on
1
The Promise America Alliance I chair is now working with the University of Virginia’s Dept of Engineering Systems and Environment to develop an indicator of America’s national condition using the Constitution’s Preamble (“We the People...”) as the standard baseline of our human well being. I am sending you a copy of our primary text that is now available on Amazon for your review and comment: “A Higher Purpose: The Moral Equivalent of War”. Thank you. Dick Cheshire
If you google Richard S. Fuld Jr. (pictured), you'll see estimates of his net worth that range between $100 million and $250 million. Whatever the correct number, he is surely a decamillionaire, if not a centimillionaire, having admitted in Congressional hearings after the collapse of Lehman brothers to having been paid over $300 million by Lehman between 2000 and 2008 alone.
Put another way, Dick Fuld, sometimes described as the worst CEO in American history, and widely credited as one of the principal human beings responsible for the financial crisis (the implosion of his firm being the immediate cause of the near failure of the global financial system in September of 2008), is currently worth between 1,897 times and 4,744 times as much as the average American family. This is what catastrophic failure looks like for the 0.001%: being worth merely thousands of times as much as your fellow citizens.
Fuld's contemporaries, like Jamie Dimon and Lloyd Blankfein, are both worth in excess of $1 billion (more than 18,975 times the average family), and the real big boys in this country, like Jeff Bezos, are worth millions of times the average family (more than 3 million for Bezos).
Fix everything else, and this will still poison the republic. Fix economic measures, sure, great. But what it will tell you most urgently is that we need massive wealth redistribution in this country, and fast, or our fall will beggar Rome's.
4
Welcome to the new Gilded Age. What shall we call it? The Titanium Age?
Good column, but also, of course. We always need to develop better statistical tools.
But there are various underused statistical measures out there now, such as the GINI index.
Why isn’t the Times using them more systematically in its economic/business reporting?
A good place to start considering how to improve how we measure and monitor economies is to learn what money represents and what it does not.
Money is not wealth. Money is a means of trading actual wealth without actually trading it. To illustrate what this means it's useful to consider how in the early 1800's trade of goods like lumber and other commodities produced in the frontier was stalled by the lack of legal money. The commodities were real wealth but money was needed to trade them.
Making money is often mistaken for creating new wealth. It's not.
1
When you hear of one who is laid off from a job that was deemed "obsolete" because it now can be done online there is another job lost. Not to a robot, so to speak, but to the ability of the internet to take the place of one-on-one instruction.
Add to the job loss the age of this unfortunate person, (63), and over two years of applying, interviews, etc., no job. Age discrimination does exist. There are many who have productive years ahead, who are educated, willing, but once their age is deduced, they are no longer in the running.
3
Don't give up and be willing to search outside your field. Network where you can. Something will come your way.
Any measure of economic activity to gauge quality of life will be deemed deficient. That is the nature of the beast when one uses math to define quality of life. Moreover, politicians are always looking to exploit the use of numerics that might work suitably to project their point of view. Such is human nature.
Instead, and perhaps, we can start using a basket of measures that contain things such as high school graduation rates, crime rates, college graduation rates, health care coverage, life span rates, etc. to capture a sense of overall goodness ? After all these are things, and there are likely more, that lead to fruitful economic activity and to an improvement in the quality of life ! It is worth a shout to use the causal factors to define a metric ?
3
Government tracking and publication of distributional GDP, labor participation, etc., would be great. But it is not just "habit comes before accuracy" that explains why we do not have these things front and center in every government report on the economy.
We do not have these things front and center because the one percenters who own the vast majority of financial assets also own the politicians.
Government focus on what really matters to the quality of life of the rest of us would require, at a minimum, the overturning of the Citizens United decision, strict campaign finance limits that do not allow "corporate persons," including PACs, to make any campaign contributions, Electoral College reform, and an end to gerrymandering. Then we might finally achieve one person, one vote, each vote of equal value.
Our present rate of progress toward fairness is not just zero, however, it's negative. And the regression away from fairness is accelerating.
1
Thank you, Mr. Leonhardt. Many of us have waited 10 years to read an article such as this.
There's nothing quite so despondent as working your whole life only at the end of it to not have much to show for it, and not being able to find work, or being able to do work that will oblige a lifetime of injuries sustained whilst in work, through no fault on your own part.
There are hundreds of thousands of older men closed off from the world in this country due entirely to 2008. They have no work, no chance of work, no money, no future. You can see them everywhere in the grocery stores - often the only place you will see them apart from the library or the history section of used book stores. They retreat to their homes, if they're lucky to have one, and spend their time reading. In that, they are probably the most read, most educated men around. Ironic isn't it. Though many of them are unable any longer to communicate with the world that has sprung up around them. Where they cannot any longer just tell it like it is without other people taking offense to everything they say; because it wan't said right, perhaps was a bit course, with too much feeling, maybe, and not in some boring subservient monotone. (Just witnessed that this morning - in the book store.)
2
@James Devlin And what about older women?
You lost me when you called our president racist. Was a good article before that though.
1
Economic metrics do not measure loss of resources or loss of quality land, air, and living space. They measure economic growth but not the cost of growth we have to pay for public health, security, and services. Furthermore, the raging fires, floods, hurricanes, etc that many now experience is going to cost, in terms of personal well being, loss of productive time, and cost to restore one's lost assets. How are these losses accounted for, along with rising costs for clean water, air, and land, and for their sustained production?
Mr. Leonhardt has zeroed in on the most important political issue of our time, economic inequality. It bears on every vote in the Congress.
That economists have begun to track economic metrics at the various income strata is key to understanding the reality of our society's economic condition. GDP01 and GDP99 differ widely.
3
Alan Greenspan called for more money for the better collection of economic statistics. Naturally Republicans have opposed such funds.
2
The statistics have trouble factoring in trends like more dual earning households allowing men not to work, and one percenters receiving most of the gains. Surely the recent tax changes will exacerbate the trend.
Perhaps a serious of graphs focused on different pools of people would better explain the changes?
1
At the Aspen Ideas Conference of 2013 Chrystia Freeland a noted economics journalist talked about 120% of the recovery from the crash of 2008 going to the top. Her book on the topic was called Plutocrats : The Rise of the Global Super Rich and the Fall of Everyone Else.
https://www.youtube.com/watch?v=S9LIVa3WVPo
On May 23,2013 she joined Paul Krugman and the Late Tony Atkinson the foremost expert on inequality and Piketty's mentor in a conversation titled Inequality and Economic Growth at CUNY.
https://www.youtube.com/watch?v=zAFCaDS4a6Q&t=638s
In his initial comments Dr Krugman gives his interpretation of what middle class is.
1
Really useful exploration. Many of the measures we talk about puzzle me. For example - the number of housing starts. Why is this an important number in assessing the health of the economy? And, more broadly, endless growth can't be sustainable. What about a set of measures that reflect a sustainable economy that support it's people well-being?
2
I think the notion of people who would like to work but have given up looking for a job needs to be better explained when there are so many unfilled jobs right now. Also, do those people include individuals lacking the basic job skills of showing up and putting in a day's hard work consistently? On the flip side there should be a statistic that differentiates employment that provides a living wage from employment that doesn't.
2
Thank you, Mr. Leonhardt. Many of us have waited 10 years to read an article such as this.
There's nothing quite so despondent as working your whole life only at the end of it to not having much to show for it, and not being able to find work, or being able to do work, that will oblige a lifetime of injuries sustained whilst in work.
There are hundreds of thousands of older men closed off from the world in this country due entirely to 2008. They have no work, no chance of work, no money, no future. You can see them everywhere in the grocery stores - often the only place you will see them. They retreat to their homes, if they're lucky to have one, and spend their time reading. In that, they are probably the most read, most educated men around. Ironic isn't it.
1
@James Devlin
The worst time for men to be out of the labor force was ''achieved'' by the Obama administration, purely by intention. As he loved to be heard saying, ''Those jobs aren't comuing back!''
Even though they are, Barack.
Exactly right!
I am educated in the physical sciences and somewhat smart and it took me YEARS to figure out that the Dow and the GDP do not reflect the reality of the 99%. For years I just thought I must be doing something wrong.
I don't know if setting up this conundrum was deliberate or accidental. I don't care. What I do know is that it takes someone as educated in economics as Paul Krugman to quickly understand the discrepancy.
Let's not wait for the government to catch up. Let's encourage the Times and others to devise and publish statistics that are meaningful to submillionaires.
3
The point is well taken, statistical measures can be misleading even when they accurately measure what they say they do.
2
The part about discouraged workers was a favorite line of attack to discredit the recovery when Obama was in office and it is misleading. The numbers showing how many people actually want a job, or want a full time job, are published right alongside the standard numbers. It's called the U6 unemployment rate, and it isn't that much different now than it was in 2000.
To the author's point, the U6 is a much better measure of actual unemployment/underemployment, especially now that part time employment has become such a widespread economic phenomenon
2
No set of statistics will tell the whole story about the health of the economy unless we have one that accounts for the immense costs we will eventually have to pay to deal with the catastrophic effects of climate change. Until we do that we're basically giving a patient with stage 4 cancer a glowing health report.
2
The remaining structural ills of the economy are due to factors that pre-date Trump by many years. David focuses primarily on income inequality, which is a trend that manifested decades ago as the delicate balance between rational incentives to drive innovation and corporate responsibility to employees and society generally became excessively weighted on the side of what B-school dons already had been teaching for a long time – basically that competitive deconstruction is good in an unalloyed sense, and that the race to the bottom in sourcing and compensating labor globally is healthy and indeed desirable so long as it improves the quarter-over-quarter P&Ls of businesses, and regardless of the destructive effects on our own communities.
We’re not going to fix that failing of corporate approach overnight: we lack the legal infrastructure to do it, and even a working consensus as yet that it’s necessary. In the meantime, according to the NYT, working-class and middle-class wages are rising with general improvement in this Trump economy and inequality is beginning to diminish. This was predicted as the economy became super-charged and corporations needed to start competing for bodies and skills in a tight labor market in order to address and exploit economic growth – a classically Republican assumption, which is bearing out as I’ve long predicted in this forum. So long as the economy continues to grow, keeping the labor market tight, this trend should accelerate.
…
1
…
However, the divergence between the actual news, which even the Times reports, and the punditry remains intense for two reasons, one strategic and one tactical. The first is a fundamental strategic difference in the proper role of government with regard to micro-managing the economy between Republicans and Democrats. Republicans want to keep the hand of government as light as practicable, in order to minimize its intrusiveness and maximize the liberty that corporations have to seek better ways and individuals to live freer lives. The second, tactical reason is that we have an election coming up, Democrats want to flip the House and any argument that seeks to demonize Republicans, to them, is a valid argument despite lacking any kind of rational context.
But the fact that things are palpably improving with regard to inequality under Republicans when they did not under Democrats is a strong argument for keeping Republicans in charge: Democratic approaches are neither organic nor sustainable; and those of Republicans are. As is so plainly clear.
@Richard Luettgen
"So long as the economy continues to grow, keeping the labor market tight, this trend should accelerate."
....right up until the time it implodes (again) because of continued malfeasance on the part of the corporations who, as you point out, feel no sense of commitment to bettering their communities or the lives of the middle and working class.
Rinse, repeat.
1
Do you mean the republicans who want Americans to live freer lives without health care and with polluted water and air? Or the republicans who want people to be free to engage in corrosive lobbying? , or the republicans who want the freedom to have children in this country treated as inmates?, or the republicans who want the freedom to buy weapons to freely walk into a school or check into a hotel room and murder people? Or the republicans who label nazis as fine people? Or the republicans who want freedom except when it comes to who you can marry or whether to have a child conceived from rape? Which of those are you referring to?
1
Breaking economic data down by say, quintiles (bottom 20% through top 20%) would be useful. I would also like to see economic statistics broken down by age more often. It's not only a difference of rich vs. poor households. Unemployment tends to be greatest among those under 25 and over 50, for example. Those who were just beginning their careers when the recession hit in 2008 took a harder, more enduring hit than many of us Gen Xers and Boomers who were already well established, at least if we didn't buy our homes at the peak of the market. The costs of health care and education tend to vary by age group.
3
There is a panel discussion on this very topic at CUNY in May of 2013.
The discussion features
Paul Krugman
The late Tony Atkinson the foremost authority on Inequality and mentor to Piketty
Chrystia Freeland who had just released her book Plutocrats The Rise of the New Global Super Rich and the Fall of Everyone Else.
It is one and half hours of informed discussion by three people who love and respect each other and backs up this op-ed
It is time to take a break from the MSM and listen to experts.
I must admit that as a Canadian our Minister of Foreign Affairs and our head of NAFTA negotiations brought me to this discussion but it gave me a new appreciation of Dr Krugman and Professor Atkinson and his followers gave me some hope that we may escape the leadership of know nothings.
https://www.youtube.com/watch?v=zAFCaDS4a6Q&t=2383s
2
These are the early throes of the transition to a guaranteed-income economy in which no one works unless they enjoy it. It would be nice to come back in 200 years to see how it will have been put into place.
1
I wish you were right but human history suggests a oppressive tiny militarized elite ruling over huge numbers of slaves/ serfs.
1
Measure job numbers AND job quality over time period; include costs of living and inflation; also, there are regional variabilities. There also needs to be an "unpaid labor" category for caregivers of both children, aged relatives, and chronically disabled adults. Right now there are children who are care givers to their chronically ill parents.
1
The United States needs a 'Financial Well Being Index.' This index would measure the overall financial positioning of our citizens. It would include health insurance, emergency cash, retirement savings, income, life and Long Term Care insurance, savings rate, debt, and net worth. In tandem would be a 'National Happiness Index.' These two indexes would be far more meaningful - and useful - than GDP and the Unemployment Rate.
I agree that almost everything today favors the top of the pyramid - including everything supposedly populist Trump has done. Do we really want to go down the road of the French Revolution? We're on our way. As a Californian, I hope for equilibration here. This is a thrive or survive (barely) state - with most people struggling to pay their bills. Meanwhile, the Land Rovers cruise on by. The local Billionaires do little to help - almost nothing compared to their net worth. 'More for Me' is the self centered paradigm. Trickle Up...
7
Great comment, agree completely!
Leonhardt is right that new measures of welfare should be added to our national information menu. Income maldistribution qualifies. Other measures should include realistic measures of welfare among those in "poverty," as poverty is a moving target. My guess, but only a guess, is that the great majority of those in poverty, as currently defined, have cable, color TV, and cell phones; also, owing to government programs, family nutrition is probably better, or at least more achievable. By these measures those in poverty are better off than their counterparts of 20 years ago. But this reinforces Leonhardt's basic point: statistical economic information should be more plentiful and more relevant. Also, to the extent possible, it should be objective. We should not juggle the numbers to prove a preconceived prejudice.
1
Food stamps or SNAP supply $1.30 per meal per person- I doubt that the nutritional status of the poor is good. They also cannot afford healthcare, childcare or a decent education. A lot of them live on less than$2.00 a day.
Try feeding yourself on $1.30 a meal. It is called the SNAP challenge- I am a old fashion cook making simple foods from scratch and it is real hard to do.
A minimum wage worker can only afford a one bedroom apartment in 20 counties in the US and no 2 bedrooms anywhere.
Do not glamorize the life of the poor- many work very hard at work too.
1
@Don Frankenfeld
"By these measures those in poverty are better off than their counterparts of 20 years ago"
Not sure I get your point.
I could replace "those in poverty" by "the top 10%" and the statement would still be true.
How good are the jobs ?
More obscure data => Labour Participation rate
The labour participation rate, the fraction of adults that chose to work, is about as good a measure that economists have to measure the attractiveness of jobs available. In developed nations the labour participation rate tends to be high when the jobs available are good, low when not
Country Labour Participation rate
US 73.3%
Denmark 78.8%
Netherlands 79.7%
New Zealand 80.9 %
Sweden 82.9%
Switzerland 84.%
Iceland 88.3%
=================
Labour force participation rate15-64 year-olds, % in same age group, 2017 or latest available Source: Labour Market Statistics: Labour force statistics by sex and age: indicators
4
@Woof
There seems to be some disagreement over the Labor Force Participation Rate.
This says it's 62.7%:
https://tradingeconomics.com/united-states/labor-force-participation-rate
1
The "men not working" stat is mostly men who either 1) can't pass drug tests or simply are not mentally capable of holding a job anymore (if they ever could), or 2) aged out of consideration -anyone over 50 knows all about being perfectly qualified for a position but never even getting a response to a resume; or 3) have a criminal record (often minor) that our system will not allow to be expunged after a certain time, making them essentially blacklisted.
1
The biggest mistake the left establishment made from 2014 on, was to drop the long-term unemployed from long-term unemployment rolls and for the left media to stop talking about the plight of the former middle class and long-term unemployed, highlighting the job gains but not focusing on how badly people were and are still doing.
We still see op-eds propping the Obama economy, without properly describing the condition of a third of the nation and attributing blame for it to Republicans. This refusal to acknowledge that aspect of the continuing Great Recession is what cost Democrats the 2016 election. People wanted change out of the misery they'd been in for 8 years. Acknowledging their existence and promising more than more of the same would have gone a long way.
We're still there. Democrats still don't have an economic message.
---
My Notes on Paul Krugman's ‘Capitalism, Socialism, and Unfreedom’
https://wp.me/p2KJ3H-345
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@Rima Regas
Well written article on the link.
2
The collected, displayed, and broadcast statistics will only change when the change is in the interest of the long-term ruling party. That party has been the Republicans for most of the last 60 years. I doubt that the needed change will happen anytime soon.
2
When the GDP was introduced, the U.S. was the greatest industrial producer and mass market in history. The global economy was greatly affected by it but it had little effect upon it. This meant that a lot of important factors were so locked in with everything else that they did not need to be addressed separately. Nearly all the wealth and investments were within the domestic economy. If most people were unable to buy more goods and services, investors and lenders had little opportunity to make money elsewhere. The GDP reflected the economy for everyone. Now we operate in a global economy and the GDP does not address it. The need to address many more factors in the GDP is now necessary.
2
Why is 2007 the yardstick by which to judge? Why not in the 1990s when I was making six figures and helping children with their college expenses and fairly free from major debt? Of course ageism really hadn't assumed the its currently enshrined place in business models. And I'm not the only one bypassed by new ways of doing things.
Have social programs grown 90% since 2007? Of course not, we (America) can't afford that say the republicans. Has medical care covered more Americans? Yes, but there seem to be so many states that think it was wrong and a "booming economy" needs to be prevented from sharing the boom. They desire to remove the good that ACA has done so that more of the economy's fruits can be distributed to the people who deserve them.
What is obvious is that citizens who don'y already have wealth, only in the majority of cases their mortgaged home, can forget about ever having it. That's not the way to make America great again.
2
Shame the author had to try to make it partisan where it actually isn’t. But, that’s the New York Times these days. Still, once you get past the racist Trump comment and a brief review of the conservative trend in Europe, you will find a meaty read on what is wrong with America and it’s truly a non-partisan issue that only the Occupy movement seemed to be effective at publicizing.
2
A thoughtful article that demeans itself with a gratuitous comment that Trump is "racist".
3
@wnhoke
I found it relevant, not gratuitous.
He *is* racist. He actively worked to prevent black folk from renting apartments in his buildings. He was sued for this and lost the suit. He. Is. A. Racist.
Does the official unemployment rate still count only “men not working,” as your figure indicates? If so, then it is even more skewed by ignoring the female half of the workforce. If not, then NYT why is it labeled so? Either way, Mr. Leonhardt significantly weakens his argument by appearing not to consider as well the often dual pressures of job and child/elder care put on women.
I believe the "unemployment rate" measures the number of persons registered for unemployment benefits, who as a corollary are looking for work. This is an easily ascertainable number, so it's not going to disappear.
