|RANT FROM FEBRUARY 2004
"Our Booming Economy"
The stock market is up.|
Interest rates have dropped out of sight.
Labor unions are more nearly irrelevant than they have been in one hundred years.
Productivity is up -- that is, owners are squeezing more "added value" out of the effort of laborers.
The Gross Domestic Product, the sum-total of all goods and services in the entire system, is up, a little.
For these reasons the government, and many pundits, crow about our booming economy.
Let's take a look. For whom is the economy booming?
Stock market gamblers, temporarily and as a group, are doing well. The temptation to cheat is up, and real opportunities to cheat are up. Cheating is up. Perfunctory and mostly ineffective attempts to punish cheaters are up. None of this has much or anything to do with the daily lives of the average citizen, except as TV entertainment.
The non-existent interest rate means that those who were depending on earnings from modest savings, as in certificates of deposit in local banks, will not be getting any noticeable income. This affects elderly people disproportionately. Most younger people do not have any savings that amount to much, so the non-existent interest rate is of no concern to them. For those elderly who did some saving, the economy is not booming. The financial advisor's advice, "You must invest, not save," means really, "You must join the risk-takers, the gamblers. With your lack of experience, you just may become what the gambling/investment sharks call a sucker. There's one born every minute."
Labor is hardly allowed to organize these days -- those who insist on trying are widely regarded as subversive, here as well as in Latin America. The rate at which jobs are disappearing makes it hard for workers to make any peep of a noise about "working conditions," or "benefits," which means health care, which would be a right in a sane society.
For laboring people, the economy is not booming. For those workers who have not yet lost their jobs the pressure to increase productivity, which means to work harder, only makes the job less rewarding, less satisfying. There is little reason left to do it, except the dwindling payment for doing more and more. When work degenerates to that degree, the whole social system suffers. Workers need to find enough pride and satisfaction from their work that they are willing to do it.
The increase in the Gross Domestic Product is mostly a deception. Enlarging the sum total of all goods and services in an economy does not mean that the economy is booming for most people. Kennedy said, "A rising tide lifts all boats." It doesn't sound like a fitting proverb to come from a Democrat, the working people's party, and it isn't true, in the sense that he implied it. A tiny minority can receive a huge increase in income, and the average for all can rise slightly, in spite of the fact that the vast majority are worse off.
Take an imaginary small economy of 100 households. Say the GDP is $100,000,000, evenly distributed, so that each one was worth $100,000. If one household suddenly receives an income of $100,000,000, while the rest stay the same, the GDP has become $200,000,000, and the average household worth has increased to $200,000. But 99% of the households are no better off. Only one household could call it a booming economy. If the other 99 households spend much time watching shows that describe the antics of the rich and famous, some of them may decide that they're worse off. And if the one booming household got its new income by stealing from any of the others, there just may be trouble.
Trickle-down, or trickle-up -- both notions are false. Parties, and governments, that proclaim how wonderful it is that that small minority is getting more and more of what there is, while the vast majority make do with less and less, may yet find themselves discredited. The current trend is approaching a breaking point.