So basically when Hillary Clinton offered "retraining" she was completely wrong?
Structural unemployment is mainly just another Republican excuse to import more workers from developing countries, or to outsource manufacturing and other good paying jobs to sweatshops in China, India, and other places that can always go lower on wages, partly since environmental and workplace safety standards are low to non-existent there.
The US government has stripped American workers of rights to collective bargaining thereby allowing American firms to pay wages among the lowest in the developed world. They claim Americans lack skills, but as Professor Krugman has shown, all evidence suggests otherwise. To the extent that some Americans lack skills, it’s partly because they lack affordable education, but there’s also a serious dearth of on-the-job training in America, particularly compared to other advanced economies in Europe and in Asia.
American companies need production bases in other countries to remain globally competitive, and to secure future access to foreign markets, but we cannot continue giving foreign companies virtually unlimited access to our vast consumer market as long as American workers are at such serious disadvantages, nor until other nations’ markets are as open as ours.
1
Because workers (i.e. the 99%) have no power.
Maybe wages are not rising on average because many jobs will be moved to low wage countries if there actually is wage growth in that industry.
http://larrysummers.com/2017/12/10/sugar-high-is-right-diagnosis-tax-cut...
December 10, 2017
[ Related, by Lawrence Summers. ]
Crisis Professor ? What crisis can there be that we are already not seeing ?
I think a FRESH look at the entire situation is a good opportunity for us to re-understand what exactly happens when things go belly up in Republican control.
1. The Republicans KNOW that the tide of history is against them.
2. They are doing WHATEVER IS POSSIBLE to maintain the lie that growth will lift all boats.
3. Deficits, "debasing the currency," jobs, terrorism, xenophobia, homophobia, infrastructure, Russia/China/Iran/NorthKorea/Pakistan/Afghanistan/Syria/Libya, lying, perjury, malfeasance, nationalism, immigration, etc. are all horses for courses. They serve the purpose of whatever it is that needs to get the base fired.
(So never be surprised when any of these are used against the Democrats when they're in office.)
4. If you are looking for a Republican logic to oppose, then you're in the wrong business. It will be .... whatever is available at that moment in time : Religion, including pro-life-ism will be a reason that will never go away. It doesn't matter if the Pope is against you, so it doesn't really matter because you control the narrative. Your base will never leave you.
So, AGAIN, for the Democrats :
1. Stay the course. Articulate clearly and VOCIFEROUSLY that "their" goals are : Equality of opportunity, concern (if not care/welfare) for all via government schemes that aim to help the weak but willing.
2. Same rules for everybody.
Write it on the forehead. Repeat it always.
3
Look more closely at that graph. Have you read any of Edward Tufte's books on visual representation of data? This graph is very deceptive in an easy-to-understand way. It shows that when unemployment surged in 2008-10 wages plunged, then both recovered somewhat. But the deception is that both are represented on the graph as percentages, a means of 'normalizing data' so as to compare dissimilar units such as unemployment % vs $$. OK, but then this graph is re-normalized by using two different Y-axis scales. This magnifies the impact on wages by almost 4X compared to unemployment change.
So what? The unemployment rate has fallen by half since 2010, while wages have risen 1% since 2011, as the graph actually shows if you correct the y-axis distortion. Going from 90% to 95% employment (8MM more jobs) raised wages by 1%. Creating millions of jobs did not significantly impact wages over a decade! Think about that.
3
There are two major reasons for lack of wage growth.
First, despite firms placing a greater burden on employees in out-of-pocket expenses such as deductibles and co-payments, health care premiums are increasing at such a rate that it takes away from funds that would have contributed to wage growth. Examine overall compensation instead of wage as a better indicator. A way to reduce rising health care premiums is to have a national plan to combat tobacco use, obesity, and air pollution. Each of these are huge contributors to the rising cost of healthcare. Replicating the MPOWER anti-smoking plan used in NYC and raising taxes on sugar-sweetened beverages (SSBs) would help to reduce those health care premiums leaving more money for wages.
A second contributor is the import of cheaper labor which depresses wage growth. This is true for illegal aliens which are able to work in this country depressing wages for working class jobs. A fix would be to implement the eVerify technology for employers.
For STEM jobs there has been there has been a greater push to import workers with H1-B Visas. The "Gang of Eight" Senators are part of a group that wants to triple H1-B Visa growth with the results that wages will further be depressed.
President Trump has policy that is very much against depressing wages for both working class and for STEM workers. He has a very strong policy against H1-B Visa abuse. Stopping the import of cheap labor will help with wage growth.
1
Are you saying that the "consultancies" which cater to the STEM intensive corporations are not importing cheaper labor via H1-B visas? These consultancies are in this mix; the STEM workers they provide for lower wages are able to take lower wages, because their home families are willing to provide supplemental financial support. The home families of STEM workers want their offspring to stay in the U.S. with extended visas, or simply staying with no consequences. It is very difficult to track down those whose visas have expired. We see pictures of families and individuals being deported; those are families and individuals who do not have the protection from large corporate consultancies. Those are the poor and disenfranchised.
The intent of H1-B was provide STEM workers *for which there were no Americans with the expertise*. The program has been widely abused, by consultancies and by regular tech firms and by universities.
For example, Disney in FL, Southern CA Edison, Abbott Labs, UC San Fran have all used consultancies to import workers to replace Americans. Trump was vociferously against this move.
Meanwhile, the poor American working class are being displaced and have their wages lowered by illegal aliens that are living here illegally. As far as I know, the only people being deported are the ones living here illegally. There is an estimate 11 million of these illegal aliens -- enough to substantially depress wages for Americans who are working class.
The very Democrats that complain about lack of wage growth are the very ones that endorse policies that depress wages. The Democratic leadership isn't stupid, they know what they are doing, they are counting on Americans not understanding this information. They were wrong, which is why Trump won.
It is also a key reason the working class in Britain voted for BrExit. The elites don't care about the plight of the working class in either USA or Britain.
Read about "global labor arbitrage"
We need to build a lot more housing if we are going to maintain growth. Need a Manhattan Project for this.
1
This essay begs the question of where we might be if McConnell, Boehner and the rest of the GOP had united with the Obama Administration. We could had had a massive buildup of new infrastructure (high speed rail, any one?) as well as repair and rebuild existing roads, rail and airports at historically low interest rates.
We can only dream, since we all know the specific goal of Republicans (as of 21 January 2009) was to prevent the reelection of Barack Obama for a second term.
The GOP effort failed fortunately, but unfortunately we will never know the true cost of their blind obstructionism of all things linked to Obama or the hated"Liberals".
4
So you are saying that if we had had more demand stimulus, then we would have achieved the current rate of unemployment earlier. We would have $8 trillion more in production of goods that were chosen by the government, rather than the market, so we would need another bailout bill to sustain those! And how much more debt would we have, 3 or 4 trillion? I know you don't care about debt, but another trillion would not help anyone. Oh, and how much bigger of a trade deficit are you also targeting with all those years of increasing deficits?
Employment figures don't tell the whole story. There are vast numbers of baby boomers who lost their jobs in their 50s and have now "aged out" of the job market. They are rapidly spending through their equity and aging in an atmosphere where their savings will be entirely wiped out by for-profit medicine and pricey assisted-living arrangements. The financial stewardship and saving habits of the WWII generation helped undergird the lifestyles of these boomers and their offspring. Much of that money has been spent. The next recession will lay bare the true desperation of many in middle America. Full employment isn't even close to a reality here in the Heartland.
9
Southern Europe is seeing more ex-pats from expensive Northern Europe. Soon there will be American ex-pats moving into the same places. Consider this: Portugal, Spain and So. Italy are more attractive than Kansas, Ohio et al. They have affordable medical care equal to, and in many locales, better than ours. If the U.S. has a government now dominated by self-interested plutocrats who champion extraction industries and fossil fuels, how hard is it to imagine a better life style in Europe. The U.S. has Leisure World; is it affordable for the average working person in retirement? No. It is basically a large country club for those who have a substantial retirement income. The U.S. is running on fumes, left over from the post WWII days when we dominated world economies. We no longer dominate world economies; we are powerful and rich. However, we are divided into two large groups: the very rich and the working poor. The middle class is disappearing; that is the class which will move out. That is the class now operating in survival mode; and, that is the class least willing to be reduced into poverty by the current government and its corporate owners.
3
I simply do not trust the employment figures. Is there anyone here who will swear on a stack of pancakes that they represent the true state of all working-age adults in the US?
It depends. More recent history shows an anti-expansionist Fed can negate growth in the economy from Keynesian stimulus or otherwise. The current Fed seems to want wage growth and higher rates (and a smaller balance sheet) at the same time. I'll leave that one to the Nobel Prize winners etc to figure out. For sure, a few ill-timed rate hikes could still lead to the Great Fed-Created Recession of 2019-2022. In the meantime most everyone thinks the economy is pretty, so I'll roll with it
Listening to the nightly news. The discussion is about whether the tax cut for the rich should reduce the rate to 20%, or 22%.
Republicans have the presidency, and a very slim majority, yet they have totally framed the conversation on the economy - with zero pushback by Democrats.
When Obama was president, he appointed Simpson and Bowles to decide how much to cut the deficit - when a higher deficit was needed to put people to work. He appointed known SS haters, to stage a public debate about how *much* to cut SS - a policy direction opposite to the preferences of 80% of voters. He bailed out bankers, appointed banker representatives to key economic posts, left workers and homeowners in the lurch. No discussion of minimum wage increase, or the *huge* shortfall in demand - didn't stake out a huge stimulus as an opening negotiation position.
The whole public debate was framed to push economic policies wanted by the 1% - and opposed by the bottom 99%. With Democrats dominating both the house and senate (60 seats) - and the bully pulpit - Democrats could control the content and framing of the economic discussion.
Of course Democrats were routed in the 2010 midterms.
How clear does it need to be made that Democrats aren't stupid or incompetent. They have the same economic goals as Republicans. They are no longer even trying to hide it.
6
The wages not going up is probably a function of how much in stock buybacks companies are allowed to do.
3
When Nixon opened China did anyone realize then that ideas could flow in both directions? Yes, the Chinese got to see a modern industrialized world, but the capitalists saw a society that exploited workers like in the USA of the 1900’s. Ever since, both sides have been working at becoming more like the other. Nixon is the root of all evil.