Once persons have exhausted the unemployment benefits -- 6 months these days? 9 months? -- they are by definition no longer "unemployed". Makes sense?
News sources would do a public service by mentioning these facts, or whatever the actual definition of unemployment is, when they quote the official unemployment statistic.
How would you write this article as factual reporting rather than opinion? Simply remove any recommendations? The NYT as our journal of record should report these figures on their business page regularly.
2
Does Ron Paul know?
More doom and gloom from the NYT.
1
We have never recovered from the crash of 2008. We continue to struggle as prices rise, taxes rise, and our children need help because they can't make enough money to pay their bills.
So, for all of you out there sitting in fat city, I want to know how you got back to where we USED TO BE. I do not believe we can ever recover unless the piggy-ness of the few who hold all the wealth changes. We are living in "serf-dom". We now have "lords" who rule over us, screw up our politics, our lives, our liberty all so they can continue to become richer, fatter and piggier. When only a few have it all there is nothing left for the rest. SHARE. We learned about sharing in kindergarten.
May I suggest a song for you all:
Rosenshontz: SHARE IT
There are lies, there are damn lies and there are statistics. Lionhardt's article is correct. it tells the truth.The bottom 90% of the population have been left behind by the Republicans and the plutocrats, who control the flow of money back to themselves and then keep it away from the 90% of the population.
If this doesn't predict the fall of democracy and the rise of plutocracy, I don't know what would. Unfortunately many workers continually vote against their own interests. Such as when they buy into right-to-work where unions were destroyed and oligarchs prevailed, bringing about the greatest ever income inequality. The Republicans and their donors have bought out outr democracy with their money, which now flows through Citizens United to control elections.
With the true statistics shown in this article, the United States is no longer a democracy, but is a plutocracy where life, liberty and the pursuit of happiness if limited to the top 10% of the population. This can't continue without a social and economic revolution. But the plutocrats won't realize it until it's too late.
2
The Internet provides a platform to build coalitions. It has been used by propagandists, to cobble together old divisive factions: racists, nationalist, bigots, in the same way pillars of community can watch smut with relative anonymity. Part of this 'right wing revolution' is just the idea that minority factions of all kinds, from LGTBQCA people, to slivers of Nazi factionalism in Chimnitz,can come out into the open. The same thing that is beautiful and wonderful for representative citizenship, is also seeing old bruises the culture has been trying to get over. No livable wage in the US is far more hurtful than in Germany, where comprehensive social programs have been in place for more than a generation. People will die from ACA cutbacks. People have died from no Medicaid expansion. Those that can afford retirement through their investments, they are the loudest voice in Congress.
1
Why should the NYTimes wait for the government to change their reporting?
Can you be forward thinking and start your own reporting?
Do you fear being like Nike or Ronan Farrow?
The NYTimes is an influencer that can change our country for the better - what are you waiting for?
2
Often the problem isn't the statistics collected - the problem is the press which continues to highlight the wrong ones.
Statistics currently collected address the issues listed in the article - economists have known about them for years, and they've developed good alternatives. Often all it takes is for a reporter to look down the list of stats on the same page far enough to get to a better number. The reason the older stats is collected is to provide academics consistent (if imperfect) measures over time.
But the press needs to report better numbers. They have on occasion improved - a while back they transitioned to reporting GDP (Gross Domestic Product) instead of GNP (Gross National Product).
We have the science, the technology, the public institutions, the money, the quantitative systems of measuring, recording, and analyzing that can be used to account for everything related to our social activities including the economy and how all that we are taking from and disposing into the Earth and the biosphere are balancing out. It’s just that we choose not to bother.
Why we don’t pay attention to how we are interacting with the world and how we acquire and use resources, energy, and wealth in a holistic way is the question to be asked. It is the reason that Republicans can deny climate change aggravated by human activity even as the effects are already killing people and destroying property, more and more every decade. But what can you do when so many people prefer the cosmology of ancient Babylon recorded in the Old Testament to the revelations of modern science.
Nice work David. "Inflation" is another mis-statistic. Let's "adjust" everything that families spend most of their money on (food, housing, medicine) and then come up with a number that makes them think they have more money than they really do. Connect this op-ed with Irwin's NYT "The Policymakers Saved the Financial System." and you start to get a picture of just how disconnected the economic strata are in the USA. That, of course, leads to the political upheavals with nationalist vs socialist agendas; combined with political corruption based on undo influence from the "0.1%ers". Is our democracy at risk?.....of course it is.
1
The only people who believe things have improved are the uninformed or delusional. The cities are filled with homeless, the banks own everything including our houses and cars, even the futures of our youth. Generational loss of basic education, social services and the decline of the common persons welfare is the trend. Drug addiction, obesity, poisonous fast food are a few of the realities of modern America. These numbers show the mechanics of capitalism and confuse the machine which is owned by the masters of finance, for the condition of the people who are profoundly suffering. Civil society requires leadership and enlightened management. When children are shot in schools and the answer put forth is to arm teachers, you know you are in the land of the profoundly bankrupt.
Credit card debt should be one of the top indicators. Forget tariffs. If you mandated credit card rates at seven percent you’d have more buying power. Make the credit rate for American made products lower as a bonus. If the economy is doing this well then why are those plastic rates so high?
I’m willing to bet....as long as I can use my Visa.....that many people are living on those cards.
1
You would simply have a lot of people that no longer have credit cards.
On the whole this is an excellent essay. Leonhart says,
"It’s worth remembering that the current indicators are not a naturally occurring phenomenon. They are political creations, with the flaws, limitations and choices that politics usually involves."
This is correct. In fact, inflation has also been fudged. In 1996, the Boskin Commission redefined the CPI taking into account the improved quality of i-phones and computers and allowing for a greater range of substitution. The Commission admitted that an advantage of the new CPI was that its values were about 1% lower than the old CPI, and said this would "save" social security.
As far as GDP goes, a couple gets a divorce and spends tens or hundreds of thousands of dollars on lawyers. This adds to GDP whether the participants are better off or not in the end.
Perhaps most glaring is the failure to include population growth as a key macroeconomic concern. Thus GDP per capita is in some ways a better measure than GDP.
We are not one America but a hundred different Americas. Many people have to contrast rosy GDP figures with their own lowering living standards. They they begin to doubt the writings of economists or of pundits who extol such figures in the NY Times.
Leonhardt slips a bit when he calls Trump a racist. More accurate would be that he "uses inflammatory language when describing illegal immigration."
Name-calling and partisan reporting reduces the believability of the NY Times.
1
That Picketty-Saez-Zucman graph near the end of the article in a great visual display of reality for the working population. It shows very clearly that the GDP GROWTH is all going TO THE TOP 10% and is NOT TRICKLING DOWN to the majority of the people in the country. Please, NYT, continue to display this graph.
2
This is a massively long overdue revelation of the truth. Over the last 30 years the number of under employed people who have been forced into Part Time (Full Time) minimum wage jobs have surged to the point that many have dispaired and given up even hoping for meaningful employment any more. The stinking official statistics are a joke; who reflect only those who are becoming wealthy while the vast majority are hanging on by their fingernails. The gap has been studied, watched, and diagnosed AD NAUSEUM! The simple fact is the working people of North America (I include Canada here) have been betrayed by the politicians who are controlled by Wall Street; and have abandoned Main Street. Everyone knows it; but because fools keep voting for the Oligarch class it only gets worse. IF enough people come to their senses and stop listening to the ALT-RIGHT / Trump lies on Nov.6; maybe we can turn this insane rigged system around. MAYBE?!
2
I am no economist - I just play one on the message boards.
Personally, I think the real number that people should look at (that truly cuts to the heart of the matter) is the percentage (relative to income) that businesses/corporations are subsidized for their profits - or how much their workers are (on top of their salary) receiving social payments and the like ( like food stamps - snap )
THAT is the real number to look at it.
If (say 30%) of the working population is gainfully employed and working full time (let alone 2 or 3 jobs), YET they are still on social payments, (even though they are contributing to the massive output of GDP and lowering the unemployment rate), then that is wrong and needs to be addressed,
How can we address it ? Well, the simple answer is to raise the minimum wage to a living one. ($22hr minimum)
The other change in attitude, is that the tax breaks (in particular for the large box store/online behemoths) needs to be stopped, every time they want to expand, or even move BECAUSE they are not getting enough tax breaks. This is a ridiculous scenario.
States and communities need to stop competing with one another to poach those businesses by offering little or no taxes. The community ultimately needs a bail out (from you the taxpayer) in the end. Even more ridiculous.
Rant off.
4
Social payments reflect poor choices, a lack of self-discipline and an entitlement mentality among the general workforce, not any failure on the part of employers. If I decide to live a life that is beyond what my job pays (be it extravagance or procreation) then I am irresponsible. I am immature. I am undisciplined. Neither my employer nor the taxpayer owes me a college education, a comfortable home, a vacation, a spouse or children, a reliable car or health insurance.
1
I am no economist - I just play one on the message boards.
Personally, I think the real number that people should look at (that truly cuts to the heart of the matter) is the percentage (relative to income) that businesses/corporations are subsidized for their profits - or how much their workers are (on top of their salary) receiving social payments and the like ( like food stamps - snap )
THAT is the real number to look at it.
If (say 30%) of the working population is gainfully employed and working full time (let alone 2 or 3 jobs), YET they are still on social payments, (even though they are contributing to the massive output of GDP and lowering the unemployment rate), then that is wrong and needs to be addressed,
How can we address it ? Well, the simple answer is to raise the minimum wage to a living one. ($22hr minimum)
The other change in attitude, is that the tax breaks (in particular for the large box store/online behemoths) needs to be stopped, every time they want to expand, or even move BECAUSE they are not getting enough tax breaks. This is a ridiculous scenario.
States and communities need to stop competing with one another to poach those businesses by offering little or no taxes. The community ultimately needs a bail out (from you the taxpayer) in the end. Even more ridiculous.
Rant off.
1
Robert F. Kennedy liked to say during his 1968 presidential campaign that G.D.P. measured everything “except that which makes life worthwhile.”--Priceless--how about measuring environmental impact, Time has come for statistical correlation of damage to environment. The bottom can fall out in more ways than one and with environment--game is over......
From my perspective as someone who until fairly recently has lived outside the US, I think it's a matter of people not being brainwashed by Trump's hyperbolic exclamations about the economy, but instead to simply ask themselves, "are you better off than you were 10 years ago?"
Let's face it. Most of us are not financially better off, nor are we secure. A major illness will destroy us. Even a chronic illness can cost amazing amounts of money. We have, for at least one generation, stopped saving money and have opted to focus on our ability to borrow it as a measure of our financial health - one of the biggest dirty tricks in capitalism.
We live on the brink of financial disaster. Losing a job would send many of us into homelessness, and it's unlikely that we'd find another job that pays the same salary and benefits - jobs abound, but many are part-time, contractual, or temporary. In a society where labor unions are disappearing, Americans have few protections from arbitrary filings, loss of benefits and retirement pensions.
We are not taking care of each other. We are taking care of the bosses and the corporations. This is not a recovery.
1
And why don't our cumulative national debt and annual budget deficit tell - or at least serve as the wellspring for - all statistics that follow...
This works for almost any level of government and entity – take any municipal transit or housing system...It highlights over-borrowing and under-investing – and pay that's too much for work that's too little, or of too little use...
The patronage motive of our best progressives will kill our soul faster than the profit motive of our worst capitalists...
(though – combine a worst capitalist with a patronage motive...look out below)
Amazon’s created a half-million jobs in the last few years...
It’s the public sector that created the rule-book that lets these workers know how to limit their hours, as not to lose an increasing fraction of their dole...
Watching Sanders and Warren and Harris and Booker try to dictate what Amazon should pay its workers – a thought...
Why don’t they go establish and effectively run a giant oppressive monopoly of their own...
2
Leonhart’s piece is the very essence of what journalism should be doing. Let’s see a monthly page in the Times on income distribution using the Pickety et al methodology.
5
I am no economist - I just play one on the message boards.
Personally, I think the real number that people should look at (that truly cuts to the heart of the matter) is the percentage (relative to income) that businesses/corporations are subsidized for their profits - or how much their workers are (on top of their salary) receiving social payments and the like ( like food stamps - snap )
THAT is the real number to look at it.
If (say 30%) of the working population is gainfully employed and working full time (let alone 2 or 3 jobs), YET they are still on social payments, (even though they are contributing to the massive output of GDP and lowering the unemployment rate), then that is wrong and needs to be addressed,
How can we address it ? Well, the simple answer is to raise the minimum wage to a living one. ($22hr minimum)
The other change in attitude, is that the tax breaks (in particular for the large box store/online behemoths) needs to be stopped, every time they want to expand, or even move BECAUSE they are not getting enough tax breaks. This is a ridiculous scenario.
States and communities need to stop competing with one another to poach those businesses by offering little or no taxes. The community ultimately needs a bail out (from you the taxpayer) in the end. Even more ridiculous.
Rant off.
2
The structural problems were never fixed! Unregulated capitalism has created an oligarchy --- just like it has every time it's been unregulated. Investment banks chase the next bubble, which generally involves milking the middle class again and again to enrich oligarchs.
This situation will remain until citizens demand regulation. Society should rule capitalism, not the other way around. Unfortunately, we are headed towards a dictatorship or a bloody, French-style revolution, to resolve this problem, again.
3
Leonhardt is desperate for statistics that point to an inequality issue, because he can'f ind any that say Trump's economy isn't better than Obama's. The median net worth chart is misleading, because the housing prices in the bubble that propped up net worth weren't real. It's not that median net worth is down, it's that it never was really that high but for a housing bubble ignored by the Fed. Further, bemoaning stocks up versus housing is ridiculous, because companies grow and produce - those values should go up. Houses are just depreciating assets. The author also continues to suggest American's aren't buoyed by the stock market, which is incorrect when you consider the pension funds and IRAs of many Americans. At least Trump was fighting for the forgotten Americans and American jobs. Hillary was fighting to keep the transcripts of her paid speeches to Wall Street secret.
2
“After all these years, though, we haven’t solved the problem. Maybe it takes a financial crisis to do so.”
The next one, I presume?
The American economic reality has been fundamentally and profoundly changed post 2008 with the cementing of the underlying trends that were emerging in the 1970s and have continued to exacerbate the extraordinary disparity in the distribution of wealth that has become the dominant feature of the American economic condition.
The plutocracy that is now apparent is hardly likely to encourage measures that make that disparity all the more apparent.
As an economist I have always believed that the whole purpose of economic activity is the satisfaction of human needs. That is what we should be attempting to measure. Not production of goods and services which is what GDP is all about. We have to come up with welfare indicators, which include not only consumption of material goods but also access to physical well-being (health) and higher intellectual pursuits (education). We must look at our society's hierarchy of values and determine how high we reach up in it
1
The crisis is definitely not over, but deepening, with every increase in health care costs and college tuitions way beyond the inflation rate, with every increase in housing costs in cities where the economy is white hot, like Seattle, pushing the middle class and poor out of previously affordable areas. An elite upper 10% or so are reaping most of the benefits now, leaving the rest of us to struggle. It won't be long before a majority of voters want a single payer health care system, and heavily subsidized tuition, and higher minimum wage rules across the board, because if the vaunted marketplace wont' solve these problems, the American people will. And it will require a much higher tax rate on the upper cast, in keeping with what they paid in the 1950's.
"Habit comes before accuracy". True, but perhaps more importantly, "Narrative comes before truth". Statistics are cherry picked to reinforce the prevailing narrative of a classless USA where opportunity abounds. My question for Mr. Leonhardt - and for Thomas Edsall as well - is when will he translate his keen diagnostics into advocacy of policies and candidates focused on redistribution. Centrism a la Clinton helped get us into the predicament he so aptly describes.
1
It is important to note that the numbers are already there for most of this. A few more is good. But why are we not hearing already about the ones we've already got?
Politics. Sure, politicians avoid looking bad.
Media. The whole idea of a free press is to hold their feet to the fire, when they avoid and obfuscate to avoid looking bad. Where is this?
Complicit.
And that is why "people — many of whom were already anxious about the economy — feeling much more anxious, if not downright angry."
1
This is an excellent example of systems thinking, specifically feedback loops. As long as our political system provides inadequate information in the form of distorted macro economic statistics, the political system will respond in kind, that is inadequately! If there voting population had a better sense of the progress or lack thereof of the US economy and more precisely how it affected average citizens, there is no doubt this would lead to change for the better of most. The crafting of more accurate statistical information to provide feedback into our social systems may have to await a more rational and sane political time; but regardless the time has come! Nice work David.
1
This financial crisis was a huge boon for the 1%. Most of them benefited enormously. The attitude of today's rich is, "I earned it, it's all mine".
1
"The main reason is inequality." "It was true before Lehman Brothers collapsed on September 15, 2008, and it has become even more so today."
More so today because of the increasing massive income tax avoidance by multinational corporations of all stripes - domestic and foreign. At the center of most of this tax avoidance is Britain - The City of London and control over more tax havens than any other country. Watch the 2017 documentary "The Spider's Web - Britain's Second Empire" available on Amazon Prime.
Need more? Watch "The Town that Took on the Taxman" and "Taxodus" on YouTube. The multinational tax avoidance in these documentaries occurs under the territorial taxation system that last year's GOP 2017 tax bill adopts. Because multinationals pay less and less federal & state income taxes, government budgets for education, health, etc. are cut more and more while personal, sales, and property taxes go up and up.
2
I have no problem with another unemployment index to account for people who have given up searching for a job. (Ironically, during the Obama administration, when he would tout the decreasing unemployment rate, Trump was saying the stat was inaccurate because many had given up looking for work or their jobs were sub par).
But the fact that many don't own stocks and thus don't participate in the growth of wealth- that is a smokescreen. 52% of people own stocks and anyone with a middle class job and 401 k plan can easily take advantage of cheap index funds. Instead of deriding the rich for owning stocks, the government and writers here should encourage the irrational and fearful (especially the young) to own stocks. In many cases buying stocks and delaying buying a house or simply renting is a better option. But to blame the more economically savvy for being wise and buying stocks is a canard that helps no one.
2
We also need to report net disposable income by class and quintile. Net disposable income shows an even more accurate picture of why many working- and middle-class people are not “feeling the GDP growth love” personally. The government (BLS) assembles the household wage & spending data needed to do this, but is not pulling it together and presenting it. Combining these shows long-term wage stagnation worsened considerably by higher health costs. Not only are health costs hampering wage growth, as employees accept lower wage increases, in order to preserve their health benefits; households are also using up those limited new wages in the form of higher deductibles & premiums.
4
All true, but it'll take a party in power, with an economy in the doldrums, to volitionally adopt a "new" economic measure, and only if it has the potential to make them look better to their voters. But to choose to do the right thing without a self-interest motive? Doubtful.
It is amazing that, globally, more and more people are somewhat emerging from poverty. A global "gini" index
measurement across countries may substantiate this over time. At the same time, the "gini" index in this country seems to "go" in the other direction.
I would attribute the mismatch to the influence of money into our politics with the 1% profiteering at the global level while maintain a boot on our throat here at home via BOUGHT politicians.
Improvement of the middle class globally and destruction of same here in this country.
Instituting a "lively" course on "statistical" economics using phones and internet greatly improving on the concept of "consumer" math may be a simple thing to do.
1
Government's obligation under the GOP is to explain why their version of it is a brilliant success despite the fact that government can't and never ought to succeed.
This crystal-clear, deeply thoughtful article is among the best I have ever read.
And among the most important I have ever read. (That, coming from a person with degrees in political science and business.)
This article should be not only required reading for government officials, elected and not, but also required acting.
