Talk to Me Like I’m Stupid: “The sky is (not) falling!” Edition
Over in the threads of my post on Josh Marshall’s election post-mortem, several contributors and readers took issue with the idea that things are economically tougher for people these days. Indeed, if I’m reading them correctly, they seem to in fact be arguing that the opposite is true. And since most of these people are people who have studied and/or teach economics, I feel like I should listen to them.
I think I may be the only contributor here at OT that doesn’t list “economics” as either an area of expertise or a hobby, so as far as I’m concerned this is a teachable moment. And because what I’m hearing them say feels wrong — and not just to me, but to most people I think — I’m going to throw out two questions that are less challenges than requests for better understanding on my part. But before we get to the two actual questions, some back ground:
Yesterday I followed TPM’s lead and re-posted this graph from the Economic Policy Institute, which seemingly shows a disturbing trend of hourly compensation not following productivity:
From my vantage point, this graph seems somewhat in line with other graphs that I have used in previous posts, such as this one from the Congressional Budget Office which shows that the wealth in the United States during the same time period had been moving away from the bottom 60% of the population (and at least appears to be heading toward moving away from the bottom 80%):
Similarly, it seemingly tells a similar tale to this graph from the Federal Reserve Bank of St. Louis that compares Real Gross Domestic Product and Real Median Household Income:
In fact, almost every measuring stick I can think of says something similar. Personal bankruptcies have long been on the rise since the 1970s, well prior to the 2007 meltdown. The rate of consumer debt growth is increasing exponentially, even though consumer income growth isn’t. Mitt Romney blamed the increase of Americans on food stamps on Obama, but in fact it’s a trend that has been following all the above graphs since the 1970s. When you look at all of these stats, it’s hard not to get the impression that the US economy is in decline.
And yet it’s obviously not. Despite all of the above-listed bad news (or perhaps it’s not bad news?), the stock market, gross domestic product, and corporate profits are all currently at or very near record highs. When I look at any or all of these things, it’s hard for me to not see a trend that suggests things are going in the wrong direction for those not at the very top; it’s hard for me to imagine a scenario where these continuing trends are sustainable, either economically or politically. But, again, I really don’t know that much about economics. And so it is I come to my question, posed to those who do.
From the threads in my previous posts, most of those who know more than Econ 101 (and, it probably should be noted, who are also not liberal) are telling me what I believe I am seeing is an illusion, and that if I were to just get past my silly emotional response (and no argument from me that I’m having anything different) that I’d see that things are actually doing what they are supposed to be. And so my first question, obviously, is…
What am I missing? What is it that I’m not seeing that econ-majors are that makes all of this seem like a good thing?
If I’m being honest, I can’t help but notice that those who are telling me that I’m worried over nothing are the same ones who believe that the system needs an overhaul, that the liberal policies of the past X number of decades are the worst, and are… well, let’s just say they probably didn’t write big checks to the Reelect the President campaign. And so my second question, obviously, is this…
How do you square that circle?
Thanks in advance for your responses.
[Picture: Going Up or Down advertisement, via Wiki Commons. Graphs: Growth of real hourly compensation for production/nonsupervisory workers and productivity, 1948–2011,” via Economic Policy Institute; “Change in Income/Change in Share of Income,” via Congressional Budget Office; “FRED Graph,” via Federal Reserve Bank of St. Louis.]
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