5
Economic policy and economics are not primarily driven to grow wages or increase employment. Their primary goal is to increase profitability. We delude ourselves thinking that the immediate cause of unemployment is either lack of skills or demand. You cannot force the owners of capital to invest unless they have some certainty they can realize a profit. For instance, we have many people who need and want a home and can’t afford them. Local governments step in to force capital to set aside a small number of “affordable units” for them to build in cities like Boston. “Demand” is restricted to those who have the money to pay, which is a one sided and abstract conception of it.
7
"Their primary goal is to increase profitability. "
Aren't you talking about business? That does not sound like what economic policy primarily seeks.
1
>After all, at this point we are indeed more or less back to full employment, although those wage numbers suggest that we still have a bit further to go.
Yes. And would you believe in this policy?
"Abe demands 3% pay rise to drive Japan’s economy"
https://www.ft.com/content/0061a6a2-ba25-11e7-8c12-5661783e5589
Right you are, Dr. Krugman. Thank you for pointing this out. Would that the Serious People would take note.
5
The Serious People will not understand until they have been unemployed after several years and several hundred resumes.
1
An excellent essay, and the new blog format is just fine.
6
https://fred.stlouisfed.org/graph/?g=guLv
January 4, 2017
Unemployment Rate 16 & over and Average Hourly Earnings of all private
employees, 2007-2017
(Percent and Percent change)
1
The "structure" is largely that many of the jobs such as in manufacturing which paid good money and were largely unionized (which is needed to get wage increases) have been exported to other countries. Also the (already abundant) investment money tends to go to financial operations rather than production. The economy has slowly expanded so that unemployment dropped, but the good jobs have not come back. Would infrastructure jobs take their place? Maybe; there is certainly a need for infrastructure rather than financial operations. But note that Japan did not do much good with infrastructure or indeed running up a debt/GDP of over 230% after the crash of 1990. There are more problems with the US economy than just a lack of textbook Keynesian stimulus.
4
I believe he was speaking of the past and republican intransigence to help the US workers and the economy overall.
2
"I’d like to think that the way things turned out would serve as a lesson in future crises. But I wouldn’t bet on it."
What you should do Paul is bet against it. The kind of high quality reason you constantly exhibit isn't what's needed in a poker game. You've got to go with a mix of rational, the assessment of risk based on knowledge of odds, and plain old hunches and the creation of others' hunches, that is, bluffing.
Trust me Paul: bet against all of the data and lessons from this criisis teaching our leaders anything. There are reliable rules that exist outside science, including the science of Economics. In this case the Upton Sinclair law applies: ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’
10
To the extent that economics gets anything right, it uses the rules and methods of science. Economics is a scientific discipline, at least in its most valid form.
2
Unfortunately since the 1980s America has descended into all out recession / depression economics. The only thinly veiled difference being all out scandalous credit cards charging interest rates that even the mob cannot extract.
Having been one of the fortunate to grow up during the zenith of America’s economic strength allows me the privilege to make what appear to be outlandish statements as above. Here is a point of rock solid evidence; in 1974 I was employed at Bechtel in downtown San Francisco making the princely monthly salary of $950. For which I could rent a 1 bedroom apartment on 17th and Judah for $290 per month; allowing me to live right in San Francisco. What is even more interesting I could not get acceptance for a credit card. Fully employed at a major corporation paying off my student loan of $1000 regularly but still didn’t make the cut. Fast forward to now .......
We are now in the most inconceivable set of financial circumstances and I most certainly believe they will become incredibly worse.
Thank you
Sincerely
Tom wolff
8
Part 2 of 4
Until the 1980’s, (1) products made in the USA meant quality, and (2) despite high income taxes, most Americans could afford to buy them. (3) Our work force was the best educated and most highly skilled in the world, though far from the lowest cost. (4) Our freight railroads were superb, and, thanks to the Eisenhower administration, our highways were grand, too. (5) Our power supply was ok, except during the OPEC embargo, but, healthy was another matter. (6) Except for oil, we were extracting all the natural resources we needed. And, (7) Our supply base was good and growing.
During this period, China had begun its village and universities manufacturing programs, but, while labor was cheap, it was just getting started and then (1 thru 7) failed on all counts.
7
Can you imagine what would occur if another catastrophic economic collapse occurred with these people in the White House? Would quickly evolve into a scramble to see how fast we could elect a democrat.
8
It’s not the White House; it’s the republican majority congress.
1
The tax law they are so hot to pass virtually guarantees a deflationary recession or worse.
2
Median household wealth in 2016 was still 34% below 2007 levels. The richest 1% owns 40% of all American wealth.
The Republican tax bill will fortify these trends.
https://www.pressreader.com/usa/san-francisco-chronicle-late-edition/201...
12
Part 4 of 4
Meanwhile, China has been growing, though at the expense of the freedom of its citizens. (1) It’s manufacturing fair quality products, exporting them and (2) consuming them domestically. (3) Its competitive universal education programs are lead leaguers, its scientist and engineers are well financed and highly productive, its labor force is largely highly skilled, and it is outsourcing low-skills-required manufactures to less developed nations. While it has some just-for-show high speed maglev passenger trains, (4) I believe that its transportation systems are in serious need of improvement. Despite the lack of domestic sources of oil and natural gas, (5) it’s successfully relying on polluting coal, but it is heavily financing the development of electric vehicles and that of nonpolluting power sources. (6) It has abundant natural resources and dominates the world’s supply of rare earths. (7) It has successfully grown from the ground up, from learning how to produce metals and glasses, to machining and surveying with domestically produced lasers.
The U.S. still leads in developing and producing new pharmaceuticals.
China hasn’t won yet, but it is well on its way.
10
As long as it’s not a race to the bottom.
It is not a structuralist of anti-structuralist problem. It is systemic. What will happen to the working class when we have a completely computerized, digital world? Morlocks?
5
What happened to the working small farmers after England instituted the Enclosure Laws; the Commons was destroyed; jobless and landless people fled to the cities; Dickens wrote about that period; and he was accurate in his description. What is happening in the Rust Belt? Where will those workers go with manufacturing skills no longer needed? Mexico? That is where Carrier took it jobs, leaving behind engineers and robotics. What happens when a consumer economy no longer has a large population with disposable income? Do we return to the days of barter? The military is no longer a jobs program. We do not have a national health care system, so unemployed Americans are left with walk-in clinics to take care of basic care. Rural hospitals are closing, leaving whole populations without even ER care. This is the beginning of a plutocracy; this is the beginning of the fall of the Republic. Ben Franklin would be appalled that we were not able to keep it.
1
There are far too many of us who are stuck in what's called: The Normal Order.
Could it be that we can't see that we have a one party government across our great land? One that has just put on the table the largest tax scam in that great land's history. Is it possible we think this one party government is not serious in their intent?
They don't need a liberal democrat in the senate. They've told us so!
9
Part 1 of 3
Let’s compare the U.S. and China.
It is only reasonable to build facilities for manufacturing and for providing services in locations where:
(1) Demand for quality goods and services is high;
(2) There is sufficiently wide spread wealth to enable purchases;
(3) Adequately skilled and low cost labor is available;
(4) Transportation of goods is reliable and cheap;
(5) Adequate power that doesn’t endanger human health is available;
(6) Natural resources are readily available, and,
(7) There is a well-developed and low cost supply base.
4
Part 3 of 4
Today, (1) many products made abroad are as good or better, than our own, and, despite low income taxes, (2) very many Americans can’t afford to buy products made in the USA. (3) Our labor force is ill educated and many lack the skills needed to produce sophisticated tools and digital products. (4) Our infrastructure is in a mess. (5) We have plenty of natural gas, but many oil and coal plutocrats have successfully slowed the development of non-polluting power sources. (6) We have lots of vitally needed rare earths, but American industry has chosen to not develop safe extraction and refining methods. I don’t know about our supply base, but, (7) it may be doing well.
3
Republicans are citing that Reagan cut taxes and we got 16 million jobs. But Republicans don't talk about huge increase in the deficit / debt.
Republicans also don't tell you that Clinton raised taxes and we got 23 million jobs. And the deficit came down and Clinton balanced the budget.
What Republicans also don't say is that Reagan also gave us the biggest tax increase in history at the time. He didn't put back tax rates but instead closed loopholes. So Reagan called these "revenue enhancers."
But even with revenue enhancers, the deficit skyrocketed and Reagan tripled the debt in three years.
Similar comparison between W. Bush and Obama.
Bush two "tax cuts for the job creators" and got 3 million jobs. The deficit went from zero to $1.4 Trillion.
Obama put back the high end marginal tax rate, gave us the "jobs killing" Obama-care and we got 11 million jobs.
Also, the deficit was cut by almost 2/3 to $550 Billion.
And that was recovering from the worst recession since the Great Depression.
Then there is the Sam Brownback experiment in Kansas that was a disaster.
Conclusion:
Raise taxes on the wealthy.
Get better job growth.
The deficit goes way down instead of way up.
And the billionaires aren't even going to spend all the billions they have. It's just a number on a score card for them.
While the deficit / debt is something our children and grandchildren will pay.
And an excuse for Paul Ryan to cut Social Security.
13
Nationally aggregated wage gains doesn't tell the story of the recovery as the upper income / wealth brackets have done fine, as noted in an article by PEW below. Middle and lower income families have not fared as well, in fact their wealth is at 1989 levels. The government obviously saw that the economy was doing fine, at last for the people that mattered. Anymore neither party even bothers to pretend that the US is anything but a plutocracy.
"Overall, American household wealth has not fully recovered from the Great Recession. In 2016, the median wealth of all U.S. households was $97,300, up 16% from 2013 but well below median wealth before the recession began in late 2007 ($139,700 in 2016 dollars).
Thus, in 2016, the median wealth of lower-income families was 42% less than in 2007 and the median wealth of middle-income families was 33% lower.
By 2016, upper-income families had a median wealth of $810,800, 10% more than prior to the recession in 2007. Moreover, the median wealth of upper-income families is at the highest level since the Federal Reserve started collecting these data in 1983."
http://www.pewresearch.org/fact-tank/2017/11/01/how-wealth-inequality-ha...
4
Forgot where I got this (don't have room for the references):
"Let's review the MMT record. The conventional, neo-classical economists from Krugman (pseudo-lefty) to Mankiw (righty) did *not* predict the Great Recession. MMT's Steve Keen not only did, he won the Revere Prize (an economics prize not issued by the Swedish banks, as is the Nobel) for doing so.
And it's pretty obvious that government is not funded by tax revenue (or borrowing). Where would tax payers get the dollars with which to pay taxes (or lenders-to-government the dollars to lend) if government didn't spend them out into the economy first?