Thank you.
4
The French economist Thomas Pickety showed that the return on "rent" outstrips the return on labor and the gap between the two is widening. That means it is more profitable to invest than to work. The big question which was not raised is why is labor being increasingly devalued. The answer is that in the 21st century more and more goods and services can be produced with less and less labor. Contrary to what most economists insist, technological unemployment is no longer a temporary matter which will be normalized as new jobs replace obsolete ones. The right of every American to work at a job which provides for a decent standard of living must become a right of entitlement for which the federal government must take responsibility. This means that when the private sector fails to provide sufficient employment of this type, the federal government must become the consumer of last resort by buying things such infrastructure, research and development and a free college education to train a new, technologically proficient workforce.
3
There are many reasons why GDP fails to measure well-being and personal growth. It includes much of the money we spend in an attempt to remedy "bad" outcomes: health care for illness due to air pollution, repair and replacement of property destroyed by supersized storms, unproductive use of energy and labor. Thanks to this article, perhaps more people will make the connection between income inequality and the cost of lost opportunities.
4
I wrote the following comments for an article Neil Irwin wrote in the September 8 2018 edition of the NYT:
If Economics is a social science, measuring variables such as average life expectancy, the number of emergency medical visits, the prevalence of chronic diseases and average stress levels to calculate economic growth would provide an improved picture of how the economy is performing. In my humble opinion, the manner in which economic growth is measured is due for technological and social improvements. If improvements are made to how economic growth is calculated, I suspect there will there be a (measurable) time lag in implementing actions to remedy current (and prevent future) negative outcomes.
2
Capitalistic idea is good in a sense it encourages people to work hard and move ahead. But when there is no checks and balances. greed comes into play and spoils the party.
I am not an economist. I do not understand how the trickle down economic work. But I do understand the division of an apple pie. Let say ten people is going to share a pie. If one person have half a pie, the other nine people will definitely have less. I may make it too simplistic when you apply to the whole economy. But the general concept is still hold true and can be applied.
In the past, the CEO or manager made 3-6 times more than the regular employee. Now some of the CEO makes up to 340 times than their employees. Look at Wal-Mart, the Wharton families are billionaire and yet many of their employee are on minimal wage or slightly higher. They do not have health care fall short of a livable wage. They are on medicaid and food stamps which the tax payer subsidized. Then you ask why the regular tax payer have to subsidize the multi millions industry ?
The retired president of PG&E have a retirement package of $35 millions. Under his watch, there was an incident of gas explosion in Oakland and at least 8 people died. I am obviously living in California and continue to subsidize his retirement.
Is this one of many causes of income inequality for the past thirty to forty years ? Is the current economic model be sustained ?
4
The chance of changing these statistical patterns I'd rate at less than 10% given that the plutocrats who most benefit by the traditional statistics have the political power. Individually we can assess the strength of our own financial strength and recovery and act and vote accordingly. Since the crash of 2008 my income has finally recovered to 2008 levels which in 2008 was insufficient to support myself, a single man in Seattle. I still drive the same vehicle, now ten years old. I wish I had a stock portfolio let alone one that had an increased value of 60% and my rent has gone up 40% since 2008. And yet I consider myself fortunate in that I have had a job and am not sitting around some tavern feeling hopeless and not looking for work because I have checked out.
If we changed our statistical forms of economic measurement the 2% would be in for a lot of trouble. Want change vote this November.
4
Radio “news” report the Dow Jones, S&P, and Nasdaq stats every weekday, often every hour. Why? I once heard a public health doctor say that if we were told about infant mortality rates in different communities even once a week, we would have a far better measure of well-being, or its opposite.
7
Well said. Full-time jobs with benefits are a relic of the past, even for well-educated adults. Just ask the Adjunct Professors working full-time hours for part-time wages, no benefits, and overall economic insecurity. Decades of legislation to benefit and extend the power and wealth of a small elite class has resulted in gross inequality that has greatly harmed all workers and the well-being of the nation. Research data that continues to present economic well-being from the view of a minority of benefactors only prolong this crisis that threatens our democracy.
9
Yes. But their is economic mobility and economic classes are not frozen.
Thank you for this article.
We have never tried to measure unpaid labor. Typically, that's women's labor. Guess what, it doesn't seem to be counted in any economic models.
I highly recommend the book _Weapons of Math Destruction_, which discusses the implications and sometimes huge consequences of the choices that are made in developing various models, such as economic models.
It's great to see the New York Times publishing a piece that challenges the go-to statistics we've relied on to gauge our economic well-being. But while more sophisticated means of measuring GDP and unemployment are a good first step, what's missing in this analysis is the larger issue with growth as a goal in the first place. Even if growth were more equitably distributed, our fixation on it (and it is precisely that, a fixation) is driving us ever faster to environmental collapse.
And it's not just climate change. Even England's largest bank, HSBC, issued a warning recently that we consumed what would be a sustainable annual budget of natural resources by the end of month 8: https://www.gbm.hsbc.com/insights/energy-and-resources/earth-budget-alre....
Continuous growth on a finite system is impossible, but we've set this as our collective goal, and it's embedded in the DNA of our current economic system.
4
As I near my 74th birthday, I feel as though I have seen it all when it comes to political bragadaccio and the desire to plump up an administration's reputation like a liferaft.
So perhaps it is worth noting that former Labor Secretary under President Clinton, Robert Reich, commented on the so-called rise in average wages in America during the Bush43 buildup to The Great Recession [The Great Depression 2, for millions of Americans].
As wealth increased for the top 10 percenters, it was more elusive for the other 90 percent of Americans. Yet, because of the "trickling-up" of wealth to the top, the charts skewing to a higher average income across the nation could be compared to, as Mr. Reich described it, (and I am paraphrasing here) measuring his own height (under 5ft tall) to that of Shakeel O'Neil who measured in nearly 7ft tall. This would suggest, that the average height between the two men, was over 6ft tall.
Reverting back to the economic language, Mr. Leonhardt's article about the jobs numbers and the state of the stock market provides a reality check on the puffery that distorts the news of the so-called recovery.
8
@David Ohman
Yes. Everyone should view Reich's humorous, timely, poignant; excellent DVD: Inequality For All.
1
HAVING the right numbers is NOT the same as USING the right numbers.
The Bureau of Labor Statistics MEASURES the inflation index for the elderly. Inflation for the elderly is HIGHER than general inflation, chiefly because the elderly spend more on health care.
But, the Government does NOT USE IT to adjust the annual increase to compensate for inflation in Social Security- known as COLA
The CPI-E runs 0.2 to 0.3% higher than "official" CPI, that
increased 2.7% over the last 12 months.
On 2/28/2017, Representative J. Garemendi (D. CA) introduced H.R.1251 - CPI-E Act of 2017 to rectify situation. On 03/27/2017 the bill was referred to the Subcommittee on Health, where it has lingered ever since.
5
Inasmuch as we're considering a change in focus, how about a labor report in addition to the market watch? Newspapers have a business section, but no workers' section. Not even a labor column.
Of course, Congress long ago sided with capital against unions. The fix is mandatory public campaign financing so government works not for the money, but for the people.
6
I am involuntarily unemployed. Why do I say that? Because my age (nearly 60) and my experience (over 20 years in IT and about the same in scientific research) guarantee that no employer wants to pay me. What employers want and don't get is experience because what they want is a 25 year old with 30 years experience at an entry level salary.
Newsflash to employers: stop whining about the dearth of skilled Americans and start hiring and training and investing in America. Stop advertising for geniuses and hire competent people. Stop asking for impossible combinations of skills and focus on what is needed. And pay us decent wages and treat us like human beings instead of discards.
If people have decent jobs with decent pay and benefits they can do amazing work. They can take care of themselves and their families. They can save for the future. They can hope instead of worrying about where the next disaster is coming from. The financial crisis may be over for Wall Street. It's continuing for every one else.
84
@hen3ry
Well said. The same concentration of wealth that's poisoning the economy in other ways parallels consolidation in corporations. That consolidation means there is often only one significant employer in an area/job category, so what they offer becomes the de facto standard.
Often, that wage is not sufficient to attract employees with the skills needed to actually perform that job, and the corporations make the ridiculous claim that there's a lack of people with the requisite skills, Then they hire new grads or foreign workers who don't have ALL the ACTUAL required skills, but are cheaper and look like they might do the job.
It's widespread, and pulling the country down.
1
Yes, I agree - "[the statistics] provide a misleading portrait of people’s lives." The statistics I'd like revealed, along with the number of men outside the labor force aged 18-65 (let's be realistic here about actual retirement age, if attainable at all...), are the number of women and men who hold two or more jobs. I myself have held four jobs at one time over the past two years (granted, for a short-lived few months), and know a number of college-degreed folks who cannot get full-time positions with benefits and are working not two but three jobs. Not side-hustles, but jobs working for companies/agencies. The number of people outside the labor force is a vital statistic and these unseen/hidden ones need to be given a place in the analysis. Great article.
2
Good column. However many such columns could be written, as bottom line truth is so often obscured by design, and even "fact based " media is sometimes hypnotized into promulgating certain constant myths about our country.
Paraphrasing Mr. Leonhard, statistics are an average, so the seemingly lovely numbers don't show all the failing towns, insecure seniors, students with massive debt, and the inner city poor areas with low tax base, terrible schools, gangs, and drop outs galore.
All day in media we hear about the good economy. The left credits Obama, the right tax cuts and Trump. All the angry, resentful people around the world once again giving in to hate can be traced, as this piece states, to the misery of 10 years ago.
More myth busting, more truth, is better I believe. Despite progress, a half black president so enraged certain whites that the backlash has turned up to 40% of us into throwbacks like Jeff Sessions. Long ago, media could have exposed how deep the belief in fantasy infects American minds, in so many ways. Long before the delusional Trump. No taxes for churches is another glossed over issue. The absurdity of legally saying a corporation is a person is allowed to stand. Can a business give birth, breathe, be jealous? It's all there, the law is so often pathetically injust, rigged for white elites.
The real left is despised for pointing out injustice. The far right supports injustice and obscuring truth. Let's have more exposes like this on many subjects.
2
Finally, an article calling out the malarky. I'm no financial wiz kid but everyone's been running around repeating all this garbage about how the financial crisis is over and everyone's employed. What has really made me crazy is that the media have just regurgitated these statements like they're true! 98% of Americans know the crisis isn't over so why can't the media call these folks out on shoddy statistics in misleading packages.
Half the nation's young people have given up hope and turned to opioids and the other half lives in chronic anxiety that they will slip into homelessness, medical bankruptcy, and massive debt. The NYT just posted an article about the outrageous cost of childcare. People are working multiple jobs and going weeks without a day off just to live paycheck to paycheck with very careful budgeting.
Oh, but "the financial crisis is over!" It's like 1900 all over again. Robber Barons and the masses of workers on whose backs they have climbed. Organized labor developed its share of problems and corruption but I think we need to turn back to it. And this time we need to include professionals and management. Let's insist that employers give a reasonable work week, sick leave, vacation days, and a living wage for everyone. Let's insist that the government organize and fund child care, maternity and parental leave, community college, and health care for all. Then the "crisis" will be over and the economy will function for all.
Media: call out the bull!
6
The financial crisis isn't behind me.
2
@KPW
Excellent.
1
About time this is said! Thanks for finally doing so. My suggestion: Everyday we get figures about the Dow and S&P, why not also publish the following: How many people are homeless today? How many people who don't have health insurance got sick today? How many people are living near the poverty line? How many *working* people are homeless? How many children didn't have a proper meal today? Newspapers and other media give us stats that track the affluent. These figures literally don't count most people's lives. As the famous quip goes "there are two forms of lies: damned lies and statistics." It's time that the media started publishing stats of the people, not just stats of the elite.
3
I love how you completely ignore the mass influx of immigrants who have no interest in assimilating into the Western culture. But sure, the economy is why traditional politics are being destroyed. Whatever you say
How many laxatives, male enhancement pills and cut rate insurance policies are sold off of the UE rate teasers on CNBC and Bloomberg? Lots. so don't shake the tree too much. You might have the advertising boys and girls coming for you.
1
Good description of the problem. Now, go look in a mirror. The media have lazily accepted the conventional-but-misleading statistics and reported them obsessively for decades. How about reporting the Genuine Progress Index every time you print the GDP? How about refusing to fall for conservatives' favorite obfuscation, the "average American"? (Did you know that free trade raises the "average American's" income by $10K/year! Of course, virtually all that income goes to the rich.) For other meaningful metrics, how about listing the percentage of income people in different brackets must spend on housing, food, health care, etc.? Don't you see you are damaging your own credibility by reporting rosy numbers that actual working people simply don't feel?
5
A friend of mine developed his Jelly Bean Theory of Economics.
Put 10 people and 10 jelly beans in a closet. Turn off the light, lock the door, and wait 10 minutes.
Open the door again.
One person will have 7 jelly beans.
Corallary: the one with 7 jelly beans will have convinced the others that this is their fair share and that anyone in that group who has a whole jelly bean has stolen it...
4
Thank you. Without seeing published data as described here. Nobody knows. I have lmultiple degrees (none in economics), read regularly.
Please keep up the effort of Real News.
1
Available free online is the pdf of the eye-opening Federal Reserve [Annual] Report of the Economic Well-Being of U.S. Households/
3
THANK YOU FOR THIS ARTICLE. The Times has along with the rest of the media have turned a deaf ear to millions of their readers complaining that we have all been left behind.
The biggest problem we have is that our so called "economy" completely leaves out the condition of the people. In fact somehow our brilliant economists have failed and still fail to adjust their numbers according to the underemployed, unemployed, and poor. The economists leave out all of that so we get a skewered number for the economy. It's clear our stock market drives everything however that vast majority of the populace doesn't own any stock therefor the endless panting and excitement over every single percentage point is meaningless yet they continue to report in that manner. Why? Why can't the media ever learn FROM THEIR MISTAKES??? Remember how gun-ho the Times was to invade Iraq?
6
"much of the news media continue to act as if the same economic measures that made sense decades ago still make sense today." That describes the NYT coverage - 4 out of 5 articles about the health of the economy paint a very rosy picture because unemployment is down or the GDP is up.
8
Have you noticed the rich continue to gloat.
Doesn't that gross and vulgar wealth get you goat?
If they don't mend their ways,
Surely one of these days
The mob will appear and cut every last throat!
1
Yes, the Times has a responsibility to make these more meaningful metrics regularly available, but tha also means not losing them in the business section. These types of metrics belong on the front page where a greater percentage of those they effect can see them!
7
This is a really smart essay.
1
“Security” is an illusion. The Soviet Union had guaranteed health care and retirement programs; they proved only as good as the system which made the guarantees.
It’s all well and good to report on the share of national income/wealth held by various cohorts, but what does that tell us? People with talent and drive do better than those without. This produces the hated “inequality”, because freedom will ALWAYS produce inequality, for the simple reason that not all people are equally talented or driven.
The Giants have not offered me a $95M contract, presumably because I’m slow and can’t catch. Hence, I make considerably less than Beckham, making us grossly unequal.
So? He’s better than I am. No one would pay to watch me play football. He earned his rewards, and owes not one single dime to me. Why should I be envious of his success and demand things from him which I haven't earned?
No one here is poor because someone else is rich. People are poor because the act foolishly, making out-of-wedlock babies, abusing substances, dropping out of spectacularly expensive public schools, or committing crimes. Wages are too low because leftists insist on keeping illegals here and admitting 1-2M unskilled legals. Just ending unskilled immigration would be a huge shot to “inquality’s” solar plexus.
No, there is no such thing as “security”. There is only freedom and opportunity. The freer we are, the fewer problems we will have.
4
Dear Michael, everything you say is true, you just ignored a fact about capitalism that throws all your conclusions into doubt. Wealth earned is passed on to generations who assume they deserve it. The Republican complaint about the poor, that they want something for nothing, seems a better fit for rich kids.
A really good idea. Our present administration doesn't really believe these "others" really count as citizens. They only make up 70% per cent of the population. It's rather like the 3000 Puerto Ricans that really didn't die after all.
1
"In recent decades, the number of idle working-age adults has surged. They are not working, not looking for work, not going to school and not taking care of children. Many of them would like to work, but they can’t find a decent-paying job and have given up looking. They are not counted in the official unemployment rate."
This should have been the focus of both the DNC and papers like this one as far back as 2014. The world today might be very different if voters both in the US and in the EU had not become so disillusioned with what they saw in the papers, and how it did not comport with what they were seeing with their own eyes.
3
Completely agree. Small business confidence at all time-high, median income at all-time high, unemployment at modern low; these are all very misleading as they suggest Trump may be doing a good job. Definitely need to pick some new ones that skew the results differently.
1
There is also a new phenomenon which has further seperated the middle class from the rich. For years, companies worried about if the middle class could buy their stock so if the stock price went too high they split the stock to bring the price per stock down where a hundred shares would be less than a couple of thousand dollars or so.
Now with prices at $200 and higher, only funds can afford to buy them. Of course, they take their bite of the transaction, so the 401K and other managed funds grow at the expense of our retirement dollars. It almost smells of a conspiricy.
It's funny how the opinion columnists at outlets like the New York Times have only now started to downplay the value of traditional economic statistics. Were they not just as illegitimate when Bill Clinton was touting his GDP and employment statistics? Or when Barack Obama was being credited for saving the US from a financial disaster?
So the message seems to be something like--don't believe the score sheet we've always used when Donald Trump is president, and in fact we should really be blaming him for the BAD ECONOMY. Yeah, we never suggested we use our newly-minted statistics when Clinton and Obama were president, but we should re-evaluate how we keep score now. Never mind that statistics like the GINI index of economic inequality have existed for 30 years and have always shown high US economic inequality. We'll hush that up when Democrats are in the White House. We only move the goal posts when people we don't like are in charge.
Oh, and Tom Brady and the Patriots really won the last Super Bowl too. They had more yards and first downs than the Eagles. Points on the scoreboard don't tell the whole story. Let's rewrite that one too.
1
Funny how there's a big push to change the metrics for measuring the economy when there isn't a Democrat in the White House. Hunh.
1
Welcome to the 'golden rule' of capitalism: Those with the gold make the rules.
Decidedly at odds with democracy, yes, but no matter since lying, brainwashing and otherwise keeping select groups of people away from the ballot box has a long tradition here.
GOP politicians actually say *out loud* that lower voter turnout helps them. An upstate NY GOP House member actually said *out loud* that despite the people he represents opposing last years tax cut for the wealthy, his rich donors told him 'don't call us again' if he dared vote against it. Guess how he voted.
1
Immigration is driving the far right ascent, not the financial crisis.
Agree that the NYT and other major media outlets - legacy and digital - should simply start reporting these new indicators and keep doing it so we know what’s really going on. Even if the government doesn’t adopt them. Or, ideally, until the government does.
1
The most influential event of the 21st century? Really?
We have 400 some-odd billionaires running around 15,000 lobbyists in Washington to stack the Supreme Court on their behalf, write self-serving legislation for their dark-money elected congressmen, break unions, eradicate healthcare and human services, eliminate Social Security, and take away Medicare and Medicaid. All the while we have a historically illiterate population of MAGA hat wearers waving on the very fascism that is disempowering them in particular.
Until the power inequity in this country is dealt with, I see no use in paying attention to phony indicators of economic health that have nothing to do with the rest of serf nation.
2
Things better change, or as Piketty wrote when discussing
the French Revolution----- "The pitchforks are coming."
There is only so much inequality that the American public will put up with without targeting the richest among us in a big way!
Influential folks like Buffet, Bezos, and Gates should realize this and lead the way toward reducing income inequality before we experience a French Revolution in this country.
