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The Wall Street Bull, September 2001 [PT]


The Tuesday Column
An Economy Bullish on Deception

The disclaimer appears ahead of most movies formatted for television: “This film has been edited for content and modified from its original version to fit your TV.” A similar disclaimer should apply to the Bush administration infomercials drugging up newscasts about the economy. In black and white, the recent surge of statistical exuberance looks good indeed. Four million jobs created in the last two years. Unemployment below 5 percent. Inflation relatively in check. Still-cheap interest rates. Economic growth between 3 and 4 percent, better than every western economy but Denmark ’s. “It’s getting pretty hard for the critics to make the case that the tax cuts weren’t good for the economy,” Vice President Dick Cheney told workers at a Harley-Davidson plant in Kansas City last week. Actually, it’s never been easier to show why the tax cuts were closer to the worst thing for the economy, if it’s ordinary Americans’ well-being you’re worried about (as opposed to shareholder comforts).

Let’s begin with those job figures. When you go from dismal to mediocre, of course things look great. Four million jobs in the last two years is good. But five million new jobs in the last five years is pathetic by any standard, especially when the administration sold its massive tax cuts for the rich as a job-creating engine. Between 1995 and 2000, remember, the nation created 13.3 million jobs, an average of 2.66 million jobs per year. That’s after the tax increase on the rich that the Clinton administration got through Congress in 1993 — the increase Republicans at the time said would ruin the economy. (The 1990s are the wealthiest decade on record.) The jobs being created this time around are, aside from construction, in low-paying sectors like temporary work, health care, restaurants and big-box stores. High-paying jobs in manufacturing, telecommunications and air transportation are on the losing end. If anything, the tax cuts are subsidizing a devolution in quality jobs.

Bush’s tax cuts, overwhelmingly favoring the rich, demolished the balance and fairness that was beginning to creep back into the tax code. I say creep back, because despite progress under Clinton , the restoration of fairness was timid and still generously tipped toward those who need it least. Clinton slowed down the growing disparities between the rich and the rest. He didn’t reverse them, as Franklin Roosevelt and his successors did until Ronald Reagan’s election in 1980.

From 1947 to 1979, family income for the poorest 20 percent of the population grew by 120 percent, and by comparable rates for the next two-fifth of the nation’s households. Income for the top fifth grew by 94 percent. Since 1979, household income for the poorest 20 percent has risen 0.7 percent. Total. It has risen between 7 and 8 percent, total, for the next two-fifth of the country’s households, or about 0.3 percent per year. For the richest 10 percent, household income grew 61.2 percent during the same 25 years. And for the richest 1 percent, it grew a staggering 111 percent. Wealth was becoming a more equal opportunity. It’s now a privilege again.

Productivity increases have historically been the best barometer of rising living standards. And in the last few years productivity has risen at bewildering rates, helping corporate profits clock in at or near records in 2002, 2003 and 2004. Yet unlike productivity’s windfalls in the 1950s and 1960s, and to some extent in the 1990s, median wages have stagnated. Why? Because corporate profits no longer translate into workers’ benefits once shareholders and executives claim their tithe. (Median CEO compensation in 2004 was $4.4 million, or 160 times as much as production workers’ average wages). As with the income figures, corporate profits bring true meaning to a rising tide lifting all yachts. Cheney, that old habitué of the 1 percent club, could afford to joke around in Kansas City about taking a Harley “for a ride back out to Air Force Two.” His administration’s trickery is taking us all for a ride.

You expect distortions from an administration that depends on fabrication for survival. You expect it less from news organizations. But what passes for coverage of business and the economy since the early 1980s has been indistinguishable from celebrity journalism. “Many business journalists, I fear, have left home and joined a cult,” the personal finance columnist Jane Bryant Quinn wrote in a 1998 Columbia Journalism Review piece appropriately titled, “When Business writing becomes soft porn.” The same can be said today about coverage of the economy. “Many reporters have bought the business point of view — bought into business values and beliefs — without giving enough weight to other, social interests,” Quinn wrote. “The world of right and wrong is much larger than the world of profit and loss. […] Reporters are supposed to be tribunes of the people — not the rich people, who don’t need tribunes, but the rest of the people, who need someone to speak for them. That’s what we need to remember, every single day.” That’s what the Bush administration makes sure we forget every single day. And the press corps, sharecropper to corporations, obliges.

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