If you pay your taxes in cash at the Treasury building, they will mark your invoice paid, then SHRED the money! THEY DON'T NEED YOUR MONEY. One hundred percent of the debt "panic" is baloney designed to keep the economy in recession so the vulture capitalists (like Pete Peterson) can pick up assets (homes, Chicago's parking revenue) on the cheap.
The idea that issuing more dollars alone is what makes inflation is belied by that little thing we like to call "facts." Check out the graphs of money supply v. inflation.
...And let's grant the *theoretical* possibility that government with its literally infinite supply of dollars could bid up prices for limited goods and services, competing with the private sector. Who else is bidding for the unemployed? Or for all that slack in the manufacturing sector?
Meanwhile, take a look at the history of government "debt" reduction ..."
4
I just love when elite economists (those whose recommendations are curiously congruent with the demands of capital - as opposed to economists like Dean Baker and Joseph Stiglitz who speak THEIR mind) tell us we’re at “full employment”.
I wish Dr Krugman would travel to western Pennsylvania. I have about a dozen friends there, in their 50s to early 60s, about half have college degrees, one has an MBA, and they cannot find work. I suppose “full employment” means that they should surrender their dignity and cheerfully announce, “welcome to Burger King, may I take your order?” - not that there are even enough of the low wage jobs.
This is just another jobless recovery, a thirty year pattern, a sure sign of an economy in trouble - but since the elite are doing just fine, their lap dog economists will proclaim that everything is just fine.
6
The annual percentage change in hourly earnings tracks the core CPI quite well. While this doesn't invalidate Dr. Krugman's argument, it does suggest that businesses have managed to control wage growth to match inflation, by whatever means they have. My guess is that the unemployment stats do not convey what is really happening, and that fear of unemployment is still a motivating factor in restrained wage growth.
1
So, following through, we are on the road to two policy changes.
The first is to increase short term rates while undoing QE2, twisting, possibly inverting, the yield curve towards decreased investment.
The second is cutting taxes on the rich and in the short term cutting taxes on some but raising taxes on most in the medium term, and possibly also cutting federal spending. I'm not thinking this will result in a net increase in consumption, short, long or medium term.
This looks like a huge policy driven economic crash. Trump won't see it coming, because anything he might understand is micro.
3
Two additional factors I see for slow wage growth.
Employers are seeing rising health care costs for employees. So employers can't increase wages as much as they used to.
We are looking at average wages. So if someone lost a union manufacturing job and is now taking a minimum wage service job, this will drive the average lower.
7
It would be interesting to see this graph for other countries with universal health care.
1
Defined Benefit Plans died. Retiree health care plans died. Small companies, 50 employees or less, do not have to provide health insurance. Large corporations broke their holdings into small entities of 50 or less to avoid mandated health care benefits. Some States pushed back against the manipulation by large corporations, primarily on the East Coast. The West Coast allowed small businesses to join exchanges for out of state health care plans. Health care for all Americans is in a state of flux. We need a national health care plan, as Europe has, to provide basic care for all. This would be available to American citizens; if you do not have a valid SS card, you do not receive benefits under a national plan. Enforce E-verify; fund the immigration service and border patrol with enough funding. We don't need a boondoggle wall winding through canyons and river beds. We need to secure our borders with adequate well funded border patrols.
It was called "structural unemployment" because congress did not want to do anything to help Obama bring back the economy, Plus congress was not the ones enduring unemployment or under employment ( they have a problem with empathy). If we had spend the money to stimulate the economy we would now have the improved infrastructure. Instead we still are in need of repairs. I do not recall "serious" economist denying the need for fiscal stimulus.
7
Is it possible there is a time lag between increased wages and low unemployment? Business' have been running lean since the the great recession but now are competing for labor which will necessitate increases in wages and/or benefits. Also they must have some confidence that the uptick in the economy is not temporary.
The real power behind growth is jobs and wage growth. Demand comes from people that have a certain amount of money to spend into any given economy. If wages stay at a stagnant level while costs rise (particularly housing/health care) then spending on anything else is constrained. So while jobs have been added, many of them don't pay well enough to create consumer demand. Meanwhile trillions in cash have been hoarded and continue to be so, not really doing anything to impact the economy one way or another. The stock market is having a gleeful rise pinning its hopes on a tax cut to come which will put even more money into a hoarding situation since most average people are not vested in the stock markets success or failure directly. Since the majority of benefit from the upcoming budget busting tax cut have already said that few jobs or raises will result, but stockholders will be rewarded, the growth the GOP keeps touting is doubtful at best.
6
Kansas might be the place to look if cutting corporate taxes, starving public services, education and health care succeeded. It did not succeed; it was a spectacular failure. So, now we have Trump and his Congress of corporate tools orchestrating a similar road to disaster in the U.S. It is not possible to sell new cars, new homes, good clothes, or even healthy food to a population working for minimum wage in the service sector. We won't see the bread lines from the great Depression; we do have a minimal safety net. However, we won't see a healthy economy, either. We will see more inequality between the top 10% and the bottom 90%.
More strong evidence that there is no skills mismatch or serious skills shortage is in the average hourly earnings of manufacturing employees. Modern manufacturing is highly technical requiring more of the so-called STEM skills (science, technology, engineering and mathematics) than most non-manufacturing sectors. So if we want to find evidence of a skills mismatch we should see it in manufacturing. And yet average hourly earnings in manufacturing have grown more slowly during the recovery than average hourly earnings for all employees with the exception of 2014 and 2016. Since peaking in 2016 at 2.7% average hourly earnings growth in manufacturing has declined to just 1.9% as of November 2017 compared to 2.5% for all employees. See chart comparing the two series:
https://fred.stlouisfed.org/graph/fredgraph.png?g=gy8T
If the problem were skills rather than demand then we'd expect to see the opposite with manufacturing workers getting more pay raises than the average worker.
9
I believe that many of the jobs in manufacturing are being automated with robotics.
1
STEM jobs have gone to skilled workers from India, some from China. They can pay these hires less than an American graduate, because their families want them to settle in the U.S., and will supplement lower salaries with money from home. This is a disgrace; it hurts American citizens, and we derive no benefit from this scam where corporations claim they cannot fill jobs with American graduates. If good jobs remain scarce, and service jobs remain the staple of lower wage workers, our consumer economy will eventually move into another recession. If a worker does not have disposable income beyond rent, food and transportation, that worker is not going to buy a new car, or take an expensive vacation. That worker is going to consume less, and pay more for what is consumed. This is not sustainable.
One must wonder, had stimulus been massive and sustained, whether we would have spent $8 trillion that we didn't have to avoid $8 trillion in foregone GDP production -- and be looking at a national debt of $28 trillion instead of $20 trillion.
But, of course, this isn't a rational consideration to a liberal who believes not that government can do useful things up to a point but that it is the primary recourse to ALL social challenges.
3
Actually 8 trillion represents destruction of capital. Crises are only that: the restoration of equilibrium between claims to future profits and the actual realization of those. Lots of those claims are fictitious, so you have a subsequent reckoning. Debt and credit are similar mechanisms to the realization of profits. However, actual profits don’t always correspond to Claims on them and you see the crisis. Given the current political organization, only the little potatoes pay for the shenanigans of modern finance. 2008 is still fresh in our memory to revise history.
2
Reagan cut taxes and we got 16 million jobs. Plus a huge increase in the deficit that tripled the debt in 8 years.
Clinton raised taxes and we got 23 million jobs. Plus a balanced budget - zero deficit.
Similar for a comparison between W. Bush and Obama.
W. Bush gave us two "tax cuts for the job creators" and we got 3 million jobs and took the balanced budget from Clinton and gave Obama a whopping $1.4 Trillion deficit.
Obama raised taxes and we got 11 million jobs and the deficit cut by almost 2/3 to $550 billion.
And that was with recovering from the worst recession since the Great Depression and the "jobs killing" Obama-care where we actually gave millions of people health care.
3
FDR stimulated the economy with the WPA and the CCC before WWII created jobs. FDR used the government to put people to work so families could survive. In case you have forgotten the history of the Depression, look it up. There were soup kitchens, bread lines, homeless and jobless people. FDR used the government to help people. Obama tried to do as much as he could. Trump will do nothing for any working people; in fact, he didn't pay the contractors who worked on the Tower the agreed amount. When the contractors challenged that, his answer was "sue me". When his casinos went bankrupt, he left employees with nothing; he did not pay his creditors. I would rather have any reasonable Democrat in Congress and the White House than any Republican whose loyalties are to large corporate donors.
"But some economists argued that high unemployment was “structural” – that there was a mismatch between the skills ... "
There was a mismatch. However with the disappearance of defined benefit pension plans, paid medical in retirement and annual wage increases the mismatch becomes more financially palatable in terms of OJT for the new hires. This can also be seen in the trend in hiring contract workers. An employer can impose what are essentially multi-year probabionary period.
On top of that, many jobs can be off-shored and outsourced. That is impacting the on-shore wages being offered. At some point wages will increase to a point that it makes sense for an employer to take a near-term hit in transition expenses (e.g. initially increase in quality numbers, startup costs, on-shore restructuring costs...) to take advantage of off-shore wages.
"there should be a lot of upward pressure on the wages of those workers who did have the right skills"
Krugman conveniently overlooks areas where there is upward pressure on certain wages. In the Detroit area engineering salaries are increasing for positions requiring on-shore presence and support (e.g. autonomous vehicles, cybersecurity).
There is also an uptick in the demand for engineers driven by the changes, which are actually stricter enforcement, in the H-1B visa rules.
Krugman would be better off looking into the employment details within various economic sectors. But analyzing the macroscopic is easier.
2
Nine, count 'em, nine years to get back to pre recession employment levels and that is supposed to be prima fascia evidence that there was no structural unemployment because workers skills could not have changed in Nine years? Also consider we really are not back to pre recession employment levels since the labor participation rate is still below the pre recession rate. As for sluggish wage growth, thank the Dems. ACCA and all the other "pro labor" mandates placed on businesses increased labor costs. Since labor is paid its marginal product, increased labor costs because of government mandates end up as downward pressure on wages.
2
And the ridiculous methodology of counting "who is or is not employed" -- so if you lost a $70,000 job with benefits in 2010....and were on extended unemployment for TWO YEARS...then with it exhausted, you turned in desperation to working part time at the local Dollar Store for $7.25....you are now "employed".
The stats measure NOTHING of the pain and misery out there....