1
Your description of 'statistics' is fit for those of us that, though able to read and understand simple terms, remain befuddled about the real meaning of 'full recovery', and 'satisfying unemployment rate'. For the majority of the U.S. population, where it's capitalistic system always allows capital to trump labor, and where the gross inequality makes statistics (as described) a "legal lie", not credible except for the affluent few. That's why Trump, among others, bombastic and thoroughly stupidly self-satisfied, and with a huge social distance from the ordinary folks struggling to make ends meet, couldn't understand statistics for what they are, a rubber stamp to justify the current inequities that afflicts us, and with no remedy in sight (and with it's added debt in corporate tax relief), and whose profligacy shall be payable by future generations. Perhaps it will take a new financial crisis to change our ways. And to re-discover democracy if solidarity is given a chance. You see, without social justice, peace is just a distant dream. And that's the rub!
Hilarious....Liberals touted the same, but worse, statistics as evidence of Obama's accomplishments. Now they are trying to find any bad information that they can. When the next recession hits, which will happen again regardless of who is in office, I am sure they will go back to traditional metrics and blame Trump. "you can see the lingering effects of the financial crisis just about everywhere "...yeah I can go see Pearl Harbor but it doesn't mean that the Japanese are still bombing it.
3
Very good column, particularly for demographic-watchers like me. We have left the statistical heavy-lifting to people with an agenda, and not necessarily the truth. Our politics is largely in the sewer, yet we allow these hacks to guide the national narrative. Obviously reality-challenged, as is the President, they cherry pick the data that supports their agenda. The media is largely clueless to these deceptions, busy chasing fires, floods, murders and ceaselessly Trump's tweets. Fortunately for NYT subscribers we always have Dr. Krugman to blow our minds.
"It's the economy stupid!" It sure is. Unfortunately, most peoples' eyes roll up in their head if they're forced to listen to anything more than the most mundane of statistics. Politicians, government officials and businesses know that people don't really care how things are measured and presented as long as they are driving a huge truck, have a smart phone and big-screen TV and can balance out all that spending by eating filth at cheap, fast-food joints. Let's not also forget that most people only see the "wealth" that's in front of them, so if they must go into debt to grasp the "American Dream," they go ahead an borrow against their future.
When a society is based on hyper-consumerism and debt, most people are easily manipulated by having stuff. Unfortunately, the really good stuff is tied to higher wages and affordable healthcare and a sense of security which are sorely lacking in today's America.
1
What parameters do we really need and for whom? Times readers don't need to be convinced.
Most rural folks know they're not getting a fair deal but because of their poor public education, they have no idea about the social battles their ancestors fought and what workers worldwide have done to tackle the exact same issues they're facing. As a result they're primed to believe any false prophet who comes along and blames their struggles on immigrants, rich liberal city folks, free trade etc.
Democrats need to stop playing whack-a-mole on the symptoms and tackle the source: money flowing into politics.
But do the Times columnists dare to confront the moderate Democratic leaders who massively rely on corporate money to stay in power themselves?
2
For an interesting counterpoint, read Coleman Hughes' essay on the wealth gap. You can google it.
I can't tell you how delighted I am at the publication of this article.
I, and innumerable others, in comments sections of media pieces touting the "booming", "robust" "strong" economy, have for years been screaming for recognition from the Times and other media outlets of this economic metrics sham which has remained unrecognized and unconfronted for so long.
Leohardt states it perfectly: The three big cited metrics -- unemployment rate, stock market indices, GDP -- do not even remotely represent the economic life of the non-rich.
The economy has been for a long time, and remains, miserable for a great slice of the population. Poverty is rampant. There 7.9 million working poor (people with jobs but still living in poverty). 80% of Americans live from paycheck to paycheck. Most seniors can't reture. Vast numbers of people are on the verge of, or are drowning in, debt -- student loan, credit card, medical expenses, rent, etc. Job and financial security have shrunk to a nubbin.
This sham is extremely important, as it wildly distorts public perception of the state of the economy, thereby sabotaging needed reforms.
Now the Times -- and the Post, etc. -- need to move this critical idea from the opinion page to the news page.
1
The only thing new in this article is that some economists are trying to devise better ways to measure the economy. The rest of us have known for years that the crisis is still with us. All we have to do is look around at the numbers of working people who have to hold two jobs in order to pay the rent, at the number of working adults who live out of their cars or in tents in my neighborhood, and at the number of highly skilled people over 50 who aren't being hired except as Home Depot greeters.
But meanwhile Democratic politicians and economists blather on about the Obama recovery, while Republicans attribute it to that orange-haired buffoon. Fact is, we might have had a recovery if Obama hadn't put Wall Street operatives in charge of the economy and turned his back on Main Street.
1
New data collection and reporting would show the Republican agenda - support the rich and punish the middle class and poor. They will never never support any hint of economic reality.
The government will never change. The NYT should regularly and methodically publish these measures -- on the same day as government publishes labor stats, interest rate changes, etc. It will take a grass roots effort.
More liberal claptrap, Mr. Leonhardt. Many many people, maybe even more people than ever before in history are working now. People are saying the economy is the best ever, in all of history, since the beginning of time, many people are saying that. Why, so many people are working some people have two, even three jobs... they work 50-60-70 hours a week or more. And their wages! Wages are the highest ever, ever. - signed, "JOHN BARRON"
Just because people can barely make it working two or three jobs, it is no reason to tout unemployment numbers. Trump is doing very very well, and his peers. And they just got 80% of the big Trump "Tax Reform" handed to them... and Trump wants to, probably unConstitutionally, cut capital gains taxes, which would almost exclusively benefit the very wealthy. The numbers look strong, but the reality is many, most, are struggling. A few do very well, while the majority struggle... we are becoming a banana republic, an oligarch's paradise.
The United States was formed by the rich, to be a tool of the rich and owes it allegiants only to the rich. The serfs and vassals will always need to fight for the scraps our overlords are grudgingly forced to share. Today, while the President distracts with his reality show white house, the Federal Government is gutting many of the personal and environmental safe guards to protect the 99.9% against the overlords. To expect that the Federal Government can and will provide reality based information that goes against the elite interests and is not going to happen. Has never happened. The media is also owned and a tool for the rich overlords. To expect them to be the arbiter of truth is not going to happen. We all know what needs to be done to rebalance our society. Is this the time to do it?
1
Can we use the Gini coefficient to measure inequality? If that was as well known as GDP, then I think this would solve the issue that Leonardt brings up.
This article perfectly articulates the anger I used to feel in my 20s and 30s, struggling financially due to low wages when my father would drone on endlessly about the strength of "the markets". Despite completing undergrad and grad school, involving myself in what should have been career boosting extracurricular activities, and having a slew of internships and field placement experiences under my belt the salaries I was being offered (and had to settle for) only just covered living expenses - I had little left over to participate in the "take care of yourself" activities that are stressed for people working in the mental health field (same goes for teachers, social workers, nurses and healthcare paraprofessional). What little I could save would be wiped out by a car repair or medical bill. I'm in an okay place now but my husband and I are still catching up from losses suffered during the recession including the short sale of a house when we relocated for jobs and educational opportunities (again!). Family resources helped us over some rough patches but most people in similar situations can't count on that. And I don't kid myself, family money is not infinite. All it takes is one serious illness or well-intentioned but poorly times financial decision for all that money to dwindle to nothing.
You don't mention one of the most important ignored statistics: employer health care expenditures. Employee compensation hasn't stagnated. More and more of compensation goes to health care, leaving less for take-home pay.
The NYTimes has reported that workers and companies in the health care industry make far more money than in other countries. They are taking a bigger piece of the pie, leaving less for everyone else.
@tj
Yes. Specifically the executives and shareholders of for-profit health care and pharmaceutical industry companies.
I invite any curious reader to study the graph on page 12 of the Census Department's Report on Incomes and Poverty. (Figure 4 in p60-256.pdf) In it, the last 60 years of American economic history are clearly displayed in two neat graphs. One is the number of Americans in poverty and the other, the US poverty rate over time. It is clear that the national attitude toward poverty and shared sacrifice changed in 1969 as the slope of the poverty rate curve went from negative to flat. Since then decreases in the poverty rate have been only temporary --- wiped out immediately in the next recession.
If you can keep in mind that the US economy grew from $580 billion to over $18 trillion (over 30 times) during the same span and you can rightfully shocked at just how greedy a nation we have become. How we square 'liberty and justice for all' with 'likely immiseration' as the future for millions is beyond me.
Looking at different statistics to determine how people are really faring economically is a great idea, but I have some suggestions for other economic statistics we need. We should be comparing average salaries in an area with the average mortgage payment or rent. The median salary in the country is around $51,000, according to a recent Times story, and here in the Bay Area it's around $58,000. People who make that amount can't afford to buy a home here, and even renting one is a stretch at the $2,000-$3,000 average cost per month. Even two-bedroom apartments cost $1,500-$2,500 per month. When I was filling out forms for federal college assistance, I was told that to be middle class (and not qualify for help), families have to make $150,000 per year. Really? Then the middle class really has disappeared.
In so many areas of life we continue to rely on averages as indicators of the experience of everyone included in the average; this is such a fundamentally misleading approach to insight. An average score on a maths test of 70 with all kids getting between 65-75 is very different to an average of 70 with some kids getting 40 and some 100...
It boggles the mind that we've gone nearly a century thinking average GDP growth for the economy at large is meaningful without more details on dispersion.
We’ll have financial security when we have effective education for all American children, healthcare that is effective for all our citizens and the needed amount of investment in America’s infrastructure. And a political class that asks “what’s needed to improve the lives of all Americans?”
The explosions in the natural gas system In Lawrence, Andover and North Andover Massachusetts shouldn’t surprise anyone who is concerned about the need for good infrastructure to insure our economic future. Just look at the subway system in New York City, America’s most vibrant city, and the problem is clear. Or Boston’s “T” and railroads across America. Decades of neglect.
The author doesn’t spend time on it but the continuing shift of the cost of College to ordinary students has created a debt bomb of enormous magnitude. We bail out bankers and wealthy investors but allow the economic future of ordinary Americans to wear cement debt shoes.
And now, after the enormous tax cuts for the wealthy and corporations, the Republicans are wailing we “need to cut Social Security, Medicare and Medicaid. Don’t think so? Read the House budget document. It’s as clear as day.
Hopefully November will bring change to the political make up of the Federal Legislature, State Legislatures and local communities. Change sufficient to put the needs of ordinary Americans first.
Vote.
2
What ailes most people that have financial dificulties is the fact that rents have doubled and tripled, but of course that’s not considered part of inflation. However if you have to spend more than 60 or 80 percent of your earnings on rent that certainly constitutes a major increase in cost of living. Rent is the nr one item that would have to be factured in with inflation of cost of living. Since the 08 crisis by far not everybody is a home owner and it’s clear to me that the current economic system is intersted in making most working people renters instead of owners..that when housing should not be a commodity period.
2
It's time for America and the world to wake up to the fact that the type of capitalism we have been practicing since Ronald Reagan does not work for the majority of people. While I don't believe that total socialism is a better system. I do believe that capitalism with socialism when it comes to basic needs such as health care, education, housing and food are essential to mitigate the worse outcomes of capitalism. We also need a strong regulatory system to prevent business and wall street fraud and to keep us safe and healthy. Kind of like the FDR era policies but without the racism.
2
Perhaps there needs to a "disruption" index as well, one that not only measures the effects of job loss and gain but also shows how disruption effects different age groups along with geographic and racial groups. Someone in their 20's for instance is much more resilient than a 55 year old losing a job or enduring bankruptcy.
GDP is a highly inflated number. Measured at
market price, it is ballooned by very expensive
health care system with the prices not seen
anywhere in the world. Other things are also
priced higher than other countries. Defence
spending at Trillion dollar( $716B Pentagon and
$200B for VA). Again way more than the next
7 or 8 countries combined. Who is benefiting
from these spendings-doctors, hospital
administrators, drugs manufacturers, insurance
company executives and defence contractors.
Are we really richer than other countries or
is it statistical illusion?
Mr. Leonhardt does a fine job outlining the history of economic data collections and some of the inherent weaknesses of GDP and unemployment rate.
I disagree with some of the causes and outcomes that resulted from the Great Recession of 2008.
Historically the value of capital (tradeable assets) has almost always increased more than labor. This was confirmed by Pickety in his epic book. Importantly, the American Golden Age of postwar America from 1945 to 1980 with enormous growth share by most is also a historical anomaly. The blame lies with both parties. As Noam Chomsky pointed out decades ago, there is no two parties, only the party of business. Elite rich, elite universities and think tanks in cahoots with liberal media telling everyone GDP is doing well, Dow hitting new peaks, and you should be happy.
After the 2008 meltdown, I voted for change in candidate Obama. As President he was great for Wall Street, terrible for Main street. Banks too big to fail, are now dramatically bigger. Absolutely no one was held accountable for the multitrillion dollar meltdown of Wall Street that would lead to 800 plus billion TARP and doubling of the national debt in 8 years. 90% of America wanted financial reform, but what we got was Obamacare, which has undoubtedly benefitted 15% of people but dramatically increased costs for the other 85%, leaving most families with less disposable income.
1
You're correct that income statistics such as per capita GDP don't capture variability in individuals' experiences. But GDP has another flaw (which most of the inequality studies perpetuate): it doesn't account for income transfers caused by redistribution. A better statistic to publish would be per capita consumption. That's one of the best ways to track the actual variability in peoples' lived experiences. Per capita consumption shows far less inequality than income data. You indirectly indicate that consumption is far less unequal when you point out that many able-bodied working age people have dropped out of the work force entirely. This would not be possible unless income transfers allow them to consume much like working people.
The "Official" unemployment rate is and for decades has been a lie. It only counts the workers who are receiving unemployment insurance payments and are registered with their local government employment office. If you run out of benefits or are not registered then you are no longer part of the unemployed workforce. Of course you don't have a job and receive no government assistance but you're no longer "unemployed." The true numbers of those who are out of work but would work if there were jobs is much higher than the Government wants us to know. You can also bet that a Republican Administration will fiddle with the numbers to claim a much higher level of employment than is true.
Adjusted for inflation, income in the US peaked in 1968 or 1971 depending on methodology. Since then it has been downhill for most people.
In the 1960's of my youth, a husband could be the breadwinner of a household of a family commonly of 3-4 children, buy a house, go on vacation, buy a new car every 3 or so years and have regular nights out with his wife. That was common- not universal, but not far off.
That same worker had a pension awaiting him when he reached 65 years old and, along with Social Security, would allow him and his spouse to retire in dignity. That family had a quality health insurance policy that allowed them to go to the Physician of their choosing and the hospital of their choosing would the need arise. If they fell ill, they would not be bankrupted by the cost of medical care. The pubic schools were great and the public Universities were very cheap- and free in some places.
Since then, because of choices made in the market and some made by politicians, that has all mostly been swept away. Many live from paycheck to paycheck and are slowly going deeper into debt just to stay even and have little prospect of retiring when they reach 67 years old. Their health insurance- if they have it- is highly restricted and has huge gaps that can leave you in dire financial stress if you fall ill. You cannot afford to buy a house and rent is outrageous. A University education means assuming massive debt.
It does not have to be this way, people. We let it happen.
2
Unemployment is increasingly passe. It's missing a big part of the reality of today's economy, the underemployed. How many people who cannot rightly call themselves unemployed are making ends meet by working 1, 2, even 3 part time jobs? While some of these part time jobs may lead to full time work, way too many employers are unwilling to hire on a full time basis lest they get saddled with the cost of benefits. Obamacare helped, but it will not fix the problem. Until we can come up with a solution to the high cost of benefits, especially health benefits, the number of workers who are chronically underemployed, will remain with us.
3
It is about time that someone in the press decided to look deeper into the real economy.
Other statistics that should be looked into are the type of jobs being created. Are they Part time, seasonal or full time.
What industries are creating the jobs.What is the average wage for each industry.
Also cost of gas, food, utilities and rent or mortgage payments.
These are the statistics that give everyone a real life view of the economy.
452
@Jean I would add - how many of those employed are regular employees (W-2 recipients) vs. temp/contractors (1099 recipients).
6
@Jean, Or the term or category called 'Casual' employee, meaning no medical, vacation time, paid sick days or benefits of any kind. This is becoming more common as a for new hires. So everyone hired before you has everything but you do not.
3
@Jean How do you know if seasonal work is good or bad compared to part-time or full-time? Your personal views should determine your actions, not put coercive mandates on others.
I am 73 and take care of my younger brother, who has advanced Parkinson's. My job is 24/7 every single day of the year. I do all the cooking, cleaning, shopping and pet care. I handle all my bother's financial affairs, deal with all his healthcare appointments, bring him down from his panic attacks and get his limbs moving when he goes into a "freeze."
The hardest part of my job is dealing with doctors and other healthcare people who are absolutely obtuse most of the time.
I do the work of at least three people, but I am officially listed as "retired."
736
@Carole A. Dunn I agree. I retired from my job to be a caregiver for my partner. Now, I'm struggling to survive on half the income.
2
@Carole A. Dunn I hear you loud and clear. You are working harder than you have ever worked before and there is no relief. And there's no real understanding either because no one is paying attention to the right things.
You and every other American deserve better than this. You deserve to have a life outside of the one you have now as your brother's caretaker. He deserves to be cared for but not at the expense of your health and well being. What both of you deserve and ought to have is time to spend with each other to share, not to agonize over the next bill, test, etc.
If I could I'd send you a million dollars so both of you could have what you need. I can't and I'm sorry.
1
@Carole A. Dunn
Trust in knowing other people watch you. Know that morality does indeed win the day, and that there is indeed something that rides upon the resolution of disease.
Doctors know. Priests know. Lawyers profiteer, and they will until you stand up to them.
The world can turn really dark and really bad fast. A shadow descends and nothing stops it. Know in someway, it is wanted, and motivated by petty foolishness and a purposeful retreat into childishness for the most selfish of reasons, this article included, which promotes destruction for the vainest of reasons.
1
This is one of the most important Op Eds to read. If it is rural Americans that are being left behind and a majority of this population are Republican than it explains the rise of Trump. Blaming immigrants, Hispanics or African Americans does not solve these financial issues. Promising to bring back dying environmentally damaging industries does not solve these issue. We are a country that loves statistics. I always ask myself who is providing the statistic and what are they trying to sell me? In this case the governement is trying to sell us that the economy is strong when it is built on a house of cards. The response to the recession was to bail out the banks and enrich the very people that ecouraged the problem. Those people are far wealthier today. It would have been far wiser to let the banks fail along with the economy. We all would have gone down together. Then, a rebuilding phase. It would have been painful but far more balanced than what we now have. There are 10 times more billionaires today than 10 years ago. The housing market melt down along with the financial crises and todays political climate all rests on the shoulders of the United State. Changing the statistical information would start to force us to accept the truth and then maybe change policy in a direction that helps everyone.
2
I retired a year ago. Thankfully, I saved until it hurt by putting the maximum I could in my 401k and always working an extra part-time job on top of my full-time one. I sacrificed many things for many years in order to build up the 401k. I made about the same as a teacher all those years. But I'm still scared.
Yes, my dividends have grown, but all it takes is another great recession to make me insecure again. I'm terrified by the GOP policy decisions and deceptions. I wish I had a million in savings, and I feel terrible for many good people I know who have much less than me. I worked hard to do the right things, but it could all be gone in a flash. Why do politicians keep hurting the salt of the earth people just trying to get by?
1
A really excellent column which leads to an important point: you cannot talk meaningfully about the United States without talking about class. The overwhelming majority of the political class, of their technical advisors, of the media, have been hostile to the very notion that America is a class society; indeed, that hostility has until recently been the general view of most Americans, of all classes. Of course, for some this hostility is based on self-interest, but for many others it is an illustration of Marx's famous observation that, at least in normal times, the ruling ideas are the ideas of the ruling class.
