Recession -- Who Cares?

The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: Rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, god forbid, recession?

To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical -- or at least the newspapers' standard -- definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then "recession" doesn't seem to be a very useful term anymore.

The economists' odd fixation on growth as a measure of economic well-being puts them in a parallel universe of their own. WorldMoneyWatch's website tells us that, for example, that "The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income." And the latest issue of US News and World Report advises, "The key... for America is to keep its economy growing as fast as possible without triggering inflation."

But hellooo, we've had brisk growth for the last few years, as the president always likes to remind us, only without those promised increases in personal income, at least not for the middle class. Growth, some of the economists are conceding in perplexity, has been "de-coupled" from mass prosperity.

Growth is not the only economic indicator that has let us down recently. In the last five years, America's briskly rising productivity has been the envy of much of the world. But at the same time, real wages have actually declined. It's not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently.

And what about the unemployment rate? The old liberal faith was that "full employment" would create a workers' paradise, with higher wages and enhanced bargaining power for the little guy and gal. But we've had nearly full employment, or at least an unemployment rate of under five percent, for years now, again, without the predicted gains. What the old liberals weren't counting on was a depressed minimum wage, impotent unions, and a witch's brew of management strategies to hold wages and salaries down.

Now if those great and solemn economic indicators -- growth, productivity and employment rates -- have become de-coupled from most people's lived experience, then there's something wrong with the economists, the economy, or both. The clue lies in the word "most." We have become so unequal as a nation that we increasingly occupy two different economies -- one for the rich and one for everyone else -- and the latter has been in a recession, if not a depression, for a long, long time. Not all economists can bring themselves to admit this.

I suspect that America's fabulous growth in productivity is another illustration of the disconnect between economic measures and human experience. It's been attributed to better education and technological advances, which would be nice to believe in. But a revealing 2001 study by McKinsey also credited America's productivity growth to "managerial innovations" and cited Wal-Mart as a model performer, meaning that we are also looking at fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads, and cutting back on breaks. Productivity may look good from the top, but at the middle and the bottom it can feel a lot like pain.

When employees are squeezed hard enough, then you have the possibility of a genuine recession as technically defined. People buy less, so growth declines, to the point where even the economic over-class has to sit up and take notice. This is happening in Japan, where a recent Wall Street Journal headline announces: "Growing Reliance on Temps Holds Back Japan's Rebound: Firms Increasingly Add Part-Time Workers; Spending Power Lags." The U.S., where consumer spending accounts for 70 percent of the economy compared to a little more than half in Japan, is even more vulnerable to a downturn in personal consumption.

What is this fixation on growth anyway? As a general rule of biological survival, any creature or entity that depends on perpetual growth is well worth avoiding, lest you be eaten alive. As Bill McKibben argues in his book Deep Economy, the "cult of growth" has led to global warming, ghastly levels of pollution, and diminishing resources. Tumors grow, at least until they kill their hosts; economies ought to be sustainable.

Apocalypse aside, the mantra of growth has deceived us for far too long. What it translates into is: Don't worry about the relative size of your slice, just concentrate on growing the pie! Now, with a recession threatening even more suffering for those who are already struggling, may be the perfect time to get out the pie-cutter again. Too bad that the one leading Democratic candidate who promises to do so now appears to be on the ropes.

Comments

[mmckinl]

We need a new economic model.

Japan proves to be an interesting case. Ehrenreich and the Wall Street Journal get it wrong. Japan is in perpetual stagnation because the population is declining and its markets are being contested. Consumer capitalism needs more and more consumers and more and more markets to perpetuate itself or it withers and dies.

And therein lies the problem. Consumer Capitalism's dirty little secret is that unless it constantly expands it dies, and that is antithetical to what we have discovered about the environment and the atmosphere--that they are finite, and that mining, forestry, manufacturing and refuse cannot be forever thrust upon them without dire consequences to the economy and the very survival of civilization itself.

We need an economy based on sustainability. Without it the human population will be "right-sized" through warfare, starvation, disease, pestulence or a combination thereof. It is only a matter of time and time is getting short. Which road do we take, ever more consumption or sustainability?

