September 21, 2006

WHOSE ECONOMY IS IT ANYWAY?



Caption: Current economic trends have this dog mortified. And a little bug-eyed.

This is the last (for now) of several related posts on the key findings of The State of Working America 2006/2007 by the Economic Policy Institute.

Once again, El Cabrero strongly urges people interested in economic justice to lay hands on this resource. It is a painstaking and very detailed analysis of income, mobility, wages, jobs, wealth, and poverty. There are statistics enough for all.

But sometimes things are easier to understand through narrative than numbers. Here's the story as I understand it.

Economic growth--increasing the total output of goods and services--in general is good, but it's not necessarily good enough by itself to do working people much good.

It is possible to have economic growth and widespread increases in economic well being across the population. That was generally the case in the late 1990s with the nation as a whole.

(El Cabrero sincerely regrets the fact that he did not recognize the 1990s as the Good Old Days at the time.)

On the other hand, it is possible to have economic growth and increasing poverty, stagnant wages, and growing numbers of people without health insurance. That has been the case for most of the 2000s.

In the late 1990s, both market forces and public policy combined to promote rising incomes. The labor market was tight and public policies worked in tandem with the market. Earlier in the decade, the Earned Income Tax Credit was significantly expanded. The minimum wage was increased in 1997. New tax credits helped make post secondary education more affordable for working families.

Federal revenues were strong. Surpluses began to appear after decades of deficits.

The economic recession of the early 2000s was followed by what some call "a jobless recovery" in which GDP and productivity grew but prosperity was not widely shared beyond the wealthiest Americans.

Public policies this time worked against working people. The minimum wage was allowed to stagnate for (so far) the second longest period in its history (9 years Sept. 1, 2006). Tax cuts for the wealthy and the war in Iraq squandered a federal budget surplus which could have provided basic services to assist low income and working families. Key government agencies were occupied by industry-friendly and anti-union/anti-worker officials.

Skewed budget priorities led to a $40 billion cut in social programs such as Medicaid and student loans to pay for $70 billion in tax cuts aimed mostly at the wealthy. Some of the worst policy initiatives of the 1990s such as NAFTA-type trade agreements were expanded. Long standing pillars of the safety net such as Social Security were targeted (so far unsuccessfully) for privatization.

Working families were--and still are--caught in a scissors.

As the authors of this book length report say,

...if the findings in the hundreds of tables and figures that follow can be reduced to one observation, it would be that, when it comes to an economy that is working for working families, growth in and of itself is a necessary but not a sufficient condition. The growth has to reach the people: the bakers need to benefit from bread they create each day of their working lives.


GOAT ROPE ADVISORY LEVEL: ELEVATED

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