2
Corporate-media pundits are allowed to discuss the toll of the financial crisis - just as long as they don't mention that the economic policies of both parties caused the crisis.
And we're supposed to think that everything was fine before the crisis. To admit that it wasn't - and why - amounts another indictment of both parties stewardship of the economy.
The "why" of course, was the neoliberal economic policies that shipped jobs out of the country with only reassuring rhetoric about jobs programs - that never materialized - along with austerity that sought to offset the outrageous amount of military spending and various welfare-for-the-rich programs with cuts to social programs.
2
We hear, have shouted at us by Trump, data that supposedly proves how well we are doing. We need to hear, have shouted at us by different economists, people like David Leonhardt, data that tells it like it really is. What it costs in dollars to rent a decent two-bedroom apartment in a safe neighborhood, and to fill a shopping cart with healthy food, and to pay school tuition and fees, and to pay for healthcare (including insurance), and to pay utilities and transporation costs to get back and forth to work and school, and to go to a movie or play once in a while and have a modest vacation every year: we need to look at real-time costs, then see what a person needs just to pay for the basics, then to figure out how employers can afford to pay at least a living wage to all employees. We need to look at our tax system and our national priorities. No more bandaids.
1
There is a chart showing household net worth versus the stock market to illustrate that wealthy stock investors have done much better than average households whose wealth is significantly tied up in the value of their homes.
In choosing a start date of 2007 at the top of a house bubble the effect of the chart is to show those whose wealth has been tied up in their homes significantly underperformed stock investors.
But this is manipulative by choosing a start date where home prices were extremely exaggerated. Surely the author knows this but probably figures most readers would not catch it. It is an insult to the intelligence of Time's reader to be subject to such manipulation.
Correct me if I'm wrong. I suspect that many people have been forced to work as contractors instead of as employees. When they are laid off or their contracts are over I doubt they are counted in unemployment statistics since they are ineligible for benefits.
1
Reading through David's article I wondered about those he writes about that are are not doing well for any number of legitimate reasons.
Are they among those that feel the system doesn't represent them, and don't vote?
Or are they part of the group of people who vote against themselves?
I'm just trying to get a picture in my mind about people that support policies that don't support the people. If you want people to support themselves, they cannot do it on $15 an hour - it has to be at least $25/hr in order to afford the daily trappings of life, like healthcare, housing, food, transportation, school, etc.
Roger Reynolds mentions healthcare - he's right: without truly affordable healthcare. In the past year alone, over 3-million people lost healthcare coverage.
We can to better but we don't.
2
Consistently report the median household income, adjusted for inflation. Also break it down by income ranges such as lower half, middle class, high income earners.
1
Just as we've watched hurrican Florence approach the US east coast with its massively destructive power we are now observing the start of a tear in the fabric of our society: we are headed toward a crisis as minimum and perhaps a social revolution.
Increasing automation coupled with advances in AI will further challenge our economy to provide jobs and the gap between the 1% and the rest of society will continue to widen.
We need to reaffirm our committment to our fellow Americans and ensure that affordable housing, healthcare and living wages are available to all. Most advanced industrial economies do this for their people. Why won't we?
Americans work more than all other nations (Motly Fool) and most people I know WANT to work and WANT to contribute to our democracy.
2
Key questions that should be asked, for a more accurate picture:
"Are you working in the job you are best qualified for? Are you earning enough to meet all your essential expenses (including health care, education or training, retirement, child care)? Are you being paid more or less than your contribution to the workplace deserves? How many hours a week do you work? How many hours a week would you like to work? Can you estimate, as accurately as possible, how many hours a week it would take to complete all the assignments that you are expected to complete in 1 week, at your place of employment?"
An interesting sociological data point might be:
"Looking back on your high school years, what do you believe you were not taught that you could have been taught, that would have helped you with your work life?"
You are entirely right that we are working with outdate metrics, that reflect the concerns of a completely different age & worldview.
1
@Maria Ashot
Another suggestion, "Are you making more or less than you were 10 or 15 years ago for doing the same or more advanced work?"
Personally speaking, my answer is no.
2
@Maria Ashot
*Less.
2
@Mikeweb
Same here, for a fact. Harvard degree notwithstanding...
The economy will always lead society in recovery after a crisis. The few that cause financial crises, often can afford to lose. The many more that are effected, cannot. There is a term called the money-multiplier that is used to explain growth. There is a negative multiplier that impacts society following a money crisis. This negative multiplier is a large number, perhaps thousands. J K Galbraith observed that the stock market crash in 1929 only involved a small (1-5%) of the population, some paid cash, some used debt, but it brought the entire nation to it's knees. Making the speculators whole, as we did recently, does not make the nation whole.
1
@BeaconpsBush and Obama really messed up by bailing out the creditors instead of the debtors. This crisis was a once in a lifetime chance to level the playing field.
I was not surprised about Bush and Paulson, however I was realy shocked about Obama appointing Geithner and handing it to the banks. By doing so, he really betrayed the working people and is hugely responsible for the current inequality. And that will ultimately be part of his legacy.
I’m at my local bar with my ten best friends. Average net worth, including House, 401K, and savings is $1 million. A billionaire walks into the bar. Average net worth shoots up to $83 million. Has anything changed for me and my friends? This is why per capita GDP is such a misleading statistic.
4
I am sorry, David, I am just not buying it. The problem is not relying on the wrong statistics. It is that not enough people know just how well they are really doing. If the Greeter at Walmart would simply tell each shopper that the Dow is over 25,000, I am sure everything would be fine.
4
Inequality is a major problem for our society and our institutions.
This gets frequent lip service, but little analysis and no recommendations for correction. Well, here's some. The problem is rooted in tax law, specifically the difference between earned income and capital gains. We need to tax money not labor. The justification for capital gains is to encourage investment. Why? People invest for their own profits, not to build more factory capacity! Without the favorable tax status people will continue to invest for their own profit. TAX THAT MONEY! And lower taxes on earned income, most of which goes to pay to live. Raise capital gains taxes, and lower earned income taxes in order to address inequality and to save Democracy for the future.
6
When we calculate our economic state we ignore anything that we have not quantified and placed in the accounts with which we use to calculate it. We may determine the depreciation in value of productive properties or estimate the lost value of resources extracted that cannot be replaced but ignore the costs of polluted air and water or of replacing non-renewable resources. The pressure politically is to never do so because it means imposing constraints upon behavior which always makes doing things more difficult and requires more energy to accomplish.
1
More the handling of the crisis than the panic itself caused anger and frustration among some segments of the population. I don't see any of this as a threat to order, either at home or internationally. The populism one sees now, whether left or right-wing, seems actually blander than we have typically seen, not only in this country but in Europe. The shock and astonishment of the so-called elites at any challenge to the presumed finality of the globalist order they had imposed tends to exaggerate the turmoil, in part of course because those inclined to warn about the impending doom are sympathetic to the established order.
3
The measures described in the column would be a welcome and much needed change. But I’ve long wondered why affordability is not tracked and reported as a key measure of perceived economic health. It’s not hard to see that the things that really matter to most people are increasingly out of reach - food, housing, education, health care, transportation. Inflation figures don’t capture the average person’s ability to afford life’s necessities nor their frustration and helplessness when those needs aren’t met.
2
@Jerry S.
That is reflected (even in the charts in this piece) in inflation adjusted numbers. Also, when you see a statistic call 'real' (like 'real income') that also means that it has been adjusted for inflation.
The bigger question is whether our inflation statistics are capturing the true measure of the average person's actual expenses. For instance, many economists believe that health care and housing are being underrepresented in most of our measures of inflation.
It appears to me that the gap between the government's published figures for unemployment and reality widened considerably beginning in the 80s when trickle-down voodoo economics became entrenched and neoliberalism became gospel on both sides of the aisle. Perhaps the Times could take an in-depth look at this.
1
Besides the "GDP" and "unemployment" figures, a most telling number would be income inequality. By referring to "average" incomes, the media tell us nothing. What is being told now is like if Bill Gates walks into a bar. Immediately, the "average" income of everyone in the bar is in the millions. But that does not show the problem with disparity.
3
Myself, I'm just deeply impressed that about five minutes after he took office, Trump magically had all the fake economic numbers fixed so they worked right.
Really, it's impressive.
2
@Robert The numbers are not fake. They are invalid in the statistical sense that they do not measure what they should measure. They do not measure whether the economy is doing what it should be doing. What they do is like measuring the functioning of a skyscraper by the poundage of concrete in it.
1
What most people do not know is that high rates of return on money lent or borrowed reflects high risks, more likelihood of the money lent or invested being lost. To avoid insolvency lenders or investors must hold back money to cover those likely losses. But that means lending or investing less money and making less when these ventures go well. Pretty soon the lenders and investors see the reserves as lost opportunities to make more money. Thus around the world bankers underfund reserves and governments allow it and provide public revenues to save those banks when the inevitable losses occur.
If this practice of people in the financial market taking risks where they take the profits while the public pays for their losses is to be stopped, the public must act to stop it. Bankers and politicians never will, on their own.
3
The best measure of financial/political stability is one that measures the ability of working families to purchase the fruits of their labor. This is measured by total wages as a percentage of GDP.
As a result of the 2008 financial crisis, this fell from 45% to 43% and has never recovered. It represents a purchasing power hit of $2500/yr for every full time worker.
Lower purchasing power yields rising and poorer quality consumer debt and increased fear, political polarization and tribal irrationality.
15
@Robert Goldschmidt
Excellent point. It's also worth noting that 60 years ago total wages as a percent of GDP was over 50%.
2
Here is link to the St. Louis Federal Reserve FRED chart for wages as a percentage of GDP.
https://fred.stlouisfed.org/graph/fredgraph.png?g=ld2b
Yes wages/GDP hovered right around 50% during our golden economic period from 1948 to 1972. During that period labor and business both won, proving it is not a zero sum game.
1
Unfortunately, I cannot see this happening voluntarily in the near or very near future for obvious reasons. For starters, the economic anxiety is most definitely caused by the gaping income equality chasm. The very wealthy have been able to sit back and watch the bottom 99% squabble over scraps, content in the knowledge that their enormous and growing wealth is safe as long as our bickering continues. Propaganda, like that of the conservative media, fuels the infighting with racism, immigration and crime worries, guns, religion, and the cultural wars. The result keeps the angry masses at bay, fighting with one another instead of fighting the actual cause. What I cannot understand is why the very rich continue to hoard their wealth. At some point, soon, the anger is sure to boil over. It is much easier to be seen as benevolent and coming to the bargaining table voluntarily, then to be dragged to it violently. History tells us that this type of inequality is unsustainable and equilibrium is eventually achieved. The wealthy need to decide whether it will be achieved through peaceful or violent means.
6
"It’s worth remembering that the current indicators are not a naturally occurring phenomenon. They are political creations, with the flaws, limitations and choices that politics usually involves."
Thank you, Mr. Leonhardt, for an excellent column. A financially astute man once told me, "Numbers are great. You can make them say anything you want." Indeed. But reality continues on its merry way.
If Bill Gates walked into our home, the average income of everyone living here would go up by millions? billions? But Mr. Gates would still have all the money.
A recent column of Dr. Krugman made the point that if you burned all your furniture in the fireplace, the house would get cozier for a bit. But where would the kids sleep? Essentially we're burning up the world's resources, polluting and plundering, to keep the economy inflated. I have no idea where future generations will lay their heads...
3
Curious. Just what do men who are not working or looking for work do for income and health insurance?
1
@caljn
Exactly.
If Bill Gate's walks into a bar where 50 people are having a beer, the average net worth of each person just shot up $2 billion.
Einstein - or some other genius - said one of man's biggest shortcomings is the ability to understand (getting our minds around) the magnitudes of order that abound in our lives. Like how big the earth is relative to the sun.
Demonstrating this concept is the online video "Wealth Inequality in America - A Dramatic Video". An eye opener to say the least.
But it does support the notions that the Labor Department could provide more data on wages, rather than only broad averages. And that the Federal Reserve, for its part, could publish quarterly estimates of household wealth by economic class.
[Another such video is "What does one TRILLION dollars look like?"
It is one thing to mentally know that giving one million people $1 million each equals $1 trillion... but this video shows visually the staggering size of that number.]
Great article. Increasingly aggregate numbers don't tell the story due to inequality, so the PSZ (Piketty, Saez, Zucman) numbers will be very helpful.
Income inequality pre-dates the financial crisis, as the share of income going to the top 1% peaked in 2007. CBO reported that for 2014 (the latest data they publish), the share of income going to the top 1% was actually lower than 2007 both pre-tax and after-tax.
Pre-Tax %
1979 9.0
2007 19.1
2014 16.7
After-Tax %
1979 7.4
2007 16.6
2014 13.3
This was due to the financial crisis and Obama raising taxes on the top 1%.
We can fix this inequality pre-tax or after-tax or in combination. Pre-tax strategies include stronger unions, a higher minimum wage, and (arguably) protectionism and immigration restriction. It's too easy for corporations to import the skills they need rather than train for them here.
After-tax strategies include raising taxes on the rich to fund education and healthcare subsidies or Medicare for All.
At 1979 inequality levels, the bottom 99% families would be getting $7,000 more per year in income. We should establish pre-tax and after-tax policies to make that happen.
3
"Far-right political parties are on the rise across Europe, and Britain is leaving the European Union. The United States elected a racist reality-television star who has thrown the presidency into chaos."
My observation to Europe and America is, immigration. Illegal in the US and a full on invasion of Europe. The EU is a good example of how governments can't control an economy. The tighter they hold the reigns, the more out of control the economy becomes. The truth is, no one entity, nor person can control an economy. Add to that, thousands of unskilled people, with no means to take care of themselves, causes citizens to rise up and say "No. Nien. No mas."
This isn't racist, it is survival. It is normal.
4
@Mike: How many of the immigrants coming into Europe are the direct result of 1) First World countries directly recruiting cheap labor (Germany and its Turkish immigrants, for example), 2) Western meddling in the Middle East and Africa (refugees from Afghanistan, Iraq, Syria, and Libya), or 3) Colonial chickens coming home to roost (Britain and France between them controlled most of Africa)?
1
You too are a victim of propaganda, new data shows immigrants to the US hold 4 year college degrees in higher proportions than US born
1
When the NYT argues for changing how success ought to be measured, one can be certain that the reason is because a Republican is in office. And so it is this time. GDP has accelerated under Trump from the mediocre 1.8% growth in 2016 under Obama. So that must be wrong. And unemployment rates have dropped to decades lows, with record lows for blacks and Hispanics, and 40-50 year low for higher school dropouts. During the Obama years, when one questioned how much of the unemployment rate decline was due to low labor participation rates, the NYT alsways said it was due to baby boomers retiring. That was partly true. Now, Leonhardt does not even mention part of the decline being due to the aging issue. Guess that does not support his narrative.
And this week, median income and poverty stats were issued for 2017.they barely mentioned the 1.8% improvement from 2016. And nowhere was there a word about how Hispanic incomes increased by 3.7%, double the rate for whites. Or that Hispanic incomes over the last 5 years have increased by 20%, again double that of whites. Poverty? Did they mention that the 12.3% rate, down 0.4% from 2016, will probably drop again in 2018 due to an improving economy? Or that the lowest rate under Clinton was a very respectable 11.3%. The low going back to the 60s was 11.1% in 1973, under a Republican. So unemployment is getting near prior lows.
Bragging rights for Trump? Yes. But also hope for millions of Americans.
4
Much like election polling, the issue is as much with the questions asked as the METHOD of asking.
How many of you have been out of work and surveyed if you are actively searching? If your company does not use ADP to process payroll, why are you left out of the semi-official private non-farm payrolls monthly report?
What needs to be done is the IRS needs to publish quarterly reports on payrolls and wages. Will people on the fringes or under the table be left out? Sure, but they're left out of most reports anyway.
Lets get to the root of the #s; draft the IRS!
2
Well, Yes!!! A meaningful, comprehensive measure of economic well being for our citizens has been way too long in coming. Waiting for or government to do this is foolish as long as partisan politics continues - anybody wiling to place bets on that? And I agree that the press could and should take this issue up in spades. Yes Times, et al, do it!!!
1
Economic indicators also need to look at sustainability. The most unsustainable parts of our economy are the ones that contribute paradoxically to the most "jobs" and "spending." Disease care (aka 'health care') for preventable diseases such as obesity, adult-onset diabetes, hypertension, colon cancer, lung cancer, alcoholism, HIV and many others tops the list. The military and production of all weaponry--especially guns.
Cigarettes and chewing tobacco, steak, pork, fried chicken, potato chips, Coke and many other unhealthy foods that in many cases torture animals and pollute the planet. Ford F150s, Chevy Suburbans, pornography, unnecessary pesticides, perfume. All religions. And most importantly: over-population. These industries collectively account for well over 50% of GDP, "jobs," and spending, yet contribute negatively to a sustainable world (at least for those who are not Republicans).
5
Where is the outrage? Nothing will happen unless there is a palpable outrage. Let's put the test to work in November.
4
It would help greatly -- as in helping people form more informed and intelligent opinions -- if the mass media -- especially TV news -- would replace the routine superficial reporting of the usual misleading economic metrics and start delivering better information to consumers along the lines of this piece. Can't we please start talking and writing more intelligently about economic realities? Why are we afraid to challenge people think just a little harder? Or are we doomed to the same old superficial reports on the Dow, GDP and unemployment rate?
2
David Leonhardt reminds us that the economic and unemployment data theorem is historically based on confirmation bias and fraud. If, indeed, a new and accurate matrix were utilized to represent a more accurate financial portrait of quality of life for the American population it would shatter the mythical 'trickle down' economic paradigm the oligarch ruling class employs to manipulate the economy in favor of the top 1% income class. Everyone knows that the economy is a rigged 'House of Cards' construct engineered by Wall Street to redistribute wealth and subsidize the wealthiest while 99% of the population struggle. And our representative government is rigged to preserve the wealth of the 1% income class at the expense of the 99% because money is free speech in the eyes of the Supreme Court. Please remember to vote in November so that your voice is heard and you help elect leaders willing to work for more realistic economic policy paradigm and will utilize fact-based data representative of quality of life of the 99%.
Nice try, but the Kochs and the rest of the oligarchs that fund the Republicans are not dummy's. They know that these changes are a threat to them will expose how the economy has been re-engineered to create inequality.
You should expect their puppets in Congress to label efforts to change the numbers reported as creeping socialism (even thought they have nothing to do with socialism) and unAmerican and accuse Schumer and the rest of the Democrats of trying to start a class war and fight them tooth and nail.
1
The problem is less that the measures of the economy are all wrong, but that measuring simply the economy to assess the state of our nation is all wrong. For a nation pursuing happiness, the fact that we do not use any measures of happiness or well being reveals the poverty of our elites' view that we are at our essence are nothing more than a conglomeration of markets, an economy. We are at our heart a society and until we measure the health of the society we are flying blind and deluded.
4
Thanks for this informative piece. Maybe a new Democratic Congress will initiate legislation based upon Chuck Schumer's idea. It will turn people's heads. I am really tired of Trump supporters crowing about low unemployment numbers and an overvalued stock market.
1
Oligarchy rules over minds. Bodies follow.
Ruling ideologies are generally in place to serve the class which imposed them. We do need to promote economic indicators which reflect better the state of society. For example mortality under age 5, is twice greater in the US than in Italy.
