Monday, April 28, 2014

Get a clue, Jack

My plan had been to be home in the middle of the afternoon last Friday. It had been a long week and I was looking forward to hanging out in the backyard playing with the dog and doing some work in the garden. But, as tends to be the case these days, that plan didn't quite work out and I didn't leave the office until 6:30pm.

I turned the radio on and Marketplace had already begun. Someone was talking about progress in Detroit. This mysterious someone was saying that in tearing down abandoned homes, the city was showing signs of recovery. Sure.

At first I thought Kai Ryssdal was talking to one of the show's correspondents. Then I realized he was talking to a cabinet secretary. The person on the other end of the line turned out to be the Treasury Secretary, Jack Lew. Y'all might remember Mr. Lew as the guy who got a lot of attention from the press when he changed his signature so it would be somewhat legible on our currency.

Now I could start talking about how, at a certain age, we all have a fairly distinct signature. My illegible scrawl developed when I was the treasurer of a housing co-op in college. Once a week I had to go into the office and write a bunch of checks to pay the bills. My hand would start to hurt after jotting down my signature so many times. In response I changed the way I signed my name so it would involve less moving of the pen. My signature has remained, more or less, the same ever since.

The fact that Mr. Lew was so concerned about how his signature looked that he wanted to change it - and that he changed it - highlights something endemic to our political class. Our modern-day politicians are chameleons with their fingers in the wind. They will make changes to their appearance, their speech or some other aspect of the personality at the drop of a dime if a consultant tells them there are votes to be had and money to be raised if he makes the change. Then they carry on as if nothing ever happened.

For a reminder of how blatant it can be, just go back and take a look at Mitt Romney trying to act like everyman by taking off his jacket and rolling up his sleeves during the 2012 campaign. There were few things more painful (and transparent) than watching Mr. Romney try to act like a normal Joe.

But, back to the point, Mr. Ryssdal asked Mr. Lew a couple of pointed questions about the economic recovery. He wanted to know why economists proclaimed that the economy was doing fairly well while unemployment was still sky high. Mr. Lew did everything he could to avoid answering the question that he was asked. Mr. Ryssdal was having none of it, however.

Mr. Lew went on to try to explain how profits and the stock market were up. But he had very little to say about why large companies were sitting on piles of cash instead of hiring workers. Mr. Lew mentioned the people he had discussed the state of the economy with and, to no one's surprise, those folks were CEO's and their ilk. No wonder Mr. Lew had no clue as to how the economic recovery was playing across the country.

Not surprisingly, though, Mr. Ryssdal never asked the really hard questions about the structural changes in the economy. There were no questions about whether high unemployment rates were putting downward pressure on wages which, in turn, would put downward pressure on demand which, in turn, made companies less likely to increase production and hire more workers.

The fact of the matter is that our economy is rotting from the inside out. Manufacturing companies have farmed out the jobs on the assembly line that paid well to developing countries who are desperate for jobs. Those well-paid jobs we lose are replaced by low-pay jobs in the service sector. These jobs pay less than a living wage and few benefits leaving less money on the table for folks to spend.

These low-wage employers are then subsidized by government redistribution policies so they can keep their wages low. Now this isn't the typical destruction of the middle class argument that President Obama likes to make. The term middle class has very little meaning in our economy.

Originally the term referred to small shopkeepers and merchants who worked for themselves and had few employees. These shopkeepers weren't the owners of the means of production and they weren't being exploited for their labor power. These are the folks Adam Smith was talking about when he said England was a nation of shopkeepers.

The "recovery" over the past few years has been concentrated at the high-end of the income spectrum. All of the indices our politicians like to point out to prove the economy is righting itself measure how well things are for the people on top. If our politicians were concerned about the plight of the working poor, we would have far more talk about our high unemployment rate than we have of the state of the Dow Jones Index.

Mr. Lew is completely out of touch with reality and, until someone in Washington takes a look at how current economic trends affect the working poor, the situation will continue to get worse. The Dow can go as high as it wants - that doesn't put food on someone's table. If the private sector isn't going to increase the number of jobs in the economy then the government must step in with jobs programs that put the unemployed, and underemployed, back to work rebuilding our nation's infrastructure.

Yes, it would be expensive. But that money would be better spent than the money that was laundered through the government's bailout scheme in which companies (who espoused a belief in capitalism) held out their hands for government largesse and then paid the executives who ran the companies into the ground a king's ransom in salaries and bonuses.

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