2
i guess krugman is upset that unemployment under trump has gone down so he needs to pick whatever negative he can find...putting that aside i have a different take on stagnant wages ...i worked in an industry that employed mostly unskilled workers...i looked up a union contract signed 40 years ago and compared it to a present day contract...the starting wage 40 years ago was 5$ an hour and today the starting wage is 10$ an hour but the cost of benefits was 30$ per week 40 years ago vs. 400$ a week today...so wages doubled while the cpi quadrupled during the same period...taking benefits into account the total cost to the employer was 230$ per week vs 800$ per week today ...breaking this down into 10 year periods the ratios are pretty consistent..the same employee who retires after working 40 years is probably making 25$ to 30$ an hour today so as they retire they are replaced by a new employee making significantly less, 10$ an hour......wages have become stagnant for the past ten years or so because all the raises the employees are getting are put into benefits and not their paycheck...healthcare costs are robbing employees of their wages
2
your analysis is simplistic in ways that are hard to list. Most importantly you do not take into account the changing value of the dollar, which would set your analysis on its head. I do appreciate your point about employers paying for benefits. But you ignore the fact that more and more jobs come without benefits. You also overlook changes in unionization as well as working conditions. The rise in employer paid benefits may be due to the rising cost of healthcare. That analysis would be worth doing.
9
@Peter g
New York ny
Unemployment was falling for seven years before Trump took office. And healthcare costs over the last five years have been rising at the slowest rate for decades. But don't let the facts both you.
17
@John Hartford
I agree with your comments.
What I can't understand is that while health care inflation has been the lowest in decades, my insurance costs are going way up.
I pay my own Blue Cross. In 2010, I paid $200 / month with a max out of pocket of $2,500.
In 2018, I will pay $1,050 / month with a max out of pocket of $7,000.
A small part of the difference can be explained by age. I was 55 in 2010. I am 63 in 2018.
The Blue Cross agent gave his opinion that Blue Cross didn't take people who had more than one sign of risk. Now they have to take everyone.
However, I would argue the real problem is that the US spends twice as much on health care / capita than most other countries.
We don't have universal coverage.
And we have states with black infant morality rates worse than Botswana. Alabama is one.
3
OK, Keynesian economics might not sound serious enough, even though it is serious.
But the current policy is Keynesian economics for bizarro world. With full employment, the stock market is at all time highs, and the economy is touted as being "strong and about to get stronger" by the Atlanta Fed, we are about to borrow heavily for a stimulus which, as Donald J. Trump has said, is "rocket fuel" for the economy. And will create no jobs, nor is it an investment in infrastructure or anything else of value for the future and will obliterate a generation of STEM graduates for no good reason other than to facilitate creation of this monster
Logical arguments by learned men have no impact. No matter how many FRED graphs throw a clear white light on the economic situation, it makes no impact.
There is no way to stop this runaway crazy train.
11
I am concerned that a significant number have simply dropped out of the labor pool who are ready and willing to work, if given half a chance. That,of course, would bring the unemployment rate while ensuring that wages remain low.
3
Please don't forget that the first wave of baby boomers hit retirement age starting in 2011 so we have also had 6 years of a large group of people aging out of the labor market as well - so that would impact the total labor pool as well.
1
I share your feelings about the latest job report but continue to be bothered by the Angus Deaton and Anne Case study findings of the high morbidity rate amongst White (non-latino) males between the ages 45-54 http://www.pnas.org/content/112/49/15078.full.pdf . I don't believe this alarming stat has changed much.
I am also bothered by the uneven distribution of incomes/jobs. We still have friction in inequality that mars the positive improvement in Average income over last year. For example, in a Census Bureau study the overall median household income hit a high of $59,039 in 2016, but incomes in Black and Hispanic households lag behind the median. The chart which I can't show in this comment shows $81, 431 for Asian, $65,041 for White, $47,675 for Hispanic and $39, 490 for Black.
So, we still have social mobility problems that could be helped by economic growth but I am reasonably sure that this new tax cut bill is not going to improve this situation. I subscribe to the theory that real growth occurs because of innovation that improves the standard of living and is broadly shared.
We have not been broadly sharing the return on public investment and private investment seems to have been sequestered by the upper 5 percent of income earners. I believe, and history shows, we can do better if the government invests in improving the "commons" infrastructure for people to live, with adequate healthcare, education and reduced commuting costs.
Why is this so hard?
9
>
First, let the record show, that the Titan is a "demand sider", which hardly makes me an optimist.
I'm a pessimist because I know the sick nature and tactics of the herd that we demand siders are up against. Hence I know that the demand-side arguments are doomed from the start.
“I'm a pessimist because of intelligence, but an optimist because of will.”
Antonio Gramsci
3
Tired of slave wages and being in a slave job such as Walmart or Mcds or the lies that the so called gig economy temp agencies give out which they say last two months yet only last two days! The so called employers never call back or make up excuses that "you're too old, not qualified, over qualified, not worked in too long due to republican't greed and selfishness and anything else heartless empty excuses under the sun" they come up with in their non existant little minds, rather than do their jobs and hire the only fair way, first come first served. Minimum wage at 20hr plus cut CEO and owner wages to no more than 1% above the lowest paid employee. No more tax evasion either. Tax the rich tax the corporations tax all republican'ts and their supporters and voters out of existence!!!
3
Employers who say they have a hard time finding workers, actually mean they have a hard time finding workers willing to work for the meager wages being offered.
If they paid better, then people would be willing to work for them, or get the training necessary. Isn't that what free-market is all about?
24
I keep hearing some new college graduates making six figures. Clearly you need to be more specific and you simply cannot generalize everything. If people have the right skills such as AI, they can make a lot. Seriously, how much more can MacDonald's pay people to flip burgers? I can think about several reasons for wage stagnation. In essence, companies need talented people to generate value-added products. Innovations are essential and any serious company will want to be two steps ahead of competitions. So research and development are the core interest. For manufacturing, if possible, automation is the priority. A hybrid approach is more realistic today but companies don't really need whole lot workers anymore. They just need a few great, loyal, reliable and productive workers. These people are also the core interest. So when people say loyalty is dead, they really have no clue! Try to think how to creat values because only mutually beneficial relationship can last.
Liberals cannot have both ways. Unlimited immigration depress wages. It is a simple concept of supply and demand. What America needs are high-end manufacturing in order to keep living standard. I bet the true cost of low-skilled immigrants is much higher if the data is analyzed separately for each group of immigrants.
4
I think you miss the point on immigration. Yes entry level job wages will be depressed (although FICA and Medicare taxes are paid) but that's not the benefit of immigration. As the grandson of an Italian immigrant and first in my family to have a 4 year degree, I have a daughter, nieces and nephews (3rd generation Americans) all with master's or PhD's who are earning good wages having families, paying taxes, and are contributing members of America. That's the benefit of immigration. Stop wallowing in the shallow end of the argument. There is a bigger picture here.
7
You could be right. Why don't you analyze the data separately for each group of immigrants, and report back to us when you have data instead of supposition.
2
We live in a country which has not just forgotten its people, but has a government now working to impoverish them further. If the current tax bill isn't a bold example of that, then the other initiatives this year, including destroying health care for millions and the environment for all are.
If someone making $1 Million per year is going to realize an $85K tax cut, then someone making $50K would need a $4K break to be on that plane percentage wise. The paltry real number (around $1K) is reflective that the people are always going to be the losers.
8
For 3 generations the American Capitalists decried the "Planned Economies" of communist Russia and China. Decried, I say! So, now American Capitalists rule over the "rigged" economy, one that benefits only the wealthiest among us. They will lie, cheat, steal, and most importantly, corrupt the nation's productivity in pursuit of some capitalist ideal. What that ideal is cannot be articulated by its promoters, simple because it shifts with their whims. Too much regulation. Too much reform. Too much economic justice. But, never enough money for them and their country club buddies.
6
As the writer Joseph Conrad said, capitalism is piracy with good PR.
I don't disagree with Prof. Krugman's prescription: we should have tried infrastructure spending. What I disagree with is the concept that he or any economist is asked or expect to predict the future with any certainty. This skill is not given to man.
Perhaps infrastructure would have worked, or perhaps not. With unemployment as low as it is even today, we still have sluggish wage growth.
The economy recovered slowly but steadily under President Obama, to his credit. But it's still doing so under Trump. Go figure.
Perhaps infrastructure would have worked, or perhaps not. But at least at the end of the day, we'd have some bloody infrastructure that bloody well worked.
10
The Serious People in the Beltway who were or are "structuralists" exemplify the old expression that it is very difficult to persuade people that they are wrong when their livelihoods depend on their believing that they are right. These same people believe that cutting taxes on corporations and on the wealthy will lead to capital investment, greater employment, higher wages, and economic growth notwithstanding abundant evidence to the contrary and not a shred of evidence in its favor. The wealthy control the economy and the government, and they always have. If we cut taxes on lower and middle income class people, it would give them more money to spend on needed goods and services. This would result in more revenue and more profit to the wealthy who own the businesses that provide those goods and services. Their net after tax profit would surely be greater than without that additional revenue. I have never understood why those who control supply would want to reduce demand rather than to increase it. Maybe I just do not understand the psychology of greed. Is part of it just being hateful?
3
Of course stagnant American wages have nothing to do with the mass importation of foreign workers to do "jobs Americans won't do." Absolutely nothing! Only a bad person would even suggest such a thing!!!
6
You could look at the numbers of undocumented entrants to the U.S., which fell steadily under Obama, to refute the theory that they are keeping wages low.
11
Regarding unions, it might be argued that (historically) workers' bargaining power didn't rise because of unionism. Rather, unionism flourished (for a time at least) because conditions of industrial production made it impossible to withstand.
The industrial era saw human physical power and human physical dexterity replaced by machinery while humans themselves retained cognitive superiority. In fact, industrialisation made workers' cognitive superiority relatively more valuable because a properly trained human could control a much greater value of production. A trained human was a valuable asset. By going on strike and idling expensive capital equipment it could quickly impose upon its Rulers greater costs than it itself incurred.
Historically, unionism was illegal and punished under savage "Combination Laws". In the US, those Platonic Guardians of the Supreme Court - invoking the Bill of Rights no less! - overturned labour laws (eg Lochner v New York, 1905 on working hours; Coppage v Kansas, 1915 on legislation protecting union membership) on the grounds that they infringed the "liberty" of workers to contract with their employers.
Ultimately, the conditions of industrial production made it easier and more profitable to grant Subjects a few limited concessions than to continue fighting them.
But the transition from industrial to service economy has swung the balance back. AI/robotics will complete the process.
The Peasants' Revolt is over.
We are being refeudalised.