[sculptor]

Barbara, another factor is that a lot of middle class jobs have gone overseas the same as in the previous flight of manufacturing jobs. I call the recovery from the last recession the recovery at the top. It's easy to be "productive" when you've sent all your jobs to a country where you pay 1/6th the US. salary. One ironic thing is given our dismal educational systems we'd probably not be able to fill those positions if they somehow magically came back to this country without hiring foreign workers.

[KeepItGreen]

The reality of the average worker is a much different picture than what is being presented by the corporate controlled media. Wages are stagnate or falling as a direct result from unregulated global trade and corporate greed. Most American families can give examples of how globalization and the "bottom-line" mentality are affecting their pocketbooks. Here are some of the effects that are happening in my family.

1.Sister " management in Telemarketing Company " company moved jobs overseas.
2.Brother " manufacturing in Brake Parts Company " company moved to right-to-work state, offered to let them keep their jobs with a salary slightly above minimum wage and without any benefits¦want to relocate?
3.Husband " manufacturing company bought out by Multi-national Corporation, threats of layoffs and relocation.
4.Sister - master"s degree registered nurse " recently laid off from major hospital due to downsizing of staff.

Medical care provided by many hospitals is scary at best, due to running them as "for-profit" businesses. Most of the nurses in my family have become so depressed with their jobs they have gone on to find employment outside of the hospital setting, only one of the six is still practicing medicine.

This I am sure is the reality of most U.S. workers, you are a replaceable piece of meat, do not ask for more, expect to get less, or your job will be eliminated or moved to where they will take less or nothing.

[gigiz]

(CONT) The neo classical approach increasingly uses mathematical modeling that is so technicla that it has made any meaningful public discourse on economics impossible.ARVO pointed out that Henry Ford understood that it is in the interest of capitalists to pay workers enough to buy the goods produced. However, we are now living in a post Fordist era , and with globalization the interests of workers and owners are increasingly decoupled (overd0G'S word fits best here).

[gigiz]

(cont) MANY OF THE PROBLEMS WITH THE CURRENT ECONOMIC PARADIGM ARE NICELY OUTLINED ON THE WEBSITE FOR THE POST AUTISTIC ECONOMICS MOVEMENT- do google search for a brief history of the post autistic economics movement. They describe how, for the past 40 yrs, neo classical economists have sought to block the teaching of any non neo classical approaches in universities ( this includes Keynsian models). They (the neo classicists) have "increasingly formalized their theory making it progressively irrelevant to understanding economic reality."
(CONT)

[gigiz]

I agree with mmckinl; what is needed is a new economic paradigm. The current indicators used by economists of economic growth etc have no bearing on the economic well being of regular people. They do not take into account phenomena like ecological devastation. If the country of Indonesia were deforested tomorrow and the wood and rubber products from this deforestation sold to foreign countries, the GDP of Indonesia would show economic growth for that yr. Needless to say, such an event would lead to the ruination of ecosystems and the economic future of common people.(continued below- word max on this site)

[Rumples]

I'm no economist, but intuitively it seems that a huge trade deficit means our dollars are going overseas to enhance the lifestyles of foreign nationals. Of course, buying cheap foreign labor contributes to larger domestic profits (ie. growth) while purposefully slighting American workers. In my ignorance, I have often wondered about the perceived connection between growth and prosperity. It's comforting to know that the question is well founded.

[flatus]

Hey, Shrub in 2000 AND, I said AND, 2004(!) is it not predictable that the American electorate will once again fail to find the best candidate?

Edwards '08 (before it's too late)

[Wiredwilly]

Nazi bankers Paul and Max Warburg created the Federal Reserve in 1913.
THAT is why there is a recession.

[Boyaca]

Absolutely right about Edwards. He is telling the truth and all the media focuses on is the way he is telling it. It is time someone got really pissed off over how America is run. It is time everyone gets pissed off over how the entire population has been screwed over by big business and your own government ( they are one and the same). Where are your collective backbones? Vote for a guy who wants to fight for you. Hillary? Obama? Huckaaaaaa WHAT? Romney? These guys like it just the way it is.They are there to make sure you stay where you are and the really rich guys get more. For heavens sake America, wake up and smell the coffee. You are living in a dream world. Freedom? What Freedom? The Freedom to starve? The Freedom to work like a slave for less and less and lose your home to boot? What kind of Freedom is that? The population of the USA is Orwell´s dream. Certainly no smarter than the beasts in the field who go willingly to the slaughter. It seems to outsiders like me, that you are all to willing to expose the throat to the sword. When will you all gather up your guts and stand up and fight?