The modern economy has become similar to the Roman global economy which came to rule toward the end of the Roman Republic… quickly causing its fall. Indeed, extreme, and increasing concentration of wealth, thanks to tax-avoiding globalization, also deprived Italian citizens of employment. To anesthetize them, money, “bread and circuses” were distributed by the plutocratic Roman government. The result was that Roman citizens in the core of the empire were progressively made completely impotent. They progressively lost the ability to work, and then to think creatively. Military incompetence and invasions followed.
As the empire started to crumble, Roman emperor Diocletian imposed a command economy, and the cult of the emperor, quickly followed by Constantine who imposed Catholicism. 58 years later, emperor Theodosius instituted (in 381 CE) the penalty of death for heresy.
Could that have been avoided? Yes. The Gracchi brothers explained inequality killed: the wealthy had become too wealthy, thanks to globalization; the absolute limit on wealth of the earlier Republic had to be re-established. Instead of implementing reforms, the wealthiest assassinated the Gracchi and 5,000 of their followers.
Two articles in two days pointing out the fallacy of our "great economy." As Leonhardt shows it is not that great for tens of millions of us. We are a couple of missed paychecks away from disaster. I commend the NYT for detailing these facts.
The St. Louis FED website is a treasure trove of data. Why should we have to mine for the intel? Could it be because those in power do not want us to know the whole truth? Be careful Mr. Leonhardt. You are stepping on some very powerful toes.
1
@Concernicus
Why be careful? Do Americans take the time to read and become knowledgeable about issues, real economic data vs. faux news? How about that last election, presidential, and the tax cuts that followed? And all the rest?
1
Can you imagine this column if Obama was still President? The point would be how statistics don’t prove how great the economy is performing.
2
@Shamrock...This column would never have seen the light of day if BHO were still President. The whole point of this incessant wealth envy blather by the Times is the hatred of Trump. If U-3 were 16.4% and the Dow was at 6,239, all of the economic indicators would be just fine because they would show what a disaster Trump has been. NEVER TRUMP
1
Excellent! It's about time that a major news outlet highlighted this issue. As others have commented here, every major news outlet should begin doing the same. I try to point it out when talking about it. When Trump trumpets about why impeachment because he's doing such a good job with the economy, I continue to cringe at the distortion and outright lying. He should be corrected on this issue, too. The ideas for reform noted here are very long past due, as Leonhardt puts the prospect of making no changes as being so dangerous. The way I put it, I guess the ship has to hit the iceberg before anything different is done. What, not enough lifeboats? Who knew?
4
@akhenaten2...Was Obama distorting and outright lying when he recently took credit for the same economic indicators that you and Leonhardt now find apocalyptic?
Maybe the NYT could run a lifestyle series contrasting average households in various countries to similar households in the U.S.
A family of four, making average wage, living median lifestyle, and showcase how many hours they work and where each of their dollars go to maintain that lifestyle.
We are all taught that America is the richest, fairest, most exceptional country on the planet. But Americans don't ever get a window into the average lives of average families in other countries. We are too self absorbed to care about that. Maybe it is time to take inventory just so we know how we really stack up.
22
@medianone...A useful indicator of satisfaction with one's economic lot would be something like an Emigration/Immigration Index. What countries have high emigration indices and what countries have high immigration indices. Why? Just a thought.
the IRS could provide a simple number fairly easily for people whose incomes are reported on W2 and its contractor equivalent, by reporting how many people are making lower incomes (inflation adjusted) than they were X years ago, for X of 5, 10, 15, 20, and how much less they made. split that out by age and whether the person has started drawing Social Security. a better study to understand the impact of lost wages before retirement would be needed for those in retirement, and to understand how many were forced into early retirement.
1
While we're at it, changing economic indicators that is, let's change the definition of "growth" from quantitative to qualitative. The last thing the human species or the planet Earth need is more growth - growth in the amount of production/consumption.
2
The unemployment rate does not count one group of discouraged workers that I am very familiar with, those friends of mine who lost their professional jobs after age 50 and were able to work only part-time or in much lower-wage jobs until they qualified for Social Security at age 62.
At that point, having run through their assets (draining their 401(k)s, selling houses that they didn't have much equity in, having to pay through the nose for health insurance or going without and suffering major illnesses) they not only could not afford to wait for the higher benefits that they would have been eligible for at age 70 but were constrained from earning "too much" until they reached age 66.
Contrary to the stereotype, not all boomers who grew up middle class are sitting pretty these days.
I also sympathize with the younger people, some of them in their thirties, who are still casting around trying to find a living-wage job and are constrained from taking further training for a career change by their already burdensome student loans and capricious work schedules.
The 0.01% are getting a good start on their ultimate aim of turning America into a Third World country, with a small group of the ultra-rich controlling a privatized economy, hiring the rest of us at a pittance, and blaming us for our poverty.
14
When I read that median annual household income in the U.S. is $59,000 and average annual household income is $56,000 I know what that means because my third grade teacher taught me the difference between median and average. I can then compare that with the annual income my wife and I (just the two of us—we didn’t have children) make, which for at least 15 years has always over $300,000 and often over $400,000. We live in the Midwest, so the cost of living is moderate (our home was paid for years ago). I can also read about the median net worth of an American married couple in our age range, three-quarters of which is home “equity”—which you can’t readily spend. I can compare those numbers to those of my wife and I.
So the numbers are there. And with the elimination of defined pension plans, and knowing the average social security payment (which half of recipients take at 62, knocking their full benefit at 66 down by 30%), one can get a picture of your retirement versus the average or median.
It is therefore interesting that the writer thinks we are in the dark.
2
Most of these numbers were great when we didnt have computers. Computation and the abulity to track those computations over time means we should be looking at everything in more fine grain.
It is like we are still trying to forecast the weather using only a barometer and a thermometer while ignoring weather satellites, computer modeling, and yes, climate change.
These numbers are broad strokes where we have details. Yet we ignore the detail for political reasons. Because it is easier to hide the lies and sefwnd opinion when one doesnt have to deal in facts.
Sadly, this doesnt lead to positive outcomes. It is just one step above reading tea leaves.
Let's go a little deeper. Every society must have an economy, but our solar system, the shape of that system is a matter of human choice. What is the job of an economy? 1. To produce goods and services of high quality in sufficient numbers, 2. To distribute them in a way that allows citizens to live dignified lives, and 3. To guarantee a job to anyone who seeks one and that pays enough to to live a dignified life for self and family. To deregulate this system (a la Reagan) removes the economy from democratic control and will always produce a failed economic system on criteria 2 and 3. Our present, increasingly unregulated, economy in the US is a dismal failure by any human measure.
5
@John Mullen The first sentence should state "unlike our solar system"
@John Mullen...A minutely controlled economy, reminiscence of Soviet Five Year Plans or other Marxist economic models, has yet to produce your number 2 and 3 criteria. Nevertheless, Bernie Sanders and his Democratic Socialist geniuses are a whole lot smarter than Marx, Lenin, Trotsky, Stalin, Mao and Che, so we can expect the realization of dialectical materialism just as soon as the Blue Tsunami swamps capitalism this November. Oh, yeah.
"That’s why the net worth of the median household is still about 20 percent lower than it was in early 2007."....The author would have been more credible if he had not deliberately picked a year when the housing bubble (the price of homes) had reached its runaway inflated peak. The price of homes in 2007 does not now, nor did it eve,r represent some sort of norm that should be used in determining a bench mark for comparable net worth.
3
If a larger percentage of Americans do NOT have an extra $500 for an emergency then no, we are not doing alright or better.
Those who are doing better are doing really well, the rest not so much or at all. Until this inequality is balanced or recalculated these 'Happy Days are here again' stories are pure bunk. There are way more people struggling day to day than there is wealthy or comfortable ones. For starters how many children in the US are living in poverty? Over half. Homelessness is growing rapidly too.
5
Thank you @DLeonhardt. I find that statistics are used to win some argument. Your argument is clear. The poor and underemployed are misrepresented in the Stats used by Government to tout their position of how MAGA is working. I think that a radical new thinking about what a measure of a successful society is needed. I have always thought that using Market-Baskets of Buying Power and Relative Debt by Income Levels and Assets Ownership - Less Debt, over time, are better gauges of a health of an economy. Just saying that there is 15% unemployment in low income areas doesn't help us to understand how those individuals stay alive. Are they living in an alternative (dark) economy. A cash economy without record? I like your home ownership construct and how most people who own a home use it to build their wealth for lower income people. But, fact is we are below 65% home ownership in America (https://goo.gl/lxD0pQ). What do those in our country who do not own a house use to store wealth? How do 35% of our population create a transferable asset to their progeny? What is their trend economically? How do we measure this more than 1/3 of our population's economic health? We have so many dark holes in our data we are losing large swaths of what it means to be an American today. We hardly know what is going on in the house next door much less the world we see go by on the train to work. Thanks for your insightful start to a major gap in our world thinking.
4
As long as the rich get richer and the poor struggle without hope, the Economy has not recovered. The United States is prosperous when a full work week yields a living wage. The architects of ‘the recovery’ (Bernanke et al) were also the people in charge who ignored the impending disaster in the first place.
7
Mr. Leonhardt's data and observations are spot on and entirely consistent with copious writing and research on this topic-- from the widening gap in inequality, loss of jobs providing upward employment, structural systemic conditions within the economy that make it profoundly difficult for individuals to better their situation. Serious writers have similarly challenged the more traditional measures of GDP as reflecting generalized growth and well-being. That conditions such as pre-existing wealth and social status are more statistically relevant to success than individual grit.
As others have pointed out as well -- this is one of the most profoundly wealthy Congresses and strong monied interests have clearly worked to position a narrative of rugged individualism, laissez-faire econom
Economic conditions for the great majority of individuals in the U.S. and their future children are unlikely to improve until we get our stories straight.
6
About time somebody of note finally noticed this. You might add to the unemployment numbers all the people who are under-employed or working part-time instead of full-time. And (somebody can double check me on this) I think the "official" measure conveniently ignores people who have left the military but haven't found jobs, and recent college graduates who can't find jobs. Oh, and all the middle-aged people who have been dumped from jobs but can't get hired anywhere else or can't afford to re-educate themselves for "the new economy." Whole swaths of the population, left to wither. Keep it in mind when you vote.
12
@MCS...You can double check yourself. You have a computer and you can read. Google 'Monthly US Underemployment Rates" and follow your nose. You will find information related to your concerns that Leonhardt conveniently forgot to include in his condemnation of Trump, America and Capitalism. Give it a try.
In this very informative article, the author rightly points out that the rise in the stock market does not affect most people. However the rise of the costs of housing and heath care does and must be addressed at all levels.
5
Leonhardt makes a valid point that additional measures such as net worth are important to include in policy decisions. I am disappointed but not surprised though that there is no mention of life choices as a big factor in the current outcomes.
Almost all of us know people (maybe looking in the mirror) who stretch to buy a bigger house, a nicer car, etc. and yet have little or no savings. We are a society consumed with immediate gratification, exacerbated by peer influence.
Every now and then a story emerges about a seamstress or teacher or factory worker with a modest income who manages to leave a surprise multimillion dollar estate. They did it it not from the lottery, but by a series of life choices.
Google "radical saving retire early" for lots of stories and advice on how to get there. As a libertarian I embrace free choice, but with that comes the responsibility to live with the consequences. Everyone with low net worth is not necessarily a victim deserving government intervention.
1
I think we're touching on 2 different topics here. The economy, or health of our companies if you will, is as good as it's ever been. There is no doubt about that.
What continues to deteriorate is the power relationship between employer and employee, which is completely off and the cause of many socio-economic issues.
A healthy society has a good balance between empowerment of employees and keeping the cost of business down.
Too many employee benefits/rights (lack of working hour flexibility, high severance, too many holidays, firing barriers, etc.) and you end up with a high structural unemployment like France, too few and you end up with a class of working poor and a low quality of life (uncertainty, dependence on employer for healthcare etc.) like the US.
Germany and the Netherlands, which are realistic examples of economically very successful and diverse countries, get it exactly right.
Everything starts with getting money out of US politics. It is the root of all evil. Public discourse in the US has been made impossible by constant and deliberate polarization (dividing workers on race, religion, perceived freedoms etc.), avoiding crystal clear societal problems to become valence issues.
It should be the single most important issue to tackle when Democrats regain power.
7
In addition to the economic threats mentioned, at a meeting with my financial advisor, he brought up another dark economic cloud: $1.3 trillion in student loan debt. Those who become doctors will pay their debt off, but those who work in teaching or the service economy, or can’t find a high-salary job may never pay their debt, which will grow with interest due. A trillion is a big enough number to be part of the conversation.
7
David makes some good points but regarding the unemployment rate, his narrative is undermined by the very data he presents, namely, the male labor participation rate has been declining steadily for fifty years. It is a secular change which isn't readily explainable by economic opportunity or the lack thereof. You can't make a cogent article that over the last fifty years there have been diminished job opportunities. The usual economic explanation relies on psychoanalysis of male workers, arguing they suffer from diminished masculinity because their wives can now make more than them in health care and their manufacturing jobs have been sent to China. But over three generations of men that's suspect in my view. Instead what I see is that men have increasingly failed to "grow
What's also missing is the amount of money being spent on debt service. The great recession force many people to run their credit up to survive the job losses mentioned. Many missed payments or were foreclosed or declare bankruptcy. All these factors increased their cost to pay off those debts.
Let's take a person or family earning a decent middle class income and say that pre-crisis they had less than $5,000 in revolving debt and a good credit rating so the average interest rate was about 13%. They loose their job and to survive the expenses go on credit cards. As the debts go up, maybe payments are missed their credit score goes down and the interest rates go up. Now they are $20,000 in debt to the credit cards and their average interest rate is closer to 20% (maybe even higher). They get a new job for the same amount annually.
Before the crisis their credit card minimum payments might have been around $200 per month. After the crisis the $20,000 is 4x higher but because the interest rates are higher they need to pay more to cover the interest so they credit card payments are closer to $1,000 per month, maybe more.
This is a family that with the same income has $800 less per month, $9,600 per year available for savings, and purchases. They are effectively taking home almost $10,000 less. And with minimum payments that condition will last a long time.
We need to understand average available purchasing power of the lower 99% to forecast true consumer positioning.
9
I think you missed the best opportunity to make your points; not through a boring (to most) recitation of old versus new financial metrics, but through the lives of those you describe.
For example, how are the former officers of Lehman Brothers (the CEO, CFO, etc.) doing ten years later? Well, I’d guesstimate! How is a Trump supporter from West Virginia, for example, doing right now, two months before the mid-terms?
Bring these lessons to people who don’t regularly read company annual reports, Bloomberg News and HBR. Those who you target are content; not apt to want change to statistical reportage!
3
True, we can make much better use of the distribution statistics we already have, focusing on household income instead of GDP (as by Picketty) and these should be published regularly by government agencies. But there are still a couple of technical problems here. First, our income distribution statistics come from the Census Bureau and are wildly inconsistent with GDP income concepts, definitions, timing and results. Until these can be reconciled by the agencies, we will have inconsistent time series and weaker analysis. Second, on wealth distribution, the most important, and only really secure source of retirement income is Social Security, but entitlements against future taxes are not counted as wealth even though they serve that function. On current distribution, the pinch seems to be mainly in the bottom third, while the median (the middle class) rises. I split my time between two very working class towns in New York City and Maine and I observe (as Leonhardt says, use your eyes to look around you) an explosion of Mercedes, BMWs, Audis, Volvos, Lexus's and (in Maine) high-end pickups in the last year. i suspect this would be readily shown by the trend of a Lorenze Curve, as was the case in Brazil and other Latin American countries until recently.
Based on the trends I've observed throughout my lifetime, financial security results from doing your homework, going to college, working hard, staying sober and saving money. Having rich parents, being white and getting lucky are also very important. While it is a legitimate opinion to espouse, I think it's unrealistic to expect the government to arrange for your financial security.
3
@Dusty
Those behaviors you describe as the road map to financial security are all valid. Unfortunately millions of people who have followed that advice are still scraping by.
The great 20th century middle class didn't just magically appear by dint of Adam Smith's 'invisible hand' of capitalism. It was cultivated by a specific set of government policies around subsidizing public goods like infrastructure education and research, legal protection of labor unions, tax laws that encouraged domestic investment by businesses, and a meaningful minimum wage that was an actual living wage. Basically, leveling the playing field so that all people were allowed to prosper in a growing economy. Emphasis on the word 'were'.
The playing field is decidedly no longer level. This is due largely to the right wing's evisceration of those policies, aided by decades of division along any social lines possible along with brainwashing people into believing that anyone who is poor has only themself to blame.
5
But how is all of that related to the article? Answer: it’s not.
The once affluent middle class has seen massive destruction since the rise of "supple side" economics that still are a pillar of GOP economics. It's shaky foundation is that throwing tax breaks to the wealthy "job creators" who will hire more workers. When America was a manufacturing economy that relied on manual laborers this may have been somewhat accurate. But in present day America where automation and outsourcing to China has led to a decline in blue collar employment, the correlation has been seriously weakened. And worse yet is that the same thing is now happening to white collar jobs with the advent of data science and advanced algorithms. It is a house of cards that is waiting to collapse. The NY Times should consider a series of articles on trends in technology in employment and what the economic impact will be on jobs.
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Capitlism and free markets are not just about business profits, it also about consumer purchasing power. The global economy with products manufactured outside the USA has greatly increased the purchasing power of most middle and low income Americans, far more than increases in wages and salaries have ever done. And i s been at the expense of manufacturers who failed to transition with the changes in the global market.
republicans and trump are focused on using tax payer money to “save those failed manufacturers at the expense of the increase in consumer purchasing power while trump is attacking those US corporations which have found success in transitioning to the global economy.
The trump policies have not just given away the asian market but without even a fight, acting like a 12 year old bully ranting threats and hoping for individual transactons which can be flouted as great trump achievements instead of building the multlaterial relationships in SE Asia, such as the TPP. will only result in a US economy dependent on political power to force US consumers to buy overpriced US made products, losing the purchasing power benefits of the global economy resulting in the use of political control, and not free markets, to increase profits for corporations and a lower standard of living for middle and low income Americans.
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I'm one of those people described on both sides of the equation. I am 54 years old. Three years ago my 20-year job supporting AT&T systems was finished being outsourced to Accenture, a consulting firm that uses India labor to undercut American workers.
Working in IT my whole life was never my dream, so I have explored other options to no avail. I have been living off income from a rental I own in a desirable area, and by taking from my 401k. My 401k has risen with the stock market, so over three years I have managed to maintain the same balance I started with after withdrawing nearly $100k. Thank goodness I sunk decent money into my 401k (and bought Apple stock at a good time).
But my prospects are limited. I need a job to get health care, but employers aren't interested in over qualified older workers when young fresh eager talent is available.
If I didn't have to worry about health care I could work for myself, but health care through Kaiser is $525/month, and at that cost, if I get injured I am still paying a high deductible. Health insurance through an employer would cost a fraction of what I pay.
So while I am not struggling thanks to assets I own (two houses in highly desirable areas), I am not sure what the future holds for me. I just want steady work where I can use some of my skills, but the opportunities are slim.
And the leadership doesn't give me hope. If democrats fail in 2018 or (worse) 2020, I am considering selling it all and moving to another country.
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@Soldout. Your predicament is similar to people who juggle several part-time jobs because employers keep hours low to avoid paying for health insurance. If we had single payer "Medicare for all" more employers would be willing to hire people full time.
Leonhardt's basic thesis seems to be that everyone uses GDP to evaluate the economic health of the citizenry.
Personally, I can't recall the last time I sat at a bar and heard someone say: Yep, that GDP proves that I'm better off this year than last.
Statistics are just that: a record of what has already happened.
They aren't predictive, and in many cases - and for a number of reasons - they aren't suitable for supporting a particular hypothesis.