8
And what is corporate America constantly in search of? The ability to pay $10 a day versus $10 an hour. Just ask Ivanka. Who won't even admit that. The problem with wage increases in the U.S. is that labor includes foreign workers on foreign soil. The unemployment figures don't include them, nor do the wage figures. But they certainly figure into Ivanka's bottom line and profit margin. And if you think Ivanka in any way, shape, or form is going to cut into that profit to invest in American workers, you are totally delusional. She does not have to. But she'll take the big tax cut, thanks to American, and only American, workers who will foot the bill, thank you very much.
5
I'm sorry Paul. The political class weren't listening to you in the depths of the crisis, they are definitely not listening to you now.
2
We are doomed.
3
Does anyone take anything the so-called "economists" on both sides of any economic "debate" say seriously? Let alone use it in developing a practical policy? The whole "economic science" is nothing more than an ideologically driven hubris whose sole purpose is to justify continued exploitation and inequality.
3
You leave out how much better trained workers are since Trump became President. Taller and better looking, too.
4
Professor Krugman, being an exception compassionate American, continues to imagine that purported (but spurious) "conservatives" and other right-wingers care about about ordinary Americans.
On the contrary, America's plutocrats and their lackeys have selfish agendas that are not always served by high employment or even economic growth.
For example, over the course of the past 8 years, bankers and other rich capitalists have acquired much of America's housing stock lost to foreclosure by unemployed and underemployed working families. Those houses grabbed by the 1% at distressed prices are now being rented back to their former owners and other tenants at exceedingly profitable and rapidly escalating rental rates.
The lesson for decent Americans willing to face reality is that most capitalists are cannibals and capitalism is devouring 99% of Americans' futures.
Most of America's "capitalists" are frauds, striving to rig markets in their own favor, crush small businesses, oppress labor, and - generally - grab monopolistic ownership of everything, including political power.
Indeed, capitalism is devouring American democracy and reducing this nation to a corporate police state lubricated with large globs of Fake Christianity.
9
Krugman defending his columns of the past decade.
1
What's to defend? He was right.
Krugman's is correct that the structural unemployment case was bunk and even he says most economists agreed. It was as he says basically a political talking point and politics was the reason the structuralists view prevailed not economic logic. Republicans had control of the house and were able to block spending on infrastructure. The recovery act only got through by the skin of its teeth at the peak of the crash. Unemployment took a long time to come down because demand was weak as the US recovered from the worst crash for nearly 80 years and there was plenty of spare capacity in the economy. Using 2007 as a benchmark however is also a major error. 2007 was the peak of a huge economic bubble (although the air had already begun to leak out of it) when the economy was massively overheated. Does Krugman posit the economy should have continued to operate under the bubble conditions prevailing in the run up to the crash?
5
Yeah, in 2007 many large banks had outstanding loans equal to 27 or 28 times their reserves. This guaranteed a disaster.
2
The quandary seems to be that if everybody can find a job, why don’t employers have to pay more to get an employee? It would seem that employees cannot bargain for a higher wage by refusing to work for too low a wage.
The explanation may be that if an employee asks too much, employers can get the work done in other ways. For example, by going off-shore, or by putting more into automation. In effect, the employee is not competing just with other employees, but with other solutions to getting the job done. Building a house requires far fewer workers today than in the past, and instead of raising wages the employer can reduce manpower. Or, instead of more trucks, the employer can add one or two additional trailers to each cab.
4
Average underutilization could be higher than 5% or could be less, but the main point is that a massive input was injected into the system that didn't give rise to employment curve to the extent desired - a large valley in the curve shown in this article. So, it could be thought that a lot of capital flew out of the country where the conditions were congenial for productivity. Here also the corporations are on a constant drive to train people, so the question of "missing skill" does not seem plausible to explain the shortfall. Private sector employment, wages and profits are normally taken together - even for those operating in the NAFTA region. Now, with the use of Artificial Intelligence, the situation will be very difficult and needs to be explained by an out-of-the-box thinking...
2
Keynes wrote, "“The boom, not the slump, is the right time for austerity at the Treasury.”
Krugman appears to believe this as he argues for federal spending when things are not so hot, and mutters darkly about debt problems for the time when things get better.
The trouble with this is that Keynes only half right so the ideas upon which this core idea are based must also be incorrect.
During the great boom after WWII we did not have austerity at the Treasury. From 1946 to 1973 the federal debt INCREASED 75%. And yet we had Great Prosperity during this period. GDP averaged 3.8% and real median household income surged 74%. And this period lasted 27 years.
On the other hand, after WWI, during the Roaring 20's, we did have austerity at the Treasury. We had no federal deficits and DECREASED the debt by 38%. After 10 years of following Keynes' advice, the economy fell off a cliff.
In fact, ALL 6 times in our history, whenever there was a period in which we practiced "fiscal responsibility" and paid down the debt 10% or more, that period was ended by a terrible depression.
There is never a good time for austerity. So liked a stopped clock, Krugman gets it right when times aren't so hot, but for the wrong reasons. And his explanation ain't so clear. He proposed more federal spending--good. But that is not what was really needed. We needed DEFICIT spending for it does no good to add money by spending if you take it out via taxes, but he is afraid to utter the word "deficit."
4
As I recall from my past readings, the 1950's was a period of Federal debt repayment, low inflation and no significant tax cuts. President Eisenhower refused to go along with tax cuts until WWII debt had been repaid. The 1950's was not followed by a terrible depression. In fact the country's economic problems did not really start until LBJ's guns and butter programs got going in the the mid-1960's. We have had two major wars in my lifetime, Viet Nam and the Middle East, both of which were expensive failures and neither of which was financed responsibly. As the Baby Boomers (my generation) start to die off in large numbers, the burden of past fiscal mistakes will be borne by their children and grandchildren. We are not so exceptional afterall and DC has become a fiscal swamp, not the shining city on a hill of American mythology.
1
The U.S. during the years following WWII had no competition from either Europe or Asia, so it was a unique time in history. Of course we prospered. Most Americans, including the rich, flourished at a time when our tax rates were the highest in history. The American middle class was effectively born after WWII;
I remember Krugman's columns from the Great Recession. He proposed deficit spending; he didn't propose raising taxes. Perhaps you're thinking of a different columnist?
Howard - Here are the debt figures:
06/28/1946 $269,422,099,173.26
06/30/1973 $458,141,605,312.09
As you can see there was no debt repayment, quite the contrary. The period 1946 - 1973 has been called the Great Prosperity during which GDP growth averaged 3.8% and real median household income surged 74%. I am afraid your memory. like mine, is rather unreliable.
Sandra - I call what you say, the "Europe was rubble" myth. To be brief. we can look at the bottom line. Look at http://piketty.pse.ens.fr/files/capital21c/en/pdf/F1.1.pdf which shows that the output of Europe was about the same as that of the US in the Great Prosperity of1946 - 1973.
I might also point out, that you argument would imply that WWI should have also been followed by a long period of Great Prosperity, not the Great Depression. The difference between post WWI and post WWII is that after WWI we were "fiscally responsible" and eliminated federal deficits and paid down the debt almost 40%. After WWII, we had deficits for 21 of the following 27 years and increased the debt 74%.
If you read again what I wrote, I said that Keynes and Krugman were right half of the time (such as during the Great Recession) but it was for the wrong reasons, and their proposing "austerity at the Treasury" during the boom has always led to disaster.
Comparing today's employment rate to 2007 or for that matter 1997 or 1987is comparing apples to oranges. There may be similar numbers of people working but the match between their experience, skills and choice of work as well as the salary and benefits those workers earned have little comparison.
There is little reason to consider the now conventional unemployment figures as a useful measure of anything except for how many fewer people have joined the lowest quintile and still qualify for assistance and how many need assistance but are a few dollars over qualifying.
It also fails to discuss how many seniors are working into old age, how many middle aged people are left scrambling after their savings and major investment (homes) were effectively stolen by the finance industry and medical/insurance industry.
The official unemployment rate is the biggest fake news of all.
12
@memo laiceps between alpha and omega
Conspiracy theorists are most boring fakers of all.
4
In the last twelve months:
Civilian Population Survey data on the 16-64 cohort went down 108K.
We added 1517K senior citizens.
These are the most well trained, experienced, and hard working sector of the workforce and we're retiring nearly 3 million workers a year, replacing them with 4 million young or formerly unemployment workers. This reduces wages, reduces productivity, and makes life so much harder for remaining workers who despite increasing work loads, are seeing no real raises.
4
There is a core issue here that rarely gets mentioned by economists: executives have kept for themselves an unfair, perhaps even sinful, amount of the profit produced by automation and globalization.
Thomas Watson's original successful business model for IBM (where I worked for 37 years) emphasized a reasonable balance between the welfare of the business, its employees, and the communities in which it operated. This model has been abandoned by most businesses, especially the large, multinational ones. I believe this is a root cause of many modern problems. It is not caused by economic factors, but by the (lack of) human values of the executives who make corporate economic decisions.
20
There has always been a disconnect between corporate fealty to the bottom line and the "human values" you refer to. Somehow we have jumped to deadly serious global vying for power (wealth plus military) among a few of the world's top players; and the rest of us are expected to fall in line behind our party or our country.
We don't cheer for "our side" with any real understanding of what we're doing. Sure "human values" should be the goal of all religionists, but that gets skewed when we cheer for "our side." And among the growing number of atheists who still believe in "human values" there's a strong temptation to put personal wealth first.
I don't know the remedy. I thought "human values" might win when Bernie had a chance. Of course, I'll exercise my vote in the coming local, state and federal elections: in effort to keep "human values" alive.
1
Management see`s themselves as the Real makers and so should be the dominate Takers. Ever worker below is nothing more than an inanimate wage slave and easily replaced.
In the end, whatever boosts profits for the .1% is what gets implemented in the absence of strong labor movement. Tax cuts for the rich, deregulation, outsourcing, and so on ihas been the diet we have gotten for more than 30 years. Profitability is the name of the tune. If it isn’t in the equation, other reasons are mere distractions. Productive investment has decreased relative to giving the money back to shareholders. That is the story behind Apple, Microsoft, google/Alphabet, and the 10 largest corporations in the planet. It has become a financial racket.
7
In the future there will be nothing left to do
and on that day the gods will descend, through two beautiful tubes, to congratulate us for somehow surviving our ignorance. Back on Olympus, tha wasn’t the outcome they’d predicted.
1
Paul, your statistics are unjustifiably one-sided: you said "And this $8 trillion loss didn’t have to happen: adequate, sustained stimulus could have eliminated most of it." But the reverse strategy of building infrastructure and so forth could as easily have resulted in an $8 Trillion gain. Be careful now you word things. Words matter. As you put it: -8 to zero. As I put it: -8 to +8. Do you disagree with my assessment?
