If the economy is so good and getting better, why do people feel so bad about it? Are they being misled by demagogues? Don’t know what they’re talking about? Nostalgic for an imaginary past?
The U. S. Council on Competitiveness, armed with data from the Gallup organization, presents an alternative answer in a new report—the popular view is right:
THE UNITED STATES HAS NOW had seven years to recover from the worst of the Great Recession. During that time, job growth has been steady, if unspectacular, and the unemployment rate has fallen from 10% to just under 5%, where it stands as of this writing. Stock prices, meanwhile, continue to reach and surpass new highs. Leading politicians and commentators reassure the public that everything is getting better.
And yet, there is a pervasive sense that the economy is not working, as documented in Gallup survey data and many anecdotal media accounts. The people are right. The economy is not working well. But the problems did not start with the Great Recession. For decades, the nation’s income, measured as GDP, has barely grown overall; on a per capita basis, median household income peaked in 1999; the subjective general health status of Americans has declined, even adjusting for the aging population; disability rates are higher; learning has stagnated; fewer new businesses are being launched; more workers are involuntarily stuck in part-time jobs or out of the labor force entirely; and the income ranks of grown children are no less tied to the income ranks of their parents
Among their key findings:
- The problem is severe.
- Conventional theories are unpersuasive and often ignore long-term problems.
- Changes in living standards are fundamentally linked to changes in how the quality of goods and services relate to their cost.
- Deterioration in the quality-to-cost ratio for healthcare, housing and education is dragging down economic growth.
- The U.S. population’s health has stagnated or even declined on several measures since 1980, especially for the working-age population.
- Housing costs have swallowed up a larger share of income without a corresponding increase in quality.
- Educational quality is weak and stagnant at all levels.
- A number of indirect consequences result from rising inefficiency in healthcare, education and housing
- In these sectors, regulations have caused damage, which has accumulated over decades.
- Reviving growth will require a new strategy
A couple of observations. None of these problems is recent. How far back do they go? More than 30 years, possibly as much as 40 years. The problems have festered for a very long time and will take a long, persistent effort to remedy.
Very few of these problems can be solved just by throwing money at them. In education we’re already spending a multiple of what was spent 25 years ago in real terms and have very little to show for it.
And the problems won’t be solved by replacing Democrats with Republicans or vice versa. The policies that put us into the fix we’re in have had bipartisan support. The “Washington consensus” has failed, whether because inadequately or improperly applied, practically unworkable, or just plain wrong.
Read it and weep.
The policies that put us into the fix we’re in have had bipartisan support. The “Washington consensus†has failed, whether because inadequately or improperly applied, practically unworkable, or just plain wrong.
Another explanation is that the “Washington consensus” has been a spectacular success – for those in charge. Growing inequality isn’t a bug but a feature. Given the self-satisfied nature of the assholes in charge, this isn’t a possibility that can be simply ignored.
“Growing inequality isn’t a bug but a feature.”
Good one, ice!
I honestly don’t think that’s true but the truth might even be worse. IMO most Republicans think that their strategies will be optimal but you can’t make an omelet without breaking eggs. That too few are dining is merely unfortunate—it will get better.
I think that many if not most Democrats see the increasing clienthood their strategy produces as a happy coincidence.
My view is that centrism has failed. Republicans and Democrats are gonna do their respective things- and yes, it all involves a general consensus but each comes at it from a different perspective and ostensibly serves different core constituencies. Through demagoguery these politicians end up serving self interests and through bones to get re-elected. We used to have more statesmen and centrists who kept the policies on track while allowing the baseline level of corruption to keep the wheels greased. Now virtually everyone is corrupt.
Sorry multiple typos- hope that can be deciphered.
If that’s the case, the only peaceful solution is divorce.
I found these numbers in an article about the relationship btw/ higher education and population growth:
“We spend about $77 billion for the Department of Education every year, of which ~$30-$40 billion goes towards subsidizing demand for higher education, in the form of loan subsidies, grants, etc.
“We spend under $10 billion on subsidizing supply of higher education. That is, the federal government bids up demand more than it pushes up supply. ”
https://medium.com/migration-issues/higher-education-propels-population-growth-probably-4607e3dcf797#.pbyrr73ro
From the article’s area of discussion, the effect is for the federal government to encourage growth in areas with public universities. It notes, but does not address, the implications for tuition, which would certainly be (all things otherwise kept equal) to drive up cost without improving quality. Also, I’m not sure where the numbers come from, but $77B minus $10B minus $30-$40B, must mean $27-$37B is administrative costs?
Anyway, I thought this was the kind of thing Dave complains about, doing things in an indirect way: helping students by helping schools and financial institutions.
Democrats and Republicans have their own ways of supporting trickle-down economics but they’re both committed to it.
Had I read Part II of the Income Inequality series, I may have dropped this comment there. But I don’t think it really suggests significant reforms that would decrease inequality. Colleges tends to be a top two or three quintile issue.
Hence the title of the post “Can We…” rather than “How to…”. I think that reducing income inequality at least in the near term is either practically or politically impossible.
IMO most people misunderstand what higher education is—mostly pre-professional or pre-managerial training. As such it’s most useful for people of between one and three standard deviations above normal intelligence (see my post on normal distributions). That’s a pretty narrow sliver of the population.
Let’s be brutal and absurd on the subject. Forcing the ultra-rich out of the country would improve income equality. It would also make us worse off. Forcing the poor out of the country would also improve income equality. It’s also the strategy that, for example, Rahm Emanuel seems to be employing in Chicago. I think it may be working and goes some way to explaining the results of the recent election.
“The “Washington consensus†has failed, whether because inadequately or improperly applied, practically unworkable, or just plain wrong.”
Gee, wish I’d thought of that…….