First one has to decide what the question is, and what data would answer it unambiguously. Then a method of collecting the data that is unbiased needs to be applied.
So if a new measurement needs to be collected, OK, specify it. But to claim that the existing stats don't represent reality, is an inaccurate and subjective observation, and highly dependent on the reality that one wishes to portray.
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By all means, the best measures - which I feel sure Mr Leonhardt has well identified and explained - should be adopted and broadcast widely (and distinguished from the less informative ones 'til folks catch on, to the extent that they can) .
Can't help but also feel that except for professionals in gathering and making technical use of economic measures, most use is made by politicians and the like.
And that the form of that use is a declaration that translates to "You never it had it so good/bad," which I recall, as president, saying in a televised speech during his 1964 term as president.
For what it's worth, LBJ's statement fell flat to my ear then because it evoked his career in TX where enormous changes took place both before, during and after the Great Depression, electrification being an example. Except for that kind of audience, gotta wonder how effective such declarations are.
3
The most important statistic: The amount of money legislators receive from each economic class. I am guessing that the 5% at the top are padding 99% of the money legislators receive.
14
If we capped the wealth any one family could control at four hundred million dollars we would have the remedy to inequality in this country. The amazing part is that such a rule would only affect a few dozen families. They could still own many homes, boats and jets but the billions they would never be able to spend anyway will go to schools, medicine and infrastructure.
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@TOM....What's a family?
I'm a 64 year old small town lawyer who does mom-and-pop stuff, e.g., divorce, bankruptcy, estates, some criminal, etc. WIthout question there is no more middle class. People who worked all their lives and tried to save suffer anxiety about the roof over their heads, their health care and crime. Even civil servants such as teachers, municipal employees and similar vocations are bitter about their limited ability to travel, provide for their children or grandchildren, etc. I don't know if the economy is "All Wrong". I do know it is not as advertised fifty years ago.
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@Paul Kramer... "I do know it is not as advertised fifty years ago.....Fifty years ago most families had one car, and lived in a 1500 sq ft home. They had no monthly cell phone/cable/internet charges, and rarely took vacations outside of the state where they lived.
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@W.A. Spitzer: They also lived on one income, paid reasonable amounts for health care, and probably had defined benefit pensions. Their children could afford tuition at a state university on the earnings of one minimum wage summer job and a few hours per week of a campus job.
Maybe your family didn't travel outside the state where they lived, but mine visited 38 states by car before I graduated from high school. That's because my father had negotiated extra vacation time. Yes, kids, paid vacations used to be routine.
The electronics you mentioned are the exception to the rise in the prices of necessities. Calculators that an engineer might use once cost $300. But in that same era, a pair of jeans and a shirt started at $5 each (4 times the minimum wage), and they were made in the U.S. by unionized workers. For apartments, you figured $50-$75 per bedroom, so that the standard was spending not 1/3, but 1/4 of your income on housing.
Using electronics as the indicators of prosperity is misguided. That cell phone? Many companies will give you a free, only slightly outdated phone with a contract that is cheaper than a landline.
@Paul Kramer Another thing that made that era great -- the one trumpers want to return to, was the GI Bill of Rights after WWII.
For the first time in history, an entire swath of population that would never have been able to go to college or buy a home, could do so. This created the engine that powered that fabulous Great Time they so yearn to repeat.
Start with free college and some 1950 era type small homes for super cheap. Add to that the lifetime socialized medicine those same old servicemen still get (the VA is the only true socialized medicine in America). It worked back then. Just ask somebody wearing a MAGA hat about those golden days and when they were.
If you can write about correcting economic indicators, can you provide the adjusted measurements? Is this kind of measurement only possible by the Fed?
You write,"The whole point of statistics is to describe reality. When a statistic no longer does so, it’s time to find a new one — not to come up with a convoluted rationale that tries to twist reality to fit the statistic."
The "convoluted rationale" is a product (in part) of a government that is that is painfully politically motivated to favor the wealthy.
If you feel free to write about, provide an alternative.
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But the financial crisis lasted only a few months and was indeed over back in 2009. And so was the recession, as the economy started climbing out of the slump.
What did NOT end in 2009 was the economic depression -- the first one after the Great Depression of 1930s.
An economic depression is a state where:
1. the economy is in equilibrium -- absent a powerful shock, it will stay depressed for many yeas.
2. The uneployment stays stubbornly high and a lot of existing production capacity sits idle as everyone tries to save money and spend as little as possible.
It's a catch 22 -- businesses and individuals spend the bare minimum because bad economy. Many are already out of job, and you can be next. But that meand the sales are slow and companies see no reason to start hiring more workers! So the unemployment stays high.
But how an economy becomes depressed in the first place? Well, it takes a powerful shock -- something so big and so scary that everyone becomes worried about the economy and -- yes -- starts spending less! Companies see drop in sales and start laying off the workers.
The widespread expectations of the economic downturn become a self-fulfilling prophecy!
And it doesn't matter what scared everyone into spending less. It could be major banks starting to fall. It could be stock market crash or a threat of an alien invasion -- it works the same.
We should shift the focus from the initial shock to depression -- and why we choose not to end it 10 years ago.
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And yes, letting the depression to run its course was a choice. All this time the government had the tools it needed to pull the economy out of depression. But they never used them -- why?
As weird as it sounds, ending the depression is politically a very risky move. It requires the government to implement policies that on the surface look highly irresponsible, if not insane.
It is a paradox because the depression itself is a paradox. The paradox of thrift, that's the actual term. It postulates that when everyone in the economy decided to save more but cutting on spending, they will end up saving less, not more. The depression is a world through a looking glass, where right becomes wrong, the virtue becomes a vice, and the vice becomes a virtue.
So the government choose to do nothing. But whether it was the right choice, or wrong, we should learn what really happened 10 years ago -- and it frustrating to see that we still blame the financial crisis for things it has nothing to do with.. And depression stays an obscure word from economic textbooks, even though it happened for real.
That one is easy - it was payback to the wealthy political donors in the form of massive tax breaks that redistributed wealth to those who need it least.
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“We” didn’t choose to end the recession. The Republicans in the Congress refused to go along with the government spending necessary to get people back to work. They claimed “the deficits will result in debts our grandchildren will be paying off!”
Of course, that was when we had a Democratic President. Now, under a Republican, we’re back to “deficits don’t matter.” But rather than increase the deficit in a good way (increasing public spending), we — I mean those Republicans — have pushed through irresponsible tax cuts that actually do ensure our grandchildren will be paying off their debt.
The quality of economic life was more equitable in the 50's, 60's and 70's when the graduated income tax rate topped out at 90%. And yes I am suggesting that we adopt that tax scheme again, cause it worked!
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Oddly, Trump actually made this point about labor participation rate at an early rally (although he didn’t call it that at the time perhaps to avoid talking over people’s heads). Now he’s boasting about the unemployment rate. No surprises there on the u-turn.
Economic indicators are never meant to be numbers to gauge success or failure. They are averages that can help track the movement of a series of datapoints which assume everything operates in a bell curve environment. When income inequality has pushed us from a bell curve environment to a power curve environment, averages are no longer meaningful. They are just a middle point between two distant centers of gravity.
Using per capita GDP growth today to describe American economic life is like trying to understand China’s relationship with Europe by looking at Kazakstan.
I highly recommend The Black Swan by Nasim Taleb to get an in depth look at this phenomenon.
That is, unless you want to feel better about the economy. If you want to feel good just keep reading the stats the media publishes.
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When the financial crisis hit, I was amazed. I thought that rich people owned the economy and only what they did mattered. But the crisis was caused by the little guy unable to pay his mortgage. It turned out this gigantic economy depend on the little people. But if it did, and needed rescuing, why not help the little guy rather than the bankers who rolled the system. And that continues. When the government needs money it turns to taxing the little guy one way or another. The real economy is still about the little people and the indicators should reflect that if they are going to be about reality.
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This article is rightly needed. As someone who works with governments, I know that current tools and indicators have flaws. This is why it is important to make adjustments.
A quick way to make an adjustment would be to disaggregate the broad categories into a few key sectors that reflect today's economy. Instead of continuing to report on just farm labor and non-farm labor statistics, break up the non-farm labor category into a specific set of sectors. "Non-farm labor" is meaningless in the 21st century. This categorization suited well in the 19th century when the US was an agrarian society.
Another adjustment would be to report on jobs by employment status, full time, part time, temporary, contract. Employers will have this data. Government and media would be able to capture the percentage of the work force working in the gig economy.
5
And this is why Hillary lost to a reality show host ( sadly Trump was aware our elections are determined by electoral votes, and Hillary did not understand this, not going to Wisconsin and Micigan,and going red states like Arizona ). Obama was in his last months was pushing the TPP, you know that trade bill that is worse than NAFTA, that had decimated manufacturing jobs. Working peoples lives did not get better under Obama. His staff was picked by Citigroup. Wall Street bankers were bailed out fully and the architects of the crash, were made whole and not sent to jail. Meanwhile millions of people lost their house after the crash, through no fault of their own.
Sadly now our economy is on a sand foundation. The banks are much bigger now and trading credit default swaps much more ( major cause of crash). They are partying like it is 1931. Stocks are going up because the owners are buying back their own stock. We have two political parties representing Wall Street and never-ending war for profit.
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While The Great Recession of 2008 initially rocked the world of all income brackets, TARP (government bail out) went to the 1% banking Wall Street class. This was supposedly for the sake of the 99% that the whole economic system would be saved and avoid civil mayhem.
However, before long it became apparent that the whole 2008 disaster actually functioned to redistribute America's wealth up the ladder to the very wealthy making them now ridiculously more wealthy. Emaciating the middle class and leaving the vast majority of the population to scramble in desperation as we are so well described in Mr. Leonhardt's article. Unfortunate and sad how this extreme income inequity brings out the worst in us.
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OVerall, I agree with this. However, making the topline unemployment number something other than the one we currently use would make the president look bad (he does that enough all by himself) and I think that a change now would seem to be political. Publicizing a wealth figure would be meaningful, as would a savings balance figure. Both would illustrate how fragile the finances are of many people living in America.
2
Jobs are going unfilled and there are people "idle" because they can't find a "decent-paying" job. What happened to the sense of pride that came from working and not living off the entitlement system?
Overall, I understand the main point of the piece, and there is some validity there, especially the measurements used being more about the wealthy and not the average American. That line just irked me.
@Derek Sorry, I'd rather not work for money if I could -- that is live off a pension of one kind or another. There is more to life than toiling for a wage. Volunteer service is an undervalued activity in this country.
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@Derek
What is the "entitlement system"?
Unemployment benefits end after 6 months.
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@Derek
W#hat happened to the assumption that a viable capitalist system pays participants fairly for the work they do, and goes out of its way to prevent rent-seekers from coasting on a perverse system of incentives to bad behavior.
And, more, what happened to the classic assumption that corporations must pay for externalities? Like all the water in North America, doled out for a pittance and polluted into uselessness by companies heedless of cost and unwilling to pay for their environmental crimes?
We are not a capitalist country by any means.
Its hard to be proud of being victim of a system skewed in every instance to privilege wealth and perverse levels of accumulation.
Brilliant article. Also, we need to add new economic indicators that take into account unpaid "caring" work that includes raising children, looking after elderly and disabled family members, and unpaid housework. It is crazy that the work that approximately half the adult population (women) used to do full time, and that adults continue to do on top of or instead of paying jobs, is unaccounted for.
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@Lois That's why we need paid maternity leave and wage equality and subsidized child care and a rise in the worker's incomes. Women always did this work for free and now that we're in the workforce- the work still needs to be done! Many women would be happy to still do this work and cook for neighbors and care for the elderly if their husband's made enough to support the family on a single paycheck, but who can do that nowadays?
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I’m sure the data could be created, if it’s not already. The reason economists don’t highlight these numbers is because they had been, historically, focused on production. We count that through how much is spent by consumers. Kids rarely pay their parents for the service of raising them and so we can’t accurately measure this against the person who made a chair.
@Lois Yes, it is particularly inane that the additional work parents or spouses do outside of paid employment is not counted in "productivity."
Whether maintaining property to keep values up across a neighborhood, volunteering locally to reduce the burden on municipal agencies, or -- crucially -- helping children or those in frail health, most adults are indeed being productive in a number of ways that are only rarely quantified, that add value to all of society. Obviously, well-parented kids are better prepared for school/work/society; well-cared for people with health challenges reduce the burden of care on our medical profession. Just for starters.
Excellent article. I hope that many people will read it and vote for candidates who will improve the situation and not further exacerbate it.
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Distributional GDP is an overdue good idea, as is using median rather than average, but I prefer Bhutan's Gross National Happiness Index.
As the King of Bhutan, Jigme Singye Wangchuck, said "Gross National Happiness is more important than Gross National Product."
1
As David Leonhardt says, the more revealing set of indicators already exist, but "they tend to be obscure". Well, raising information from the depths of obscurity is almost a definition of what the media is supposed to do. So why doesn't the NY Times pick a set of economic metrics that it considers more representative and revealing, and highlight them with front-page headlines whenever they become available, usually every month?
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@Enda O'Brien
This is the first time I have seen anyone consider the media to be the top economic research institutions.
(Whatever do we have unversities for:-(
@Enda O'Brien. I would add that the NYT should, after some initial experimenting with what non-economists and economists find useful, syndicate and make available to other papers that analysis.
@Enda O'Brien
Yes please! This would be a great service that the NY Times could provide. Please consider doing this!!
1
The economy hasn't recovered in the community where I live. We don't have a high unemployment rate because young people have left for better opportunities.
Our high school graduated 25 students last year. Twenty years ago, the numbers were in the hundreds.
Most of our citizens are old enough to have pensions and Social Security. The town voted for Donald Trump, in part because they don't want their tax money to be used to help the undeserving. They hate the idea of immigration and believe that people of color are criminals and lazy.
Upstate New York has a lot of communities like this. The economy hasn't recovered because agriculture has changed. There is nothing to replace it and towns are caught in a downward spiral. I suspect this is true in many rural regions.
What kind of different statistics would capture these problems? That is a big question, but it rings false to say that the economy has recovered in this time and place.
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@Betsy S
Hear you. Additional data: The small central Pennsylvania burg where I grew up had a population of 4500 in the 50's. Currently approx. 2200. Sad story, no jobs for us science/engineering types. So it goes. I'd say economic bigness is devouring everything in its' path - basically what the author here is saying. Capitalism is amoral. Etc. Nothing new here.
1
This looks like (solely based on your description) a town that failed to attract enough jobs for the new generation. They would come back but they need a reason. Farming has changed, but most teens and young adults don’t want those jobs. The same is true for manufacturing jobs. The economy of the US is focused on service jobs. If your town could invest in attracting those companies or encourage some to become entrepreneurs, your town would recover. Easier said than done, I know, but relying on farming to keep a city going is very old fashioned thinking. Only about 2% of our GDP is from agricultural jobs.
1
@Betsy Sorry, let them suffer. 99.99% of people who get government help deserve it. The kind of attitude you report exists in your community is sad. I bet they all go to a christian church, too? remember, salvation was given but undeserved and is a reward without measure. Hypocrites them all.
2
Mr. Leonhardt is right that the financial crisis has long lasting political impact. The lack of rigorous prosecution for the architects of the crisis is probably the biggest mistake made in the Obama administration. The fat cats were bailed out and normal people took the blunt of the damage. This injustice contributed to the destruction many people's faith in the American model. We are paying the price now. However, the financial crisis a decade ago is only partly to blame. The rapidly increase inequality has its origin in the 80s when we instituted a trickle down tax system. We cannot reverse economic inequality without a major overhaul of the tax system.
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@Peter
To be fair, Obama did not fail to rigorously prosecute the big financial firms, aka Obama's biggest donors, those firms and their people were bailed out and handily rewarded.
1
Two observations.
1). While we are asking the Government to provide more information and present it in different ways, let’s also add to the mix the amount we as a nation owe in the form of entitlements when we discuss the national debt. People falsely believe the national debt is about $19 trillion but when you include social security etc it balloons to $80 trilion.
2) despite the authors predilection against Trump and his economic policies, the graphs suggest his election was an inflection point for improved performance for lower income Americans.
1
@Dady
2) ...IF Mr. Trump was elected in 2012.
100 people are in a bar. The average income of these folks is $40,000 per year.
Jeff Bezos walks into the bar.
Now the average income of the patrons is $350,000,000 per year.
If you want to understand the economic situation facing the vast majority of working people you need appropriate data, including excluding statistical outliers.
Not rocket science.
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@Raul Campos You made a slight error in your post; I'm pretty sure you meant a leveraged buyout manager, not a socialist.......
@Victor Lazaron Have you made a mistake? His income is not that high, that is his "worth" which is mostly stock that he won't be selling. Otherwise decent analysis.
1
Imbedded throughout discussions of economic statistics is the misuse of average (mean) when a median (midpoint) more accurately reflects the typical experience. This becomes very apparent when attempting to portray economic status in a very skewed statistical population such as income and demonstrates how misleading average can be.
Case in point (because this one is easy), the average person’s salary is not all the sum of all salaries divided by the number of workers. Rather it is the salary of the midpoint worker, that worker who earns more than 50% of the other workers and 50% less than the other workers. The difference in the US economy is glaring, average salary is 81K, the average person’s salary (median) is 52K, 62.5% less! It is effectively meaningless to discuss average salary.
Averages have value, but not at the expense of more meaningful statistics. One might have grounds to believe that the government’s reliance on misapplication of averages to represent personal economic conditions is not unintentional.
8
I wish you luck in convincing those with their hands on the levers of power to show some of the truths behind the numbers. They are much less than motivated to show us that the vast majority of us are being had.
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@Gerry
The sentiment you express is what got us Trump. And now we know that Trump is a sucker play.
1
@Gerry. But the media should be doing this. They have the means and the motivation, and don't need government permission, right? Spend less time and space on Trump's tweets and put this kind of information on the front page.
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@Gerry To quote Upton Sinclair, "It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
2
Thank you. The govt. and media are definitely not "saying what we're seeing or feeling." I'm not a quant but the graph showing the glaring lag of net worth compared to stock prices is an important reality mirror. The reflection ain't pretty, unless you're already rich.
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The problem is this definition of a “good economy”, which seems to be that everybody feels it and everybody has a job they like. That is a childish view.
A good economy simply means that people are spending enough so that businesses have customers, and prices are stable, and most people are employed. In other words, GDP, inflation and unemployment numbers.
It does not mean that everyone suddenly has more money or that employers in every sector suddenly go on a hiring spree.
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@Max
My friend, actually, the definition of a good economy is not childish, it is antiquated. Indeed, decades ago, that is exactly what it meant.
3
Excellent article, and as good articles often do, it raises a question in my mind. I would love to know how the returns to a day's worth of labor has changed over the last 20 or 30 years. I have a sneaking suspicion that wages have been depressed through the exercise of economic power by players like the US Chamber of Commerce and oligarch-directed politicians. And, just as economic theory would predict, as wages fall so does the incentive to work.
3
I will not feel financially secure until we have decent, truly affordable health care and truly secure retirement.
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@Roger Reynolds How does that manifest, Roger? What is a truly secure retirement? What is truly affordable health care? One person dying can easily run up a $2 million bill.
Is it the role of government to supply those things? Where do they get the money, if so?
I think I am ready for retirement. I've got some resources. I am aware that a stroke could destroy my plans/desires/dreams and leave me broke. Is it the role of government to guarantee that I always am cared for?
I don't have any answers.
1
@Roger Reynolds Amen, Brother.
@Ernest Montague
Pithy. Bravo.
Many of us plebeians with no economics degree have been screaming about this for years.