3
Please explain what you mean.
Are you saying that we might have spent $8 trillion on stimulus?
I disagree with that assessment. We were never going to spend $8 trillion on stimulus. The recommendation was about $1.2 trillion.
It would help a lot if Those who control the Democratic Party apparatus got with the program and stopped boasting about how good things were under Obama.
4
Actually, Chris Martin, what would be most helpful would be for those, like you, who complain about how bad things were under President Obama, to remember that he was saddled from day one with the unfortunate aftermath of the most devastating economic collapse since the Great Depression. He did not cause that disaster, it just took almost 8 years of effort, continuously opposed and deliberately undermined by the Republican Party, to recover from it.
10
And what program is that, Chris? Trashing Bears' Ears so extractive industries can boost output a little? Destroying our trade relations in the name of phony nationalism? Eviscerating Social Security and Medicare in order to stuff more money in the pockets of the 1%?
I know all this sounds highly attractive, but I believe I prefer life under the imperfect President Obama to the current dystopia.
6
Plus, Obama was much more even tempered and less likely to get us into a thermonuclear war.
4
Prime-age labor participation is still more than one full percentage point below pre-recession levels. The chart below shows the change, relative to 2007, in the labor participation rate for all adults (red) and those between the ages of 25 and 54 the so-called prime working age (blue). Overall participation fell more than more than prime-age participation and shows no sign of recovering. But much of the decline in overall participation can be attributed to demographics. After falling for years, prime-age participation began rising starting in November 2015 but then stalled in 2017.
https://fred.stlouisfed.org/graph/fredgraph.png?g=gxpp
The question is why prime-age participation stopped rising. There are two possible interpretations. It could be that higher wage rates would encourage more prime-age adults to enter the workforce. It's also possible that hysteresis effects have permanently depressed prime-age participation. The second possibility could have easily been avoided if more demand was provided by increased government spending early in the recovery.
4
In the last seven years, four months, we added 17.6 million private sector jobs.
There is a small net loss in government jobs.
How closely does this period of wage stagnation correspond to the demise of Unions in this Country? The GOP has been very successful in blaming "high union wages" for off-shoring of American jobs and making projects too expensive. The absence of high paying Union jobs contributes to wage deflation with the lowering of the ceiling of available wages.
22
This is an irony that really baffles me. I see the heart of Trumps core today, being all the same people who were most adversely impacted by the "Unions are bad", "Global Trade is good" GOP movements of the past. Yet they continue to celebrate a party that drives a platform of little to-no wage growth, decreasing medical coverage and systematic under employment.
I'm not a Union-loving person but I find the irony here hard to avoid.
2
"The idea that mass unemployment is fundamentally just a problem of inadequate demand – that all we have is magneto trouble – and that it is easily solved by spending more, sounds too easy."
It all depends on whose money is being spent. If private individuals or companies/corporations spend money then of course there will be increased demand. But, if government spends money on things people want and are willing to pay for--education, roads, infrastructure, etc.--then those same dollars won't increase demand, create income, or stimulate the economy. The third of the economy represented by government and its spending is somehow different than the other two thirds. A dollar spent on a teacher's salary is not the same as one spent on a salesperson or a bank CEO. We only stimulate the economy if we spend on private enterprise not on public projects or personnel. Or at least that's what we're taught to believe. Keynesian economics is so 20th century.
2
The purchase of securities does not increase demand. The purchase of goods and services does, regardless of whether spent by for-profit, non-profit, or governmental organizations.
4
How does a modern consumer economy work with poor roads and poor transportation? How does it succeed with a work force not educated to compete in global markets? How is a teacher less important than a sales clerk at Sears? How many bank CEO's were responsible for the devastating bank crashes recently suffered around the world? We have government for a reason: it is called The Social Contract; and, it protects the Commons from a small predatory minority which would loot and destroy it. The Social Contract we all participate in is what supports a complex society dependent on recognized laws and norms. Consumers are necessary in our economy; they need money to consume beyond the basics; that requires paid employment for those who do not have inherited wealth. If those who control the means of production and the markets do not recognize the need for workers and consumers, a feral society will become a real possibility. That is why we have, and need a Social Contract.
4
Here is some 21st century economics (MMT):
1. We need money to conduct commerce, to buy and sell goods and services.
2, As the economy grows we need more and more money.
3. Money can come to the private sector from 2 places--the federal government or from a favorable trade balance.
4. When the federal government spends, it sends money to the private sector. Through the FED, it can create as much money as it needs. It will run out of money the day after the NFL runs out of points.
5. When the federal government taxes, it takes money out of the private sector.
6. Net federal spending is measured by the federal deficit, i.e. the deficit measures the net flow of money to people, businesses and state & local governments. In order to be useful, the money must be properly spent. If the government pays Scrooge McDuck $1 million for advice on the comic book market, and the money just sits in Scrooge's basement, that money does not help commerce one bit.
7. Thus in order to get the new money the private sector needs, the federal deficit must be larger than the trade deficit. Today we have a large trade deficit. We need a large deficit.
8. If the above is correct, periods of negative deficits, surpluses, which pay down the federal debt should lead to a bad economy. They have. There have been 6 such periods of longer than 3 years in US history, They have ALL ended in a real gut wrenching depression.
2
Here we are Dr. K, 9 or so years after the crash. And in those years, it seems to me that everything you predicted more or less has come to pass. And that makes me very pessimistic. Reason still does not prevail. There are still politicians trying to do away with Dodd- Frank and smash the ACA, SSI and Medicare, because after all, who needs healthcare. And now do away with mortgage deductions and state tax deductions. After all, what could go wrong?
9
Social Security benefits have also been stagnant or declining for the elderly. After four years without an increase, I’ve been notified that I will receive a 2% cost-of-living increase in 2018.
But the Medicare deduction has grown so much, that I will actually receive four dollars less next year.
The 2% cost-of-living increase is a joke. As any senior citizen in my area will confirm, the cost of living has grown 2-3 times that, including out-of-pocket medical co-pays.
49
Yes. Medical expenses are notorious for rising faster than the CPI. Just wait until Ryan proposes to use the chained CPI for adjusting Social Security. Or he may not even bother with legerdemain and just pull out a machete.
1
Yup! Sounds like a Abbott and Costello skit, one for you, one two for me.
$8,000,000,000,000 lost for the economy in the last crisis. Using the labor stats to gauge the state of the economy is, at best, looking at one piece of the equation. Our unemployment level and the numbers of jobs and the pay hasn't moved significantly for nearly 50 years. There were spurts and sputters, starts and stops, but as Dr. Krugman alludes to the ““beltway experts of the term of the Pres.” have consistently used the wrong formulas to diagnose and treat the economy. Those who insist that the “structuralism” of jobs or rather no jobs miss the point. An economy is a system to create products and services and create buyers for them. Almost by definition the notion that <5% unemployment is great regardless of the underemployment.
Our “system” only works with “bargained for” wages, jobs and a supportive government. The fact the stk mkts are out of sight vs 2007 levels. Better economy? NO. Actually the same. The same problems have been with us since “ The Depression”. The Structuralists insist it’s different; the adjusted numbers kill the assertion.
6
Best argument for unionizing I've heard since the 1930's.
1
I thought that the effects of automation, cybernetics, whatever assured that full employment would never be reached, and that wage earners were condemned to full exploitation by their Capitalist masters, regardless of what skills they possessed. The "Better Mousetrap Syndrome" does not, I think, apply exclusively to either technology or technological knowhow, but does foster the illusion of choice when consumerism presents the mouse, and then, after time, the theory of marginal utility ups the price of both machines and goods, but has no effect upon the ability of men to buy the trap, when it returns with a revamped look and a much higher price tag. So it is, with mice and men, despite the turgid proclivities of some drug companies to buy the thesis that the difference (between mice and men) is negligible.
We mustn't forget that many of the Serious People originally responsible for the inadequate stimulus were Democrats in the Federal Government. As I recall, the magnitude of fiscal stimulus needed in 2009 to undo the effects of the the Great Recession was about $1.5 trillion. President Obama and his advisers thought that anything over $1 trillion sounded like too much, so we got only about half of what we needed. When the 2010 elections came the economy (although much better than it might have been) was still treading water, leading to massive Republican electoral victories whose consequences in redistricting and in state and Federal policies continue to affected us.
However unwise and counterproductive the GOP's planned attempt at their own $1.5 trillion fiscal stimulus may be, at least they have the boldness to follow through with their beliefs. Why shouldn't reality-based Democrats show similar boldness when they are in charge?
8
Wrong. Obama was not able to get more, nor to get more in infrastructure as opposed to stupid non-efficient tax cuts. He needed to get something passed ASAP so he settled for less than he wanted, much less. In succeeding years, Obama kept trying for another stimulus infrastructure package but by then the Republicans had taken over again
3
The GOP "fiscal stimulus" is over 10 years.
Also not reflected in this "so-called" good job number news is the numbers of people who dropped out of the workforce during the Great Recession due to no jobs to be found - and are no longer counted as unemployed.
The job numbers would be much worse if those numbers were counted.
13
I think what the people advancing the "skills-mismatch" argument actually meant was not really that too few workers were able to do the available jobs, but rather that too few were willing at the wages industry wanted to pay — in other words, that the market for skilled labor wasn't as much of a buyer's market as they were accustomed to and felt entitled to.
You see this implicit attitude everywhere: that work is worth only what employers unilaterally say it is worth, and if somehow the world doesn't provide a glut of qualified applicants desperate to work on whatever terms they dictate, it's the world's fault and not theirs.
I would say to those in the "skills-mismatch" camp that the solution is obvious. Employers who spend the time and money to train the skilled workers they need, and then pay them enough to want to stay, are always fully staffed, whatever the unemployment rate may happen to be.
39
The labour market has been functionally made into a monopsony.
Two quotes come to mind - "You have the courage to tell the masses what no politician told them: you are inferior and all the improvements in your conditions which you simply take for granted you owe to the effort of men who are better than you." Ludwig von Mises to Ayn Rand
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy: that is the search for a superior moral justification for selfishness.” - John Kenneth Galbraith
2
You'd expect journalists to celebrate current employment rates, without a peep on the depressed rate of labor participation, compared to 2007.
But Dr. K?
If the only thing keeping the official unemployment low is number of people who have decided it's not worth looking for a job, why are we throwing a party?
9
It's more complex than that. A lot of those people simply retired -- just try to find a career job after 55! -- so when they hit 62, they "retire" and take a 30% cut in SS for life.
