Clitoral Economics

With all the talk about how to stimulate it, you'd think that the economy is a giant clitoris. Ben Bernanke may not employ this imagery, but the immediate challenge-and the issue bound to replace Iraq and immigration in the presidential race-is how best to get the economy engorged and throbbing again.

It would be irresponsible to say much about Bush's stimulus plan, the mere mention of which could be enough to send the Nikkei, the DAX, and the curiously named FTSE and Sensex tumbling into the crash zone again. In a typically regressive gesture, Bush proposed to hand out cash tax rebates-except to families earning less than $40,000 a year. This may qualify as an example of what Naomi Klein calls "disaster capitalism," in which any misfortune can be re-jiggered to the advantage of the affluent.

But even the liberal stimulus proposals have me worried--not so much for their content as their rationale. Most liberals want a stimulus package that includes an increase in food stamp allotments and an extension of unemployment benefits, which are both screamingly obvious measures. Currently, the food stamp allotment amounts to about $1 per meal, and when four Democratic congresspersons tried living on that for a week last May they ended up even crankier than if they'd had to sit through a week-long filibuster by Tom DeLay.

As for unemployment benefits: They last just 25 weeks in most states and end up covering only a third of people who are laid off. If ever there was a time to create a real working system of unemployment compensation, it is now. Citigroup has announced plans to eliminate 21,000; investment banks in general will shed 40,000. The mortgage industry is in a state of melt-down; and Sprint--how did they get into this?--will lay off 4000 full-time employees as well as 1600 part-time and contract workers.

The economic rationale for more a progressive stimulus package, which we hear now several times a day, is that the poor and the freshly unemployed will spend whatever money they get. Give them more money in the form of food stamps or unemployment benefits and they'll drop more at the mall. Money, it has been observed, sticks to the rich but just slides off the poor, which makes them the lynchpin of stimulus. After decades of hearing the poor stereotyped as lazy, stupid, addicted, and crime-prone, they have been discovered to have this singular virtue: They are veritable spending machines.

All this is true, but it is also a form of economy fetishism, or should I say worship? If we have learned anything in the last few years, it is that the economy is no longer an effective measure of human well-being. We've seen the economy grow without wage gains; we've seen productivity grow without wage gains. We've even seen unemployment fall without wage gains. In fact, when economists want to talk about life "on the ground," where jobs and wages and the price of Special K are paramount, they've taken to talking about "the real economy." If there's a "real economy," then what in the hell is "the economy"?

Once it was real-er, this economy that we have. But that was before we got polarized into the rich, the poor, and the sinking middle class. Gross social inequality is what has "de-coupled" growth and productivity from wage gains for the average household. As far as I can tell, "the economy," as opposed to the "real economy," is the realm of investment, and is occupied by people who live on interest and dividends instead of salaries and wages, aka the rich.

So I'm proposing a radical shift in rhetoric: Any stimulus package should focus on the poor and the unemployed, not because they spend more, but because they are most in need of help. Yes, when a parent can afford to buy Enfamil, it helps the Enfamil company and no doubt "the economy" too. But let's not throw out the baby with the sensual bubble bath of "stimulus." In any ordinary moral calculus, the baby comes first.

Far be it from me to make the revolutionary suggestion that babies are more important than profits. My point is just that our economy--with its dizzying bubbles, wild lending sprees, reckless downsizings, and planet-wide hyper-sensitivity --has gotten too far disconnected from ordinary human needs. We could take the current crisis as an opportunity to fix that, at least in part, by shoring up government support for the needy and the dislocated. Or we can wait around and watch while the appropriate imagery gets nasty, as this ghostly creature, "the economy," starts acting like a nymphomaniac junkie in withdrawal.

Comments

[AZModerate]

If the stimulus package only includes a tax rebate, will the people here who are so enthuseastic about relief for the unemployed/very poor instead give thier rebate to a poor person, or will you just send it back to the govt?

[wrabbitt]

With the stock market correction already under way,I'm sure you will see ceo's dump stocks,and get out of harms way while the tell the small investor to ride out the storm and go for the long term. When "W" talks about the economy, he is talking about the top 10% and how they are getting richer! The rest of us know the answer to the economy? What economy! All the major money markets of the world have turned their back on helping our economy, but, then isn't that where all our jobs went?

[amhcw]

My mother, the wife of a school teacher, used to sigh and say, "It takes money to save money." I keep feeling bewildered and wondering whatever happened to the things we learned about in school: i.e. transfering wealth from the rich to the poor (like we learned FDR did), regulating the greed of the super-powerfully rich, the power of small business as being the bullwark of our economy, and the fact that capitalism really meant the continual creation of new, small businesses?

