Letters to the Editor
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The Not-So-Great Depression
The richest Americans are gobbling up the lion's share of the fruits of economic growth, while for everyone else, wages barely keep up with inflation, good jobs become increasingly scarce, and making ends meet gets tougher and tougher.
The GOP is only offering one "fix" for this: more tax cuts for the wealthy. That's their panacea, in good times or bad -- cut taxes for the wealthiest Americans when the economy is strong, and cut taxes for the wealthiest Americans when the economy is weak.
My question is whether the mythology of the upper-income tax cut will ever be vanquished? Or is it just making too much money for all of the right people to actually ever die?
What worries me is that military Keynesianism was sort of the way out of the Great Depression (e.g., WWII set the stage for a permanent wartime economy as a way to keep things rolling). But as we've experienced many decades of this, as the Pentagon's only gotten ever fatter at the table, where do you go from up on military spending?
Or will our country literally bite the bullet and push for domestic spending on the level that it's done for the Pentagon over the decades? Our largest socialist institution in America is the Pentagon -- but any talk of turning that kind of money to our infrastructure (schools, parks, roads, bridges, libraries, etc.) brings out the wingdings aplenty in opposition, howling in rage.
Is America's citizenry a vital national resource, or are we just expendable assets in the global marketplace? Seems like politicians are going to have to choose at some point.
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The Anti-Depression mantra
There is one thing working in our favor, that is decoupling. Global economies decouple from each other at critical points, providing strength to the weak economies. Japan in the 90's did not collapse socially, and neither did Argentina.
The decoupling argument loses support when you remove the strongest economy in the system. Decoupling was also more effective when the world economies were less interdependent. The first Great Depression was economic failure on a global level. You can make the point that the worlds economies should have been LESS susceptible, and more likey to decouple in the 30's.
The majority of taxes are sales taxes, which impact the poor directly. Any failure of the consumer will be a failure of mostly state and local economies, which will spill over into Federal revenues. At some point in recent history the amount of revenues collected for SSN and Medicare eclipsed payroll taxes. I am pretty sure the government collects more money on behalf of these programs than they collect in taxes. That money then becomes a source of operating income, as the FEDs routinely raid those funds to run the government. The rest of spending is deficit spending. The answer to who is paying the most in taxes is moot, no one is, unless we count the long term obligations that accimpany deficit spending.
The problem with unfunded liabilities is that they are achieved at the expense of future growth. We are selling the next round of good economic times, for a hamburger today.
Wall Street believes that the overall global economic picture includes a middle class China and India, raising demand and boosting the global economy. These are the people who routinely sell us on capitalism in Russia, and who wonder, as the Dalai Lama does, what the world will look like if everyone has a car? General Motors treats that question as dogma.
Of course it won't work, if we all want to breathe and eat.
They also ignore the fact that highly inflationary economies (CHina and India) are at risk for systemic collapse, as in Weimar Germany.
But as one economic pundit said, it may not be a Depression, it will be 'A Long Gray Day for the Rest of Your Life', referring to Groundhog Day the movie.
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Its the Interventions...
A minor error in the article:
"Between 1929 and 1933, U.S. GDP growth declined by around 30 percent..."
I bet he meant that GDP declined 30%. GRP GROWTH declining 30% would be, e.g., growth went from 10% to 7% per year.
The worse problem: The author completely ignores the fact that the "fragility" of the system stems largely from the repeated government bailouts of the rich bankers, convincing them they can take any risks they want.
It makes me wonder: Is the author really on the side of the poor, or just on the side of expansive government?
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1929= 2008
I think reassuring ourselves by the vast disparity between the devastation of the heart of the Depression and current times is misleading. Things weren't so bad in 1929, either- nonetheless, that is when the trouble started. I draw a lot more parallels between 1929 and 2008 than I would like. And I'm really not looking forward to 2012.
I also agree with the LW who talked about the lack of physical capital- oil, clean air, healthy oceans -we have now, as compared to the 1930s. I really don't think we can overstate the importance of this, and how it might affect the economy, along with- well, everything else. We can't fall back on plentiful oil any longer, and a fucked-up environment is going to leave us all the more screwed.
As for those who think we should all just stop whinging, get to work and stop depending on the government- fine, but bear in mind that if you're not living off-grid growing all your own food, you've got some dependency issues of your own. No matter how much money you're making, you're still going to starve if the trucks stop running due to lack of oil. To think you're independent because you make enough money to pay someone else to grow your food, is delusional.
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Obesity is a consequence of economic inequality, not a sign of prosperity of the poor
Go down to the ghetto. Try to find fresh food. You'll find convenience stores where you can buy Cheetos and beer. But what if you want fresh chicken, whole wheat flour or broccoli? How do you buy those if you live in the inner city?
What you do is get on a bus and shop in a more affluent part of town. If you don't have the time or energy for that, then you live on cheap convenience store carbs and get fat.
Obesity is not a measure of prosperity for the poor. It is a consequence of economic inequality.
One good thing they're doing in LA is installing small public mini-gyms featuring cheap, durable versions of equipment found in gyms the poor and too poor to join.
But it's still hard to get supermarkets to open up in those areas. People still have to take the bus to a more affluent neighborhood if they want broccoli.