Krugman: Our So-Called Boom

[RamboLiberal]

http://www.nytimes.com/2003/12/30/opinion/30KRUG.html

It was a merry Christmas for Sharper Image and Neiman Marcus, which reported big sales increases over last year's holiday season. It was considerably less cheery at Wal-Mart and other low-priced chains. We don't know the final sales figures yet, but it's clear that high-end stores did very well, while stores catering to middle- and low-income families achieved only modest gains.

Based on these reports, you may be tempted to speculate that the economic recovery is an exclusive party, and most people weren't invited. You'd be right.

Commerce Department figures reveal a startling disconnect between overall economic growth, which has been impressive since last spring, and the incomes of a great majority of Americans. In the third quarter of 2003, as everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage and salary income, adjusted for inflation, rose at an annual rate of only 0.8 percent. More recent data don't change the picture: in the six months that ended in November, income from wages rose only 0.65 percent after inflation.

Why aren't workers sharing in the so-called boom? Start with jobs.

Payroll employment began rising in August, but the pace of job growth remains modest, averaging less than 90,000 per month. That's well short of the 225,000 jobs added per month during the Clinton years; it's even below the roughly 150,000 jobs needed to keep up with a growing working-age population.

[Racenut20]

1. The only real recovery is

for the rich folk as a result of the high dollar tax breaks given out by the "compassionate ones".

[Ilsa]

3. Exactly.

The working poor are still living paycheck to paycheck. The stockmarket boom may help their net worth over the long run, but it isn't improving their cash flow. Any discretionary income is still be used to pay bills related to lost income, lost health insurance, or in our case, saving for higher deductibles for next year.

[RainDog]

11. If Bush gave a damn about America

..and the small businesses which have made this country, and will continue to make it after corporations have taken their jobs and their money offshore,

if he were going to institute a tax cut (an insane idea when also gearing up for a war without end) he would have done a payroll tax cut.

this would have made biz better for small bizzes, would have put more money in more people's pockets for things like refridges, etc., and would have represented a fairer distribution of wealth.

But Bush is all about creating a master class of Americans who can shit on the rest of us and ask us to clean it up.

he is absolutely the worst thing that has ever happened to this country in my lifetime.

[aquart]

12. Yup. And he didn't just happen.

This was planned for years. Reagan's boys weakened media controls and put in judges........they needed those judges. They needed a tightly controlled media. They were very good planners.

The trouble with fascism is that it is excellent at seizing control, but as soon as they get it, it all goes to hell. And no fascist has ever figured that out.

[Champion Jack]

2. This sums it up nicely

The bottom line, then, is that for most Americans, current economic growth is a form of reality TV, something interesting that is, however, happening to other people. This may change if serious job creation ever kicks in, but it hasn't so far.

The big question is whether a recovery that does so little for most Americans can really be sustained. Can an economy thrive on sales of luxury goods alone? We may soon find out.

[sventvkg]

7. There will be no trickle down..Supply side is only good for the Bosses

Haven't you learned that one already 20 years ago with Reagan??? There is no Boom..Everyone i know and all business I associate with are doing worse..NOT better..The stock market is doing well because Big Business is doing well, Farming out all their jobs to asia and laying off Americans..Shipping all their manufacturing to cheap nations..OF course they are profiting!!! This so called Boom is a joke and I can't believe People actually believe that if the Stock Market is doing well, we all must be!!! I mean if only most AMericans knew that investing in Real Estate is FAR FAR better in the long run for retirement then the Stock Market, these big companies would not get so rich and people would end up much more self sufficient in the end...This country is a fucking joke..

[priller]

14. We already know the answer to that

There are many such economies in crappy little countries all over the world. No, it's not even sustainable now (since we're going 500 billion into debt every year).

[Ilsa]

4. What? Those gift ideas on Today and GMA

aren't translating into profits for all of 'Murica? You know the morning TV show gift ideas: they frequently cost hundreds of dollars. I mean, why wouldn't I want to give every coworker a new PDA or my boss a digital camera for Christmas? Isn't that what the tax refunds were for?

(sarcasm off)

[CWebster]

5. The Dems should be pounding this home

If the stockmarket is a measure of the health of corporate America, which benefits from downsizing, moving jobs and operations offshore as well as recipients of gargantuan tax breaks- than it is a barometer of the wealth of corporate America and not the vast majority of Americans.

