THE FAILURE OF "TRICKLE DOWN"

It's been quite difficult to get my Paul Krugman fix lately. The New York Times columnist who also happens to be an economist at Princeton University is now, along with quite a few other Times columinsts, behind a pay-per-view firewall. Apparently, the newspaper of record thinks people should pay to read their stuff, which, strangely, is the opposite approach taken by the Wall Street Journal; all their columnists are available on the internet for free, but their award winning news coverage is availale only with a subscription. Whatever. I don't really understand what either company is getting at, but I do know that I'm enough of a cheap-skate to say the hell with it. Consequently, I don't read the WSJ, and I no longer really read Krugman, which is a drag.

But then I came across this December 7th essay on ZNet:

The Joyless Economy

But the main explanation for economic discontent is that it's hard to convince people that the economy is booming when they themselves have yet to see any benefits from the supposed boom. Over the last few years G.D.P. growth has been reasonably good, and corporate profits have soared. But that growth has failed to trickle down to most Americans.

Back in August the Census bureau released family income data for 2004. The report, which was overshadowed by Hurricane Katrina, showed a remarkable disconnect between overall economic growth and the economic fortunes of most American families.

It should have been a good year for American families: the economy grew 4.2 percent, its best performance since 1999. Yet most families actually lost economic ground. Real median household income - the income of households in the middle of the income distribution, adjusted for inflation - fell for the fifth year in a row. And one key source of economic insecurity got worse, as the number of Americans without health insurance continued to rise.

We don't have comparable data for 2005 yet, but it's pretty clear that the results will be similar. G.D.P. growth has remained solid, but most families are probably losing ground as their earnings fail to keep up with inflation.

Click here for the rest.

It occurred to me during the "boom" of the late 90s that there were many many people who didn't seem to have anything to do with all the economic manna raining down from Wall Street at the time. In short, I realized that the economy was, indeed, doing well...if you were participating in it. In other words, if you weren't in the in crowd, the "boom" of the 90s was something of a joke. Wages for rank and file Americans were stagnating. Families had to have two wage earners simply to make ends meet, and nobody seemed to notice that twenty years earlier only one bread winner was needed. Job security was a concern even for people who had jobs and were making good money. Health care access was becoming a big problem. Outsourcing was starting to rear its ugly head.

None of that has gone away. In fact, it's gotten worse. I think it is long past due that we redefine the concept of economic growth: it is not only possible, but reality, that the corporate sector can be drowning in money while everybody else goes without. That's happening right now.

Just to firm up my point, here's a report on wage stagnation during the "recovery" (I'm not even sure what that means anymore) that I found courtesy of CounterPunch. From the Economic Policy Institute:

CPI dip boosts November wages, but still
no overall gains four full years into recovery

With today's release, we have a full four years of real wage data over the recovery that began in November 2001. The real hourly earnings of non-managers in services and blue-collar workers in manufacturing (the sample covered by this survey) are down slightly over this period, as shown in the chart.

Thus, after four years of solid GDP growth and impressive productivity growth, the average hourly wage of workers in these occupations is down by five cents. Even the large monthly spike last month only replaces the real value lost a few months ago (see chart).

Click here for the rest.

And here's that chart:



See? The economy is booming, but average ordinary people are being left behind. Face facts: money does not "trickle down" from the rich. It's pretty obvious that the wealthy elite have rigged the game to keep it all for themselves. And why not? They didn't get rich giving their money away.

I say we take it from them. Now.

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