It’s becoming a common theme – the economy is in great shape! Whether you want to give credit to Trump or Obama, it’s definitely all about policy of some kind, right?
Barataria has been revisiting some old arguments to build a new study for how the economy is changing. As the Managed Depression of 2000-2017 moves behind us, the reshaping of how we work, shop, and generally get by is starting to take shape. It’s hard to be sure about much.
One thing we do know – none of this happened overnight. So let’s revisit some old discussion.
About four years ago, in April 2014, Barataria outlined the “Case for Optimism” about the economy. It was met with considerable resistance as workers were not yet feeling the improvements in their paychecks. Hell, some didn’t even have a paycheck yet. But it was obvious in 2014 that things had indeed turned around significantly. Quoting myself:
Either I’m ahead of the curve or I’m just plain wrong – you get to pick. All I ask is that whichever you pick now you file away, with this piece, and evaluate the decision for keeps later. But this is the case for the economy finally picking up this year and developing strong momentum into 2015 and beyond – into 2017 when I still think good times will be had.
Were things really as good as I said in 2014? The short answer is yes, it all worked out pretty much as I outlined. Corporate profits did, eventually, lead to an increase in hiring and an uptick in wages. Wall Street continued and even accelerated its tear. Research has started bearing fruit. Gasoline has stayed cheap for years.
The main difference between 2018 and 2014 is that four years ago it was in the best interests of some politically minded people to relentlessly trash-talk the economy. Now, it is not. What has changed is largely the spin.
However, that’s more important than it sounds.
It’s not as though things are rosy yet. We still don’t have a strong manufacturing base. Retail is going through gut-wrenching changes powered by the internet. The next two years are likely to be the most important, as we learn how stable things become.
This is, as always, the real issue. It takes years, if not decades, for the economy to right itself. Employment gains take years longer. Confidence comes in a few years of a reliable paycheck. Nothing happens overnight.
The net change is indeed all about attitude, but that is always critical. If people have faith in Trump for whatever reason he will indeed help things move along. Then again, if he starts a pointless trade war he will do untold damage.
Where are we today? On the edge. The gains of the last few years, perhaps decade, have finally started to come in. Spring is here. That is, as any farmer will tell you, when the hard work comes. What we plant today is, as always, what we will harvest tomorrow.
That doesn’t mean that a lot of BS doesn’t make for good fertilizer. It means that we are, as always, setting up the next 17 years or so of economic cycle by the actions we take now. If they are nothing but BS, we’ll have nothing but mushrooms. If we think long and hard about what we plant, and work really hard to help it grow, we could have a balanced diet that nourishes the world.
It’s never about centralized policy, it’s about the combined actions of 320 million people working in their own interests, sometimes together and sometimes alone. They will make stupid choices in the short term once in a while, but in the long haul it hopefully all works out. And their kids will grow up in a different world and make their own choices in turn.
Who gets credit? Everyone.
This turned into a rant and I’m sorry. But I wonder if you’d say something about this:
The economy gets better and worse. But I worry about one big thing – that our economy is based entirely on the wrong things. We don’t place real, monetary values on natural resources, environment, human health, time, or a social fabric. Yet these are far more important than the stock market or interest rates. We need to do one simple thing: base the cost of something on its full life cycle, from research to disposal, and include the true cost of every bit of damage to the environment and people’s health – both the people making the thing and the people using it.
This would let us begin to see the REAL cost of things, and yes, it would make so many things prohibitively expensive. But we are paying these costs anyway – often with the illnesses and deaths of people, and in damage to the environment and habitats of the planet. These are real costs. People want to pooh-pooh them, and mock them as liberal heart-bleeding, but that doesn’t change the damage done.
You mentioned that gasoline has remained cheap for years. But that is a perfect example of how wrongly we value the important things. Gas is cheap because we don’t pay for the loss of resources and for the damage caused by searching for it, obtaining it, processing it, using it, or disposing of the toxic side-effects. Yet our economy is in great shape because gas is cheap!
I can never care that the “economy” is doing well. It’s a false economy. Products are made on the backs of people who have no say in the hours of work they do or in the safety of that work. Everyone wants the cheapest everything, with no regard for human capital. Employers want the biggest profit, even if the amount stretches incredulity, and they’ve put their labor force into the non-employee “contract labor” category, robbing them of health care, adequate pay, and retirement savings. And nearly every person in America truly believes it when economists say, “a corporation’s duty is to the shareholders,” as the company pollutes the water and air, and begs Congress for protections that allow them to do more of it.
The unemployment rate is a farce, yet everyone still throws it around. Who cares if it’s the lowest it’s ever been? The majority of people don’t work enough hours or for enough pay. The cost of child-care keeps too many women (and men) from working enough to support their families. Schedules are chaotic and unreliable. This is not “employment.” It’s one step above slavery.
I won’t even talk about the companies that taxpayers have bailed out due to criminal activity on the part of the executives or upper management (how can we ever forgive that, and what was the reason they gave for it? “To keep the economy from failing entirely.” Irony is not a strong enough word). Or that we bail out companies like Corinthian, whose “business model” is to defraud as many people as possible.
In all of that, the victims are forced to pay their debts, because “a contract is a contract.” And because the victims are poor and have no power, of course.
I’ll stop now. I’m sure you know my little list is quite incomplete. Just please, talk about a real economy that creates a just society. Help me understand why it matters that our current economy is “doing well.”
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