A good chunk of those folks invented some "illness" that got them onto SSDI -- essentially getting your top SS check but early, Plus Medicaid! Sweet!
Plenty of others just decided to smoke pot all day and move into Mom's basement.
Another segment simply work "off the books" doing part time gigs like Uber, Lyft, Task Rabbit and Dog Vacay.
It is really depressing the number of people I know over 50 who do NOT have decent, full time jobs with benefits. Most of those people were working at career jobs up until the Great Recession.
1
Mr. Krugman, I don't see anyone reporting on what has now happened with the AMT in the new Tax Bill--could you elucidate? Is it true that the GOP intended to pair a new Minimum Tax of 0% with the new Corporate Tax Rate of 20%, but inadvertently left the AMT at the old 20% rate once they had to add it back into the Tax Bill in the 11th hour, in order to cover the last-minute expenses of concessions they had to make to hold-out senators, in order to buy their votes? What is happening to the AMT now, as Congress tries to justify the Bill between the House and the Senate? Don't they need to vote again, if they wish to now drop the inadvertent 20% rate that embarrassingly nullified their 20% corporate tax cut by setting the tax limit at the same amount? Why can't I find any reporting on the status of the AMT? Why did we not hear, before the Senate vote, that the AMT was slated to be zero??? This, to my mind, is excruciatingly important news! As I face a life with no write offs for either mortgage interest or student loan interest (my husband and I STILL paying our student loans in our fifties, with two kids in high school!)--and ALL THE REST--I think it needs to be known, loud and clear, that the GOP intended/intends for corporations to pay ZERO. And, we need to know how that issue is being handled in Congress, right now. Please help!
7
For a time in my career I was a 'tax guy', a partner in a CPA firm primarily concerned with tax matters. I soon learned to not devote too much time analyzing tax legislation that was wending its way through congress. The final product was always significantly different, often radically different. It often contained surprise features that were never debated in public. So don't worry too much now on news coming out about the tax bill.
4
So who are the Democrat leaders effectively telling people this? Where are all of us demanding that, by this evidence, Trump's elusive infrastructure initiative should move ahead? Is it true that evidence is now totally and permanently disconnected from policy making, or do we simply have a failure of advocacy and explanation?
7
Trump does not have an infrastructure plan or initiative. All he has is a bunch of tweets he made during the campaign. It looks like he wants to sell off a lot of infrastructure to his cronies, who will then lease it back to the citizens or something like that.
WIth the many negatives of the new health bill -- except for whinging in the lefty media -- WHERE ARE THE DEMOCRATS? where are the ones to stand up in Congress and say NO? where is the opposition? where are the marches and protests? the organizing? the ALTERNATIVE tax plan from the Democratic Party?
<< crickets >>
1
Most economists dispense poison to the body politic. Dr K is a welcome exception. I recently heard Dr Joseph Stiglitz criticizing NAFTA on the radio then acknowledging, in response to a question, that, yes, ahem, he had been Chair of the Council of Economic Advisors when that act was passed.
4
MEXICO CITY, June 20.2017 (Xinhua) -- Nobel Prize winner and renowned economist Joseph Stiglitz said Monday it would be "extraordinarily foolish" for the United States to walk away from or weaken the North American Free Trade Agreement (NAFTA).
2
This all seems like pretty ivory tower stuff. A new social contract is stealthily evolving where shareholder value is paramount and average folk should just be grateful for corporations in providing a job (any job) at the expense of everything else. It sure feels like we are living in an economic Potemkin Village where US Bureau of Labor Statistics and the stock market tell a story of success while behind the facade large swaths of the US population are struggling to put food on the table and pay for medical expenses.
47
It's a mystery to me, but I've been screwed over now by both liberal Democrats AND conservative Republicans, so I have to figure that it is a class thing. The affluents who have everything do not wish to tell the TRUTH about how bad things are -- it is beyond even politics.
I just don't see this recovery. I see a small segment of the already affluent population who are doing great -- I see everybody else staying the same (at best) and most of us sliding downhill to a lower standard of living. This has been going on for a while now, even before the Great Recession, but the recession put that process on greased rails.
I see NO RECOVERY -- I just see expansion of low paying, part time gig jobs. Am I the only one?
1
Things make more sense if you look back to 1999 rather than to 2007. The 20th Century US economy WAS replaced, as the dotcom enthusiasts said it would be. It's far from clear how to maximize happiness in the world that's growing around us, but looking backward, whether to 1995, 1955 or 1857 isn't working.
3
"And this $8 trillion loss didn’t have to happen: adequate, sustained stimulus could have eliminated most of it."
So if the federal government spent $8 trillion more (per year???) on food stamps and the like then GDP would have increased by $8 trillion? I guess this is "progressive" voodoo economics?
1
You're completely not getting it. The purpose and function of a stimulus when the economy enters a recessionary spiral is to break a harmful positive feedback loop.
Assuming Krugman and other economists were roughly correct, another $0.7 trillion could have saved the economy most of the $8 T GDP loss that was spread out over the decade following the '07/08 crash. Nobody has suggested spending anything like $8T extra per year. One tenth of that, spent one time during 1-2 years, could likely have saved the economy 10 times as much.
Where I come from, that would be called a bargain.
1
Infrastructure, health care, education etc. are not voodoo economics. In fact those three venues create jobs. Food stamps are not causing the U.S. to go broke.
2
joco, suppose the federal government had provided jobs doing worthwhile stuff to anyone able to work. Then an amount much smaller than $8 TRILLION might have prevented the loss of the $8 TRILLION.
4
Having just finished reading "Nomadland", by Jessica Bruder, I think the book makes clear that many have never recovered from the Great Recession. The book details some who saw their home values sink, or who have been priced out of the rental market by the likes of tech. companies driving up prices. These individuals, many of them of retirement age, take to RVs and travel the country taking gig jobs - Amazon "Camperforce" jobs at holiday time (where free pain killer dispensers are on the walls to quell the punishing physical nature of these warehouse jobs), bringing in the beet harvest, and so on. These people are a step away from homelessness yet pride themselves on continuing to work as they can. Prices on everything have gone up; wages have not, and there is no way these gig jobs can sustain an individual, let alone a family.
33
The world of economics is over due for a major overhaul in its metrics. To perceive US economy are strong seems to completely ignore the broader picture for millions of people who have effectively dropped out of the economy. Full employment seems like a misnomer at best.
19
Here is a novel idea- factor in energy, resource depletion and environmental loss into economic analyses. We used to drill a hole in the ground and oil gushed out, now we steam it out of shale rock or pump high pressure sand and pollutants into the ground to coax it out. We drill thousands of feet in the ocean looking for it. Signs of desperation. The quality of ore being mined has gone down dramatically- good sites are always mined first.
The fact that we live in a finite world with limited resources has to impact our desire for perpetual growth. Maybe when the world population was half, economists could overlook it, but not now. The economy is not just equations of capital and labor, supply and demand any more. It is also a function with how we relate to our natural environment.
25
John , if we are worried about our finite planet, why are we not spending to develop resources in space. For the foreseeable future, the solar system is, for all practical purposes, infinite.
Today, it costs $10,000 to put a pound of payload in Earth orbit. NASA's goal is to reduce the cost of getting to space to hundreds of dollars per pound within 25 years and tens of dollars per pound within 40 years.Apr 12, 2008.
That's why not.
3
Doc, do you think that could have anything to do with the pittance we spend on space research? And in the long term, space colonization could provide much of the material it needed itself and show a profit. There are huge asteroids that are 90% iron.
The way things turned out won't have any more impact on future financial crises than the experience of Kansas cutting taxes or Clinton raising them has on the supply siding tax cutters in Congress where inconvenient truths are simply ignored.
The "structural unemployment" argument was popular because - however wrong it was - it simply sounded right. After all, the economy was shifting rapidly to one based on knowledge and information from one where workers made stuff from steel and wood using their hands and brawn. Alas, it still sounds right and the "demand siders" have to argue with know nothings, the same folks who liken a federal budget to mom and pop sitting at the kitchen table figuring out how much they can spend on holiday gifts for the kids.
We live in an age where the stupid have inherited the Earth.
98
"We live in an age where the stupid have inherited the Earth." Thanks Charley. We have to give the 'evil' some credit also though. Here in the US we have evil combined with stupid across large swaths of the population.
4
I find both Krugman's commentary and the comments lacking in one very important area. Parts of industry cry that there is a shortage of technical people. Politicians and colleges hold up the huge advantages of higher education. And they are all right, but there is a level that is not addressed, at least in my opinion.
We are a small manufacturer building and marketing directly a patented product to agriculture, pest control firms as well as schools and municipalities. We are in a very rural area where skills beyond farm labor are few. Our local community college focuses on educational fields that will find jobs outside the community. They didn't even return my calls.
My solution was to look for people that are working people, motivated and are not self destructive. I look for aptitudes that include welding, painting and assembly, in another word, skilled manual labor.
The results have been extremely gratifying. The shop crew for the most part started at $10 to $15 an hour. Most have doubled their pay plus overtime and bonuses. Most are journey men in their work area and we work at meeting or exceeding journeyman pay.
My point here is that upward mobility in every work place is a goal worth pursuing by both employer and employee. I do not believe that tax cuts for the wealthy or corporations have much if anything to do with this level of pay improvement for the working people.
41
Dr. Krugman's point is valid even though there may be specific locations or industries that are having difficulty finding workers. Your business would appear to fall into that category. In discussing economic policies and trend lines, one must resist the temptation to state, for instance, that all pygmies wear red hats - especially the one I met.
15
I think that Dr. K's point was that he stated that the oligarchs were using the canard that lack of job skills accounted for economic problems at the bigger perspective. Your example is telling, and credit goes to you. Dr. K was making a more general statement. Yes, that pygmy was wearing a red hat, in your instance. No, the oligarchs referring to pygmies was not a valid point, as Dr. K says.
Mr Hurburt: the problem you describe is due to PUBLIC UNIONS....who have run our public education system into a ditch.
The greedy, slacking, clock-watching public union schoolteachers are too lazy and unmotivated to actually TEACH -- and they get to keep their cushy jobs even when they graduate class after class of kids who cannot read or do math.
The skills you need come from HIGH SCHOOL -- one should not need college to learn to read, write, do basic math -- know how to assemble something from reading directions -- and welding is a skill that can easily be taught in high school vocational courses. But it is not, because they are teaching our young people all about "self esteem" and "transgender rights" and reading copies of "I Am Jazz" instead of something that would lead to a real job in the real world.