[pnziii]

6. Recover is smoke and mirrors

The same thing happened when Reagan cut taxes. There was some immediate growth, but it faded when we had to start paying for the deficit

[Homer12]

8. The United States economy has severe structural problems

1) Out-sourcing of high-tech and customer service jobs to other countries

2) The continued loss of manufactring jobs for cheap labor

3) The continued creation of low-paying jobs

4) The Walmartinization of imported products (cheap, cheap, cheap, labor = cheap products = need less money to buy them, etc...)

5) Rising deficet

6) Rising trade deficet

7) add to the list....

Summary: The US economy is not self-sustaining, the TAx cuts were like taking 45 oxycotin in a day, in order to have this (precieved) growth for the US economy (us poor people), and continued profit growth for multi-national coporations and the rich; the economy will need more drugs to stimulate which comes down to our tax dollars.

[ewagner]

9. key word = Structural

There are fundamental structural changes taking place in the American economy which no one has addressed. The traditional measurements don't seem to apply anymore.

Any economists out there have any suggestions? Comments?

[ProfessorGAC]

10. Paul's Still Using The Wrong Numbers

While i agree with Krugman in principle, as well as his economic philosophy, he's still using the trumpeted numbers for GDP growth. But, a good rationalized analysis of the "where" of the numbers shows that the growth isn't really 8.2% annualized. It's nowhere near that good, in fact.

So, one of the reasons that the "boom" isn't benefitting the population at-large, is what he describes. The other is that there is no boom.
The Professor

[Tansy_Gold]

13. I think Krugman uses those numbers because. . . . .

. . . . he knows they're wrong, but they are the numbers that are put out by the guvmint. Hence lines like "as everyone knows" and "so-called."

I think Krugman is so thoroughly and totally disgusted with the * regime's voodoo poopoo economics that his sarcasm has become a normal way of writing.

But I could be wrong.

I'm just

Tansy Gold

[Spinoza]

15. Krugman is great.

I used to believe in Hayek and Friedman's "free market" BS that lowering taxes is beneficial to the overall economy and is especially critical in a recession. Krugman, however, forcefully and eloquently explains why raising taxes, (apparently, the more the better) actually raises prosperity and that the worse the recession the higher the taxes required. Buy his new book.

[Jack Rabbit]

16. Another excellent piece by Krugman

Bush is a threat to democracy. The exclusive nature of the recovery is one indication of this.

It is very unfortnate that the media whores pull out all the stats to show we are in a recovery except one: unemployment. As far as a sitting president is concerned, there is no such thing as a jobless recovery. Bush the Preppy found that out the hard way, and shall Bush the Frat Boy.

[luisao]

17. Detailed Reinforcement from the Business Media

For anyone looking to dig deeper into the picture presented by Krugman, I just read a great recent piece from Business Week posted on ReclaimDemocracy.org. I always like having a business-friendly source to work on my conservative friends. See <http://reclaimdemocracy.org/weekly_2003/american_dream_death.html>

[Dogmudgeon]

19. Good article

Have you heard of the economic ideas of Henry George? They're always good to have when you want to warp the mind of a conservative or libertarian!

www.progress.org

www.henrygeorge.org

Basically -- the only taxes (or users' fees) should be on property that the state initially holds title to. In other words, land, corporate charters, "intellectual property" and other forms of "sleight-of-law". Taxed or rented at a very favorable fair-market rate, enough money could be raised to eliminate all other taxes AND provide for a nice Social Dividend payment each quarter.

Worth considering!

--bkl

[Dogmudgeon]

18. The party won't last

Sure, the rich are busy spending the money they stole from the workers -- workers they then canned when they sent their jobs overseas. But what the ruling class in this country fails to realize is that shortly after you take the little wealth the poorer people have, there's nowhere else to go. People who are poor but productive can help the economy grow; people who are broke and unproductive en masse can only be a drain on national wealth.

Once we reach this point, the bottom falls out. With no one to exploit, the rich turn on each other and cannibalize the remaining wealth. Actually, I think we're starting to see it happen now.

The nonsense has got to stop. "Capitalism" has become a Dionysian pseudo-religion for the ruling class to justify their larceny, the same as "Socialism" served Hitler's, Mussolini's, and Stalin's greed alike. But we are facing a looming end to the cheap oil, major changes in the climate, and the possible end of Democracy in the USA. I think any of those problems trump keeping loopholes wide, taxes low, and privilege sacred.

--bkl