[Boyaca]

Actually, America is in the same situation as the Communist countries were in in the 70s and 80s. The only difference is that now instead of government owning everything, now everything is owned by hedgefunds and banks. At least under communism you knew who was screwing you over. With the new central planning you will never see the hidden face behind your home being taken from you and or your cut in salary/wages. And yes the bank /hedgefund owns your home/car etc.. You only pay rent on it.Same with your car, furniture, vacation etc. You own nothing. The credit card companies even own the food you eat and the gas you put in your car. Why is that different than communism?

[mntleo2]

Thanks Ms Ehrenreich, again you say what so many of the working people are thinking but hear nothing about on the news.

I always laugh when I hear the stock report. as I listen to the breathless reports, I am thinking, "Well butter my butt and call me a biscuit. Soooo what the HELL has that got to do with my neighbors and me????" I know what the stock market does for the rich, but tell me, what IS it doing for the rest of us, huh, huh?

And as for growth. What a laugh. So we think raping the planet and every community in it so a few people can sit on all the resources they took, is good??? I would be happy just to "grow" enough to pay the power bill, much less for the rent and feeding the kids ~ and God forbid, also afford healthcare. Besides being obviously and sickeningly immoral, this celebration of open greed for taking the food out of the mouths of babes so some Paris Hilton can buy a $2000 purse, what the hell do the rest of us gain?

John Edwards has it right. As a low income wage earner for over 30 years, my problem with "negotiating" is that in all those years "negotiating" has gotten nothing but two or three jobs to earn what one job used to earn. Meanwhile the rich sit by the pool and collect their residual checks and call ME "lazy" after they take it from my wages.

I am tired of negotiating. These people who feel so entitled need to be made to understand who is truly the lazy one. They need to understand We The People are as entitled to reap the benefits from the taxes we pay that they don't.

For the next generation, for my kids, and for the few years I have remaining, I want some action!

Cat In Seattle

[zjr909]

I wish people who like to sing the praises of the rich would stop a moment and look around at the real world. Then they'd see how much more the rich depend on the masses than anyone ever mentions. I'm not talking about the masses as workers but as citizens of their respective communities. Most of the things that make modern life possible come from the infrastructure that's largely paid for by the average citizen. Things like roads, water and sewer, police and fire departments: these things are as crucial to the success of businesses - particularly small businesses - as are workers and tax breaks. To quote a title that makes even me cringe "It Takes a Village." Because it isn't just as workers and consumers that the majority of people impact the economy but as citizens. It'd be a much nicer world if everyone could remember that - and stop dismissing ordinary people as a bunch of losers who wouldn't last a second without the largesse of their "betters." One more thing: the History Channel recently had a show about The Plague that wiped out half the population of Europe in the Middle Ages. So many people died that ordinary peasants were able to acquire and till their own land; and the aristocracy was left without workers. They didn't much care for that.

[vippy]

Yes, what happened to the companies who made a little profit, where everyone was content. Now the companies are moving to China to seek cheap labor but the cost of the goods is still high but the bottom line increased. This is happening once a company joins Wall Street and the stock market, the race is on for more and more profit and more productivity. It is easy to see that with the hunt for productivity, customer service cannot be included, that would mean dead dollars. So we talk about providing
customer service yet don't act on it, it is a sham. In order to run a retail store with more profit one would have to fire all employees and
let the customer open the door and throw in the money and leave - there is no other way left anymore.

[Cathexis]

THANK YOU!

Thank you, Ms Ehrenreich! For several *decades*, now, ever since I first started actually looking at Economics rather than swallowing what was fed to me, I have wondered "What is this fetish with GDP and ever-increasing production?!?" Even a cursory glance indicated this was unsustainable.

And beyond that, exactly as you state in your article: Why are we measuring/treasuring this metric? What does it mean for *us*? For years, I grudgingly accepted that maybe the Rightwing explanations were correct: The "rising tide" woudl raise all boats. Yes, I was Republican, then, so I took long draughts at the Kool-Aid trough.

But you are exactly right: The ever-increasing production and the state of the GDP is basically decoupled from our lives (of anyone who actually works for a living). THANK YOU for stating what should be obvious, but that way too many of us accept as Gospel!