1
The models for global trade failed to appreciate that worker salaries in the developed nations would at some point average downward as salaries in the developing nations averaged upward. In other words, global trade does not lift all boats in developed nations. Now the question is what do we do about declining living standards in developed nations? Republicans tell us via their version of tax reform that the decline will continue but at a greatly accelerated pace.
14
As H.L. Mencken wrote, "There is always an easy solution to every human problem - neat, plausible and wrong." Here we have an easy and facile explanation - also wrong.
Not every developed country is experiencing a declining share of business revenues going to labor. Germany and our neighbors to the north in Canada are examples. Strong unions, a rising minimum wage and changes in government policy would make a huge difference in America. For the last 40 years government policy has consistently favored management over labor.
43
James is correct as Mr. Anderson seems to believe the amount of money in the world is fixed.
2
James Ward: the left has to get off of this "Canada is paradise" meme.
Canada has HIGHER unemployment than the US, and their minimum wage is not much higher than ours when you adjust for the exchange differences (the loonie is worth 20% less than a dollar).
Canada is a heck of a lot like the US -- almost indistinguishable except on health care -- and they have the same problems of employment, high costs, taxes, structural loss of jobs and so on.
1
Why can't we start thinking about "the economy" as something that exists to serve the entire country? If that were the case, we would be tailoring jobs to people's skills, and not the other way around.
Why is it so important to keep myriad people trading invisible financial instruments? They don't even exist! Pushing numbers from one column to another on a spreadsheet, or transferring invisible bits of electronic data from one bank account to the next are useful occupations? Making plastic widgets and gadgets implanted with mircochips, then selling them at exorbitant prices is a service to society?
We could be investing in the arts, subsidizing theater, films, books, music, etc., and provide meaningful employment to far more people who have real talent and interest in doing these things, instead of forcing artists to starve or cave in to pushing papers for an insurance company. We could be investing in R&D on how to save our planet from climate change, and provide more meaningful jobs that way. There are hundreds of occupations that aren't well-funded or subsidized, which could provide us with meaningful work useful to society.
Instead, we allow the one percent to dictate to us which professions are "valuable" and which ones are not. I never want to read about STEM again. People want jobs that mean something and that also pay a salary they can live on. We don't want to be condemned to slaving away in meaningless jobs - and not even be paid a living wage.
74
Great comments! An economy for the people, not people for the economy; or for the elites.
Universal income is on the horizon. Better to subsidize people than billionaires, banks and corp's.
The glaring error in striving for growth in GDP is environmental collapse. The faster the world economies grow the sooner we hit the wall. We are looking at the wrong metrics.
In simple terms, the world needs to inventory the remaining assets and resources and create a budget to make them last. After all, "economics" is the allocation of "scarce" resources.
We should be looking at lives, not the sum of financial transactions.
5
sorry. but what you say make no real sense. Condemning STEM is like saying that the majority of what advances society in a direct, concrete way is wrong. Huh?
I like the arts and believe that any decent society makes a place for that fraction of folks who are so inclined. Making it the basis for economic policy is like worshiping a stone to alter climate change, mystic - but way off the mark.
You are anti-STEM and want to fund R&D on how to save the planet from climate change? You don't have a clue about what STEM means then -- the people doing that R&D work, unless you think it should mean casting horoscopes and reading tea leaves, must be trained in STEM skills.
We have enough anti- intellectualism and anti-science people on the climate denier evolution denier reactionary religious fundamentalist oil industry supporting Republican side.
If you are at all serious about dealing with climate change than you should be a HUGE proponent of STEM education. Most STEM educated people are underemployed because we have slashed and burned our basic research funding for decades -- most STEM educated people are not forming new start ups to make some new i-gizmo.
Thanks for reminding us that our wages are not rising, while monthly home payments, property taxes, rent, utilities, medical premiums, and student tuition have all risen significantly in the last year. Our taxes are going up next year, and medicare, medicaid and social security are all facing cuts. We were better off in the obama and clinton years.
123
My property taxes -- in the Rustbelt Midwest -- have nearly always been a far FAR greater economic burden than my Federal taxes. Worse, I have to pay them every six months -- they are not automatically deducted from my paycheck.
On top of THAT are numerous local taxes, like a CITY income tax and a COUNTY income tax (!!!) and now, all kinds of taxes on water & sewer bills, that have increased the cost of this basic thing nobody can cut back on or live without by 300%. I get THREE different sewer bills, on one modest house in a suburb!
Our medical costs have drastically increased as well -- this year alone, we are facing a 50% rise in the deductible on our health insurance plan. 50%! in ONE YEAR! My husband got a pay raise, that when we divided it up, came out to (I can't make this stuff up!) ... 30 cents an hour.
Yet those in government just keep gouging us as if we were all internet billionaires who can "afford it". BTW: I live in a blue blue blue pro-union all Democratic county.
1
I think a lot of the sluggishness in wage growth is caused by changes in the legal and moral environment. Many states have passed new "right-to-work" laws over the past five or six years. The same ethics that give us "capture-the-value" pricing and the "don't leave money on the table" attitude about price increases has also influenced the wage-setting process. I don't think it has much to do with old-fashioned supply-and-demand considerations.
27
What about the growth rate for people earning the median hourly wage, or 1-2 times the minimum hourly wage, and what about the REAL growth rate adjusting for inflation that's raised their cost of living? The graphic here might be slanted by including top executives' earnings and ignoring inflation.
21
Astute speculation. Consideration of these factors would really inform PK's discussion. Kudos.
1
Your point about the median wage was an excellent one. The median is the point at which 50% are at or above the median and 50% are at or below the median. The average is the total amount divided by the number of participants.
Averages are likely to be top-loaded if the income of the uppermost quintile rises out of proportion of the other 80%. As an extreme case, imaging 8 penniless men sitting in a homeless shelter. Suddenly, Bill Gates and Jeff Bezos walk in the room. The total wealth in the room is about $1.8 billion, making the average wealth of each of the people in the room is $180 million, while the mean income is $0.00.
This is a reductio ad absurdum, admittedly, but here's a real-life example where politicians intentionally use the difference between average and median to distort a policy. When George W. Bush was "selling" his first tax cut program, he claimed that the "average" tax cut would be over $1,600.00, a significant amount for middle-income people. However, the average was highly top-loaded since so much of it went to the most wealthy.
The median - the amount of tax cut that went to the bottom 50% of taxpayers was more like $400.00 or less - at best, enough to buy two kids a Happy Meal each Saturday for the year.
Try standing with one leg in a bucket of burning charcoal and the other in a bucket of dry ice. ON AVERAGE, you should be quite comfortable ;)
20
Oops, typo. Gates and Bezos are actually worth somewhere between $180 billion and $190 billion, making the average wealth of the two entrepreneurs and the 8 penniless men would be $18 billion. Mea culpa.
1
You called it Dr. K. - per usual, you were right, and the hawks are further and further exposed as having been deeply unserious people.
In fact, one could wonder if that group were just throwing up red herring arguments at the time to quash as much economic gain as they possibly could under a Democratic administration.
As part of the well-deserved victory lap you should be taking, might we please have a little more exegesis on the fact that the $8 Trillion$ GDP loss is never ever really made up - that our economic system, and the democracy it supports, gets permanently damaged by such inaction/missteps in a way that forever holds us back ?
By the way, has anyone heard lately from the Billionaire of 4-5 years ago who was so concerned that hyperinflation hyperinflation hyperinflation was upon us due to quantitative easing as evidenced by the prices at art auctions and Hamptons real estate, and since unemployment was structural, the high unemployment rate was just something we had to live with anyway, so the Fed should raise rates now now now ?
Whatever happened to him ?
49
Ah, yes, here's that item on Paul Singer:
https://www.washingtonpost.com/news/wonk/wp/2014/11/06/heres-the-latest-...
Although there are some things today that remind us of the Weimar Republic, hyperinflation is not one.
Guess people shouldn't always believe Billionaire$ - oh, wait
30
That $8 trillion loss that was unnecessary could have provided $25,000 per man, woman and child in the US. That $8 trillion is gone, but should not be forgotten.
2
"The latest job report was very good, except for one thing..."
This is the problem that has plagued both Democrats and the media, as they continue to ignore the elephant in the news by not describing the situation as it is. No jobs report can be very good if those jobs are either low wage and less than full-time, or low-wage and gig economy jobs that pay $10 an hour or less, as many of the Uber/Lyft jobs do.
https://wp.me/p2KJ3H-2vV
The fact that this has gone mostly unacknowledged all throughout the recovery has stirred a great deal of resentment among those voters who did not benefit from the recovery. Those, for the most part comprise the angry voters who were so maligned all last year. (Profiling the angry voter https://wp.me/p2KJ3H-2hl). If Democrats have any real hope of fixing what ails the party, they will have to finally acknowledge the depth and breadth of the problem that is secular stagnation (https://www.rimaregas.com/?s=secular+stagnation) and come up with a plan that not only deals with those who are affected, but also anticipates how workers will fit into an increasingly automated economy. Angry voters come on all colors, shapes, and sizes and aren't limited to older whites, as some like to keep pointing out. For example, Black unemployment is always double that of white. Still is.
We have recovered, but not well. We need to talk about UBI (Universal Basic Income). That's what comes after Trump.
57
Universal Basic income (UBI) and the new social class called "precariat" have been discussed in economic circles outside the U.S. mainstream for some time. It's been avoided here, save for the occasional dig. With a third of Americans who are nowhere close to thriving in the post-Great Recession economy, it is high time we saw such discussions here and elsewhere.
---
UBI
https://www.rimaregas.com/?s=universal+basic+income
22
"I’d like to think that the way things turned out would serve as a lesson in future crises. But I wouldn’t bet on it."
I wouldn't either, and the proof is in the things the Trump administration is doing while we aren't looking. Remember the discussions we used to have on conditioning welfare benefits on drug testing circa 2012? Some states (Florida) tried it and were shot down by the courts. Well, the USDA is now inviting states to give it another go. The latest numbers on hunger in America are 42 million on SNAP.
Learn? What's that?
---
Politico’s Running List Of What Trump Did While You Weren’t Looking [Updated 12/08]
https://www.rimaregas.com/2017/10/06/thanks-politico-for-keeping-a-runni...
20
Why should we give food stamps or welfare to drug users? the left is just bewildering. We don't need to encourage the illegal use of drugs!
1
Maybe structuralist jobs are created by job-creators, who needed that potential deficit space in the recession years to pay for tax-cuts for the rich in the boom years.
10