The Commerce Department reported earlier that the economy sucks.
No, they didn’t use those words. What they said was: The economy grew at a real annual rate of about 0.8 percent in the first half of the year (0.4 percent in the first quarter, 1.3 percent in the second quarter). This is far below the 2.5 percent growth rate needed to keep unemployment from rising.
John Ryding, chief economist at RDQ Economics, was quoted as saying, “The word for this report is ‘shocking.'”
Sorry, Mr. Ryding, and all you other corporate economists. Why are you shocked?
The 20 million unemployed, many out of work for more than a year, aren’t shocked.
The million families losing their homes this year aren’t shocked.
The growing number of workers in low-wage, unstable jobs aren’t shocked. In the last year, employment in low-wage occupations grew by 3.2 percent, while high-wage occupations fell by 1.2 percent.
The college graduates with record student loans and lucky to be working at Starbucks aren’t shocked. Of those graduating in 2009 and 2010, barely half have found jobs. Of those, half are working in industries that don’t even require a college degree.
State and local government workers aren’t shocked. Hundreds of thousands have been laid off, and millions have taken cuts in pay and benefits.
The 90,000 workers laid off by the Federal Aviation Administration and its construction contractors aren’t shocked. In a rehearsal for the debt-limit showdown, the Republicans have refused a routine measure to continue the FAA’s operations. This sabotage of that nation’s airports is part of an effort to make it almost impossible for transportation workers to join unions.
There are even a few economists who are not shocked at the sorry state of the economy. Nobel Prize winners Paul Krugman and Joseph Stiglitz have been warning for months that cutting government spending is the worst policy in the current situation.
But you don’t have to have a Nobel Prize to know what’s going on. Knocking on doors for a local election campaign this week, a woman in a working-class neighborhood came to the door, saying, “I’ve just been watching TV about the debt ceiling. Nothing is going to be solved until we have jobs, jobs, jobs.” Polls show the overwhelming majority of Americans agree.
Unfortunately, the result of the standoff in Washington is likely to be a choice between deep cuts and very deep cuts. This policy is known by economists as “austerity.” It means that after working people have already been forced to tighten their belts through lower wages and benefits and fewer jobs, they will be forced to tighten their belts even more through cuts to education, government pensions, medical care, transportation and everything else governments do that make modern society work. That is the policy in most European countries, including Britain, where the result has been renewed recession and growing unemployment.
Why follow a policy that is the economic equivalent of driving an ocean liner full-speed into an iceberg? According to a JP Morgan investment report, profit margins at biggest corporations are at levels “not seen in decades” and “reductions in wages and benefits explain the majority of the net improvement in margins.”
First translation: While we’ve been forced to tighten our belts, the fat cats are getting fatter – at our expense.
Second translation: Don’t talk to me about icebergs! Just keep the caviar and champaign flowing in the ballroom. And shut off those noisy pumps that are bailing out the ship so there is more hot water for the first-class bathrooms!
Before these parasites drown us all, call your congressional representative. Tell them to support HR 2663 for a “clean” increase in the debt ceiling; that will help our leaking economic ship avoid another iceberg. Then, tell them to support the Congressional Progressive Caucus budget proposal to end the wars, tax the rich, close corporate loopholes and rebuild America – a measure that will repair some of the leaks, and even improve conditions for the crew and the third class passengers.