What if Left and Right are both wrong?
It's Our Turn Now
| We update housing prices, 30 something debt, and federal debt and post a 2008 article on the failure of the 00s to deliver the goods from the Huffington Post, May 18; its author is with the Economic Policy Institute. |
by Jared Bernstein
JJS: Records keep getting topped. From Q1 of 2007 to Q1 of ’08, home prices fell 3.1% (a seasonally adjusted 1.7%). It’s the largest decline in the official OFHEO index's 17-year history, fitting in nicely with the 18-year land-price cycle.Less spendy housing might give Gen Xers who're not homeowners hope. Three-fourths of consumers in their 20s and nine out of 10 consumers in their 30s are in debt. About 20% in their 30s are paying college loans; the median balance exceeds $13,000. They have more debt and less to repay it with. The median income for men in their 30s is 12% lower than what their dads earned three decades earlier.
Gen X debt pales beside federal debt. Last year’s official deficit was $162 billion but add in the money needed for new people eligible for benefits and it grows to $2.5 trillion. To cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, the US needs a record $57.3 trillion, nearly $500,000 per household over the course of a few decades. Add the obligations of state and local governments and the total rises to $61.7 trillion -- $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.
Rather than even try to pay benefits to some, we could replace such programs and their high overhead costs of bureaucracy with a dividend to everyone. Plus, we should cut military spending, quit being an empire, and save ourselves trillions. Couple those savings with revenue from charging rent for land, resources, EM spectrum, and other natural advantages. At the same time, de-tax income, sales, and buildings; de-taxing lets the value of locations rise. Then collect all that immense site value into the public treasury -- we’d easily have a surplus to pay ourselves a dividend.
The commentator we’ve chosen for today sees only left and right; hence he misses how we can transform the whole system, but he does present compelling data with tongue in cheek.
Bernstein: During Bush, we turned every branch of Federal government, including the judiciary, over to conservatives with a unified vision of the economy, dubbed YOYO (you're on your own) economics -- on your own unless you've got friends in high places; in that case, you can plunder the treasury.
What are the economic outcomes of this neocon power grab? Rank all 10 business cycles since WWII (1949). You find that the 2000s (’01-’07) rank eighth in GDP, ninth in consumption spending and employment growth, and last in labor compensation, last in the ratio of the population employed, and last in average growth of investment, which was less than half of the post-WWII average and worse than all cycles in the last 50 years.
Corporate profits were the only area of strength in the latest cycle, ranking 2nd strongest among the last 10 cycles. On the other hand, for the first time on record, going back to the mid-1940s, the income of the typical, middle-income family was slightly lower last year than at the prior peak in 2000. Outside of the top 1%, there's less income growth than in any past business cycle. Going back to 1913, income is now more concentrated among the top 1% of households than in any other year, bar one: 1928.
Using government to further privilege rather than defend rights has led to fatal incompetence, a massive housing bubble, ailing global credit markets, and near recession for the US. The "ownership society" is a cruel joke: homeownership rates are falling for the first time in decades. Toss in dollar decline and rising inflation.
They've had their turn and they've failed. It is our turn now.
JJS: To likewise fail, the way paved by good intentions? The Left fails to see what it means to be fully human, to need play as well as work. People don’t need politicians and bureaucrats to interfere in legitimate business. We need government only to defend rights, primarily our rights to our earnings, untaxed, to a fair share of Earth’s worth, and to a planet in good health. With rights upheld, the economy takes care of itself.
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: How People Become Billionaires
Part II, Behind the Deflating Stock Market Bubble |
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