[Overd0g]

Sorry numbnuts, without profits there are no babies. Try paying dad with losses.

[JohnCitizen]

THE SUPPLY-SIDE SCAM

George Bush’s $3 trillion dollar tax giveaway to the rich over the past 7 years has been a disaster for average Americans. Supply-side (trickle-down) economics is a bogus theory promoted by those who benefit from it. In a mature capitalist system, supply side never rules, it’s always the demand side of the equation that governs growth and well-being. Think about the 1930s Depression, General Motors had plenty of supply, but demand evaporated.

Previous U.S. economic downturns have been cured with only $200-300 billion in tax cuts targeted to the middle class, because the consumer (the great middle class and 2/3rds of the economy) spends that tax cut and primes the economic pump. But George Bush has raised the debt that our children and grandchildren will have to pay from $6 trillion to over $9 trillion for current economic growth (i.e. we all get trickled on, as the rich spend some small fraction of their gains). Unfortunately, this growth is largely and uniquely without wage gains, and so has shrunk the middle class that makes America strong and great. Also, this growth has already over ($3 trillion flushed down the toilet and gone!), as the FED has had to cut interest rates because recession is looming. Massive debt has led to a weak dollar, which is now at record lows vs. other major currencies because of FED interest rate cuts. In turn, the record low dollar has produced record oil prices ($100/barrel); and any additional needed FED interest rate cuts could cause a free fall in the value of the dollar, guaranteeing recession or worse, stagflation.

The middle class is slowly being tapped out, as home values (most of their net worth and the credit card of last resort) are falling in price, and a considerable number of homeowners are heading for foreclosure. With the rich-poor divide increasing, we’re headed toward previous shining examples of trickle-down economics: South America of the recent past and feudalism in the Middle Ages. SUPPY-SIDE ECONOMICS IS NEW FEUDALISM AND SERFDOM!

[23000Days]

This is arousing stuff, but unfortunately I have Electile Disfunction. I can't seem to get aroused by any of these clowns!

[yappnmutt]

there's a phd in that title somewhere, somehow.
its prudent for most economists to hedge their forecasts because none of us really know what we are talking about in the macro model. lol. anyway, the situation is dire enough that the idea(hope) is to prevent a lot more people from becoming poor. unfortunately the gov't and the fed need viagra because they have ed. rebates SOUND great but in the end the check should be 1000 dollars per person to have any effect. helping the now and future poor may be all there is to do in the end. there will be a lot to go around. maybe an adopt a poor middle class family program should be started.

[PeteBogs]

a clit-based economy... I like!

[CookieWrites]

Thanks Barbara for the good work you do and for giving the clitoris her due.
Milton Friedman was wrong because he assumed the wealthy class would have ethics. The free market has turned out to be a shooting gallery for profiteers and a nightmare for everyone else.

[davidly]

Thank you, Ms. Ehrenreich! With this post you earn the original meaning of your name "honorable kingdom" and I say bravo.

The oh-so-reasonable middle of the political and financial spectrum are quick to point out the lark: "As long as the rich are doing well, the rest will follow" - only to claim in the same breath that the middle class is the backbone of "the economy" and, if they do well, everyone does.

This essentially means that "moderates" believe in trickle-down economics, so long as it begins with them.

As far as inflation goes: Here we have the evidence that we always want more, and haven't the slightest clue what it is that we need. Stimulation indeed! If Liberals were really liberal, and Conservatives actually conservative, we might all not be so delusional.

[KarenZipdrive]

I just wonder how the Republicans are going to blame this mess on the Democrats.

[dhfsfc]

Barbara--

This is one of the best posts I've ever read on HuffPo.

I am a huge fan!

[AxelDC]

Any economic stimulus package the worsens the deficit merely adds to the problem. America's massive debt load and accompanying trade imbalance are imperiling its long-term economic health.

Providing economic stimulus that worsens the deficit is like giving a candy bar to an ailing Type II diabetic. What he really needs to do is lose weight, not gorge on more sweets for short-term "stimulus".

[martinlbny]

The state of the economy is oversimplified by politicians who are always looking for the "quick fix" (to perpetuate their career longeviety) but they do know where the bulk of their canpaign contributions (AKA payoffs)come from, so they look for answers when they should be seeking causes. The rich got that way because they don't spend, they invest (semantics, yes, but it makes for good cocktail conversation) while the poor and middle class pay higher tax rates than the wealthy, find themselves "investing" in non-interest bearing products like milk, rent and fuel that are necessary to go from week one to week two. And the fact that those probably most in need do not make the $40,000. yearly cut is once again an example of political priorities.
Martin Silver
Long Beach, NY

[pennyfortheguy]

Hungry? Out of work? Eat your neighbor's foreign car, their clothing, TV etc.