THE FAILED CONSERVATIVE POLICIES
OF NEO-LIBERAL ECONOMIC PHILOSOPHY
 
From the New York Times via the Houston Chronicle:
 
Large worker surplus hampers growth in earnings
 
"There's too much slack in the labor market to generate any pressure on wage growth," said Jared Bernstein, an economist at the Economic Policy Institute, a liberal research institution based in Washington. "We are going to need a much lower unemployment rate."
 
He noted that at 5.6 percent, the national unemployment rate is still back at the same level as at the end of the recession in November 2001.

Even though the economy has been adding hundreds of thousands of jobs almost every month this year, stagnant wages could put a dent in the prospects for economic growth, some economists say. If incomes continue to lag behind the increase in prices, it may hinder the ability of ordinary workers to spend money at a healthy clip, undermining one of the pillars of the expansion so far.
 
Click here for the rest.
 
And from the Houston Chronicle opinion section:
 
Once again, it's a bad job growth economy
 
The economy added 1.3 million jobs in 2004's first half. But the wage and salary graph still looks like Interstate 70 leaving Denver and heading toward Topeka.
 
"Five out of the last six months the real hourly wage has declined, and probably six out of the last seven months," says Jared Bernstein, senior economist at the Economic Policy Institute in Washington. "The pie is getting larger" in the economy. "But where are the slices going?"
 
Not into wage and salary increases, so far.
 
And
 
One factor is that, for various reasons, Hoyt believes the official unemployment rate of 5.6 percent understates the number of people who want work but can't find it. With relatively more available workers, employers don't have to bid so high for their services.
 
But why are there so many idle workers in the first place? Why haven't companies hired at a pace to match their growing revenue?
 
The answer, of course, is productivity, the major U.S. economic story of the past decade. Thanks to computers, robots, division of labor and, yes, layoffs and downsizing, the United States is churning out many more products and services per worker than it once did.
 
In the long run, productivity is a wonderful thing; it boosts employee pay, corporate profits, public health and other key standards. But so far, in this cycle, it has mainly boosted corporate profits. Almost all of the gains of productivity have gone to shareholders; hardly any have gone to workers.
 
(Emphasis mine.)
 
Click here for the rest.
 
The last line in boldface says it all: this is the fallacy of neo-liberalism.  Neo-liberal economists and their politician-fans believe that deregulation of business (i.e., getting rid of anti-pollution laws, predatory lending laws, protective tarriffs for endangered industries, etc.) coupled with massive tax cuts for the wealthy equal economic growth, which supposedly helps everybody in the long run--neo-liberals, also called "supply siders," believe that "a rising tide raises all the boats." 
 
Sometimes this actually seems to work in the short term (even though deregulation tends to shaft consumers and destroy the environment, but I digress); indeed, if the government bleeds enough money into the wealth sector, some of those dollars are bound to be reinvested.  However, over a longer stretch of time, that short term bump loses its momentum.  That is to say, the wealthy ultimately keep most of that economic gain for themselves--there is absolutely no guarantee that they will use their tax cut and deregulation windfall to create more and better paying jobs. 
 
Of course, without more and better paying jobs, consumer demand goes down, taking the overall economy with it.  Then the call is raised once again for more deregulation and tax cuts for the wealthy, creating another short term bump, which, again, makes neo-liberalism seem to have some validity.  I've been watching this cycle continue since I was in high school back in the early 1980s: now, we're right back where we were then, in a recession with lingering unemployment, with Republicans and some Democrats calling for more "supply side" economic measures.
 
Don't buy it.  It's a bunch of bullshit, and it'll get us right back where we are now in just a few years.
 
Actually, if we were to take neo-liberalism to it's logical conclusion, the US would look more like a typical third world country: a moderately sized wealthy class, a smaller sized middle class, and a HUGE poverty class.
 
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