Why is it so hard for "intellectuals" to see the obvious? Because they live on another planet and don't factor reality--that which is actually happening--into their formulas, as is clear from this article. Or they have ulterior motives, as with politicians.
In any case, yes, thank you for writing this. I'm sure it will disappear into the ether, but still.
5
Don't wait for the government to start using new measures. Instead, the NY Times and similar news organizations should methodically report these and similar data points. Make these measures part of everyday discourse, then perhaps governments may well take them up.
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@ACT
I agree. There is no doubt that the goal in politics (unfortunately, this is pretty much the same thing as Government now) is to cherry pick information (and to view it with a particular spin) to support your agenda (and to criticize other interpretations as biased). I sense the media has not adopted well to this recasting of data perhaps because reporting the latest outrage promotes so many clicks (and add revenue). I don't know if it is the DUTY of media to more accurately cover the data and will/viewpoints of all citizens (not just the anecdotes that tend to be compelling). Simple graphs on a regular basis about the data could go a long way to NOT normalizing the political spin. I'd suggest the economic data referenced in the article as well as near daily graphs of the lies from the administration (against historic norms), apologies for personal attacks, popular support/disapproval for big issues (reproductive rights/gun regulations/environmental protections/ok - pick your left leaning issue !).
@ACT You're ignoring the fact that statistics like that are very expensive to compile. It's the governments responsibility to make the measurements and the press's responsibility to spread the news and analyze it.
2
@ACT...excellent points !!!
The financial crisis is not only NOT behind us but is actually about to begin, the reason being that measures taken after the last financial crisis were intended to empower the mega corporations and banksters by 'forgiving them their sins' (i.e, debts) while the rest of the population suffered.
Now, with further deregulation under Trump, designed to remove financial safeguards on the a/m Robber Barons, the potential for a tsunami is growing daily. When it will hit global shores is anyone's guess, but coming it is.
17
The statistics that we use to measure the health of the economy are specifically skewed to accentuate corporate health, as opposed to the general well being of the people. Of course, we know that's what they were designed to do.
7
Additional factors that are almost never considered are the profit taking by the corporations, whose products are so necessary to daily life, that they actually should be regulated as utilities. This should include cell phone service providers, cell phone manufacturers, internet service providers, cable TV providers, and certain Software app creators. Not too long ago TV was free and communications happened by the minute, or with a postage stamp.
Personally, from 1999, the last time I conducted most of my business with blueprints and hand drawings, till today, my annual, and necessary expenses have increased by over $6000 (estimated) and I don't even have cable TV. Luckily I can cover this cost, but for a young person starting out they will have to factor in similar expenses in addition to rent, and food and transportation. I cannot imagine that a minimum wage job could provide stability anywhere in the nation given those costs.
And, because these costs are actually now necessary, the profits being taken by the shareholders of companies like Verizon, are on par with a theft from the public till. If these profits were analyzed as a downward factor on the economy, instead of as an indicator of wealth, we would get a much clearer picture of the hopeless situation for so many who can no longer afford to put money into savings for their own benefit.
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@rick. I agree. Some of them should be basically nationalized and regulated as excellent single providers, with compensation paid up front and over time to their proprietary stakeholders. Why have numerous phone and data providers who maintain redundant saturation networks in profitably populated areas while many sparsely populated places have lousy or no such facilities?
If we had a highway system like that, the freeways would shrink to goat paths between cities. They don't, because we have a nationalized Interstate Highway system and comprehensive state highway systems to support general transportation.
A little intelligent socialism would go a long way.
@rick None of them are essential. Food is.
1
Everyone who has studied statistics knows there are two basic measures: mean and variance. "Mean" means averages, which is what gets published all the time. "Variance" is how far individuals diverge from the mean. Is there a huge gap between the rich and the poor, or is everybody roughly at the average? This is what gets ignored most of the time, not because it is unavailable, but because the powers that be don't want people thinking about this.
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@Charlesbalpha
I agree. The average (whatever that is) working class individual would be totally shocked if he actually knew how much wealth his rich neighbors actually owned in the form of cash, stocks, property and other material goods. There would be riots in the streets over the fact that so many of us struggle to make ends meet while others struggle to hold on and accumulate as much as they can.
A few months ago there was an article in this paper about a guy who had accumulated several million, but he still feared that he might not have "enough". How sad to live with such irrational fear.
I think much of the economic pessimism of the country lies with the fact that a lot of the boomers are facing and old age of penury and/or ceaseless labor. The young I don't worry about so much, they have time, hope, a future. The aging have run our of time.
3
There are many other statistical indicators that offer a deeper and more accurate picture of our economy.
Wage stagnation is in effect an economic loss. When worker productivity increases, but wages barely keep up with inflation workers loose while owners benefit.
I'm a member of a union that ent six years without a new contract. When our economists calculated inflation plus a modest wage increase, in that seventh year when a deal was reached we should have gotten a 23% raise. Instead, we got 10%.
That's certainly better than nothing, but we will never regain the lost purchasing power of that 13% gap.
Today we see the same thing happening all over again. Wages are up, but just at or slightly below the 2% inflation rate. And while that slightly larger paycheck has generated a spending euphoria it will be short lived.
Our mass media has simply become corporate cheerleaders announcing Dow Jones averages by the hour as if those numbers were actually meaningful in our day to day lives.
They have created an economic illiteracy in the public by design.
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@drspock I'm a union teacher in one of the best states for teachers. My salary has been in the same 10K bracket for a decade. Now, in my 21st year of teaching, I've had to pick up a second job and I stress out if I don't book enough hours there. It's insulting and demoralizing, and as soon as I can tap into my tiny pension, I'm leaving the country.
@drspock. This is a spending euphoria?
Amen. I know too many ambitious, accomplished people with graduate degrees who are under-employed or unemployed. They want no one to know because they consider it a character flaw to be unemployed. They're all over 50. Write about ageism please.
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@anonymouse Yet many insist we are short of employees.
@anonymouse Chip raises hand. Unemployed, 57, often told by possible employers that they're afraid I might be bored. Don't ya think I could be the judge of that? Yes, write about ageism, and the throwing away of us hated younger boomers.
Sooner, rather than later, we will have another Great Recession 1) because the stock market can’t keep rising on false economic data and 2) with new banking de-regulations Wall Street will begin to re-engage in “dangerous” practices which not only caused the Great Recession of 2008 but also the same actions that caused the Great Depression in 1930’s.
Humans hardly ever learns from their mistakes especially when it comes to greed and politics. All the regulations put in place after the Great Depression to prevent another one from occurring were removed during the 1990’s and early 2000’s. Thus the Great Recession of 2008.
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The corruption of the unemployment numbers flows from the capitalists not wanting you to know these realities. So they feed us ‘business’ news which of course doesn’t include wage labour welfare issues. In fact the word welfare has been turned into a derogatory epithet. By the same people.
These new statistics will not see the light of day.
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The use of the two words, robust economy, is used as a political tool that is deliberate deception and in no way reflects the positions of the majority of citizens. I thank you Mr. Leonhardt for your OpEd. Every reason stated would give an accurate assessment of reality as opposed to the warped version and the rampant Corporate and Financial institutions neglect.
The bitterness people possessed by the double standard applied to CEO's exploiting, profiting, while being the source of generational destruction in 2007 continues to sting. Those acts were never addressed by the Department of Justice and surely responsible for the largest loss by a party in the 2010 midterms since 1938. Perhaps not pursuing the criminals changed the course of history and business as usual refects the stagnant and further decline of the middle class.
In order to restore a robust economy for all statistics need to be accurate. Those few who have thrived since 2007 have no interest in driving to view the reality of their greed and what their convenient obtuseness has caused. Their private empires are not sustainable eventually the population of 320,000,000 will rise against further injustice and exploitation. The burden of taxes by King George III, no representation in Parliament is parallel in 2018: tax cuts had no benefit for the middle class, most elected officials do not act in the best interests of those they represent rather actively promote the desires of the 21st century Kings.
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It was British Prime Minister Benjamin Disraeli who said, "There are lies, damned lies, and statistics." Democrats should not be afraid to confront Donald Trump's lies about how great the economy is because it's only great for the upper classes. Statistics are manipulated both on unemployment and on wages, which are either flat or have barely risen with the middle and lower classes. The working class white voters in the Rust Belt who voted for Trump over Hillary Clinton have been duped. The big question is whether they will come to this realization before November 2020.
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Economics is not a science. There are too many variables and unknowns to craft the double-blind controls that provide repeatable and predictable results that is the essence of science.
There is no Nobel Prize for Economics. There is the Swedish National Bank Prize in memory of Alfred Nobel.
Economics is gender, color aka race, ethnicity, national origin, theology, sociology, anthropology, politics, education and history plus arithmetic. The old cliche is that "there are lies, damn lies and statistics"is apt for economics. Deciding which economic data matters is inherently biased.
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Thank you!
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Maybe the NYtimes can start reporting these more relevant economic indicators as a start!
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Twain: "Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: 'There are three kinds of lies: lies, damned lies, and statistics'."
On economics, our statistics seems designed to make millions of Americans disappear. This has a political counterpart in the efforts, through gerrymandering and voter suppression, to do the same.
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Excellent op-ed piece by Mr. Leonhardt.
"Lies, damned lies, and statistics." It's unclear from whom this quote originated. Maybe Benjamin Disraeli. Maybe Mark Twain. Regardless, this sums it all up.
Top ten percent to the rest: "What are you complaining about? Look at the numbers."
The rest to the top ten percent: "Numbers shnumbers. I'm struggling to pay my mortgage, send my kids to college, and save for retirement. And, my job could be off-shored at any moment."
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The New York Times should be the first newspaper in the United States to implement Leonhardt's statistics.
These Leonhardt statistics could also be be broken down by demographics to make sure that politicians are continuously reminded that black and brown America suffers the most from unemployment. I hope and wish the NYT's editorial board and NYT, Inc. has the courage to do so.
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My goodness, if this article isnt the perfect example of why you can never trust the media nowadays, I dont know what is. Consider the reasons David cites that he economic crisis isnt over... 1)Because people are anxious and angry. 2)Far right political party's are on the rise. 3)The US elected a racist President. No David. The economic crisis from 2008 is over. Did it do damage? Sure, but the crisis from 10 years ago doesn't remain because in your eyes, we elected a racist President. Would this article have been written if Hillary had won?
David doesnt like the fact that all the metrics we have used to measure the economy are all pointing to a not just strong, but booming economy. An economy Obama wishes he had, and an economy thats going to get Trump re-elected, so must do something about that now, right?. Really, this is the height of dishonesty. When the media goes out of their way like this to deceive the American people, especially a paper with the reputation of the Times, it proves yet again, they truly are the enemy of the people.
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@Sports Medicine. You write: "David doesn't like the fact that all the metrics we have used to measure the economy are all pointing to a not just strong, but booming economy." As I read it, the point of the column is that the metrics you cite don't capture the reality for millions and millions of my neighbors. My on-the-ground experience with people struggling in the communities our ministry serves bears out every word in this column. I don't consider this a partisan issue. It is a moral issue. I invite you to join me in my daily conversations at food pantries where we connect with guests of all ages who work several jobs and still can't support their families and where I meet seniors who are mired in poverty - with only Social Security to support them. (The record Dow numbers are no help to them.)
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The problem with your argument is that if the economy is good under Trump, then it was good under Obama. Unemployment was fairly low. The stock market kept hitting records highs. Under Trump, the economy has continued to improve, by the traditional metrics, from what it was doing under Obama.
However, under Obama, Republicans used to complain about how the unemployment rate doesn't count people who have given up looking for work. I even saw Hannity point out how income inequality was rising under Obama. Of course he didn't mention that conservative policies on taxes, which Obama left unchanged for much of his presidency, were the main drivers behind that. In essence, they used similar arguments from the article to claim that the economy wasn't as good as it seemed. Now that Trump is in office, you won't hear a peep out of them on this issue because those numbers would reflect poorly on them. It doesn't mean the numbers aren't accurate though. Those problems still exist, whether you'd like to acknowledge them or not.
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@Sports Medicine
Shoot the messenger. This article makes specific arguments about why another set of numbers would help us understand the overall economy better. You just got upset when he called Trump a racist. How about you address the point of the article, if you can?
And Trump is a racist.
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What we can do is measure Gross National Happiness The concept of GNH has often been explained by its four pillars
1. Sustainable & equitable socio-economic development
2. Environmental conservation
3. The preservation and promotion of culture
4. Good governance
The four pillars are further classified into nine domains in order to create widespread understanding of GNH and to reflect the holistic range of GNH values. Under the nine domains are the 33 indicators.
The GNH Index’s nine domains and 33 indications
Living standards – material comforts measured by income finance security, housing, asset ownership
Health – both physical and mental health
Education – types of knowledge, values and skills
Good governance – how people perceive government functions
Ecological diversity and resilience – people’s perception on environment.
Time Use – how much time is spent on work, non-work, sleep – work-life balance.
Psychological well-being – quality of life, life satisfaction and spirituality.
Cultural Issues
Language
National Pride
Societal participation
Fundamental Rights
Community vitality – relationships and interaction within community, social cohesion and volunteerism.
Social support
Community relationship
Family
Victim of crime
The Gross National Happiness Index is a single number index developed from the 33 indicators categorized under nine domains.
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Fresh from signing the GOP tax “heist” in December 2017, Trump told a group of his multimillionaire friends at a dinner in Mar-a-Lago, “You all just got a lot richer.”
As Trump does not drink alcohol, the only explanation I could think of for him blurting out the truth on this festive occasion is-
“in ‘venal’ veritas.”
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The New York Times is also guilty of this "crime." You dutifully report the Dow and NYSE every day. How about you lead the change by reporting more meaningful statistics on a daily basis???
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My son and his friends are about 28 years old. Do you know how many of these kids have no health insurance, no pension, they pay crazy amounts in rent (if they don't live home) and are strapped with student loans and a deficit which they will pay forever. Oh, and most have not seen a pay raise in two years. The economy is not good for these kids.
The kicker is, their parents ( my friends) are all voting Republican and love Trump. I don't get it.
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@Pat
So what are you advocating for here? Trump has been President a mere year and a half, and the economy is now booming as a direct result of his policies. Obama was President for 8 years. His policies have far more a an affect on your friends situations than Trump. Was the economy good for these kids the past 8 years?
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@Pat I see an awful lot of this as well. The willful self-delusion is astounding. People who otherwise seem pretty sharp can't or won't process what their own eyes and ears tell them.
@Pat
"they pay crazy amounts in rent ...and most have not seen a pay raise in two years... their parents ( my friends) are all voting Republican and love Trump. I don't get it."
Maybe because Trump and Republican want to build a lot more housing units, and Democrats do all they can with regulations to make it hard to do? What would those rents be with an additional 1M housing units in the area?
And what do you think would happen to wages if you remove 11M illegal immigrants from the country and block the 1M/illegal immigrants that come every year "because there are tons of jobs in America"?
What are Democrats proposing that would help your 28-year-old son? Tax the rich? How would that benefit him?
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Finally, someone has written the piece I've been thinking about for years. If the media would actually be honest with people they might have a much better opinion of it and start to ask hard policy questions of politicians
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here are questions no one wants to address:
Did the economy cause Lehman to fail or did the economy fail because of Lehman?
Or was Lehman just mismanaged in a brutal economic environment?
Was the Lehman failure just a barometer of the depth of economic failure? Or bogus (grossly inflated) housing values?
Critical question to be answered prior to placing blame and setting up for the next one. Answer these questions and get the answers wrong will make the next crisis 100 times worse.
Net worth based on what? Housing values? This is not a sound bite conversation!
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we may drive more Mercedes....but....
are we a more generous, more enlightened people ?
a better world ? species ?
what are the metric for those concepts ?
the evidence is not encouraging...
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Good luck producing statistics which reflect reality.
We have a president whose life has been spent distorting reality, perfecting an ability to destroy truth.
We have a Republican Party devoted to statistics which hide reality.
If Republicans chose to uncover the truth, they would have to repeal their recent tax bill, "The Rich Man's Welfare Package." They would have to confess to the American people that their mission since Reagan has been all along ravage the working class to benefit the wealthy and themselves - the agents of the wealthy.
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Every time I read something about the incomplete recovery I need to say the same thing. We shouldn’t be afraid to say what happened. The Republican Party deliberately blocked recovery, since they thought more pain would help elect a President who would deliver tax cuts for the ultra-rich.
This is not some wild conspiracy theory—just compare the “balanced budget amendment” with the deficits today. The Republicans held the country hostage for six years. We were held up and robbed, and that should be common knowledge. For details there’s Jane Mayer’s Dark Money.
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You just can’t have it both ways. Early in Bush 2’s presidency, it was proposed that Americans have a vehicle to invest their withholding taxes in the stock market. After stocks tanked In late 2007 early 2008 this was ridiculed by Obama campaign as another Republican bad idea. Today, it would’ve been a good idea. Five years from now maybe having gold or the latest crypto currency would be even better.
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If you want change, vote for the Democrats in November. That’s it. Turn up and vote Democratic. Statistics on average household will never show up as long as our legislators mostly are the voice of the super rich who pay for their elections. BTW the story in the the Times yesterday that showed average income as over $61,000 for the first time. Did that include people like Bill Gates and the Warren Buffett and the Kochs (i.e. those who scew the middle) in the total number used to determine the “average?” Perhaps the median would have been more meaningful. Editors?
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The entire science of statistics needs a total revision. Not just in economics but also in opinion polling, medicine. the natural sciences, etc.
This is a problem of academics, a failure of "expertise", a flaw in our basic assumptions.
Perhaps we should go back to teaching Logic to our middle-schoolers. My fellow citizen should be able to see right through this sort of nonsense without any help from the "elites".
Have a look at the reasons David cited to make the argument that the crisis isnt over. Far right groups are on the rise, and we elected a racist President. Those are his reasons. And then of course thats reason to change the way we gauge the economy. Would this article have been written of Hillary were elected, and we had a booming economy?
Heres why this article was written - the economy is Trumps greatest strength. Its booming as a direct result of his policies. Adding more insult to injury, its booming as a direct result of repealing many of Obama's policies. So of course, we need to change all of that, right.
No David, the economic crisis is long over. It doesnt still exist because Trump is President. And no, those metrics we use to gauge the economy are just fine. Pity it shows a booming economy, isnt it?
Open your eyes folks, youre being played here.
"Free press", anyone??
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@Sports Medicine
Hey you again.
Many similar articles were written in NYT during Obama’s Presidency btw. For many economists this has been an extremely consistent opinion.
I would also point out that all of these economic indicators were heading up at similar rates before the election. Trump’s tax cut - which any Republican would have signed btw - is like pouring nitrous into the carb of a street racer. It will go fast for a quarter mile then blow up.
Classic Trump pump and dump. The country will go bankrupt on his watch but he will skate with profits and leaving his creditors high and dry. You and I will have to pay them back.
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This is so valuable; thank you David. I stopped listening to the news as it is majorly irresponsible, but when I do hear a glimpse, I cringe at the rote, repetitive and lazy rattling off of "key indicators". The height of swindle. Turn off the TV's America and think.
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I agree with may writers here. Why doesn’t the New York Times lead the way and start publishing the numbers that would more truly reflect the realities of the different segments of the nation?
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David, thank you for this helpful and important article. As a Pulitzer Prize winner at our most important national newspaper, you personally have a voice for change that many of us do not. So, how about working with the Times editors to see these economic indicators reported regularly, and with emphasis (maybe on the 'front page', right next to the stock market trackers, for instance)? Change in reporting of economic indicators doesn't have to wait for the Trump administration (good luck with that) but can begin with your paper. Please follow through with your important ideas, and see that your own paper regularly presents and discusses these meaningful economic indicators! Let's begin a change, starting with the NYT!
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