Progressive Policies Lead to a Lousy Economy

Right From the Start

Right From the Start

The state of the economy is, in a word, LOUSY. The friends of President Barack Obama – the bankers and moneychangers on Wall Street – are doing just fine. They have improved their wealth – without contributing to the expansion of the economy – by leaps and bounds. So much so that in a June 4, 2013 tongue-in-cheek column I wrote that I had decided to become an Obama liberal:

“I could live with all of that, but a recent squib in the Wall Street Journal finally showed me the error of my ways. Michael Derby reports:

‘Americans have recovered only 45% of the wealth they lost during the recession, adjusted for inflation, the Federal Reserve Bank of St. Louis estimated. . .‘. . . The bank said data that shows a near complete recovery in total aggregate wealth is misleading. The analysts argue aggregate household net-worth data aren’t adjusted for inflation, population growth or the nature of wealth. They note a lot of the recovery in net worth has been tied to the stock market, thus is concentrated in holdings of wealthy families.’

“Bingo!! There it is. While the recession may have begun under President George W. Bush, the “recovery” is all Mr. Obama’s. All of the major stock market indices have recovered and/or surpassed their pre-recession highs. Wall Street moneychangers and investors like me have increased our net-worths beyond pre-recession levels even when adjusted for inflation. Thank you very much Mr. Obama – the overwhelming campaign contributions given to you have paid off handsomely. (Well, the money changers’ campaign contributions, not mine – there are some things not even a pig will do.)”

But back to reality. The criticism of our moribund economy has found a succinct voice in a recent in USA Today article by Trish Regan:

“The world economy faces massive challenges – but you sure wouldn’t know it by looking at the stock market, which, despite the recent sell-off, remains near record territory.

“A poor report on the health of the U.S. economy during the first three months of the year confirms what many already believed – the U.S. Economy is stuck in the doldrums.

“Though some investors and even the Federal Reserve try to blame the weather, our nation’s economic malaise stems from a larger, fundamental problem. A problem that neither President Obama nor Fed Chair Janet Yellen seem capable of fixing: a lack of demand.

“Without a vibrant consumer to buy their goods and services, U.S. companies are hesitant to invest in the future. As such, they don’t hire, and they don’t build. The administration likes to tout the hundreds of thousands of jobs the economy has added this year. Let’s not kid ourselves. These are lousy, low-paying jobs, and they haven’t grown the economy.”

To put it in succinct terms, the gap between the rich and poor has increased, the average income for the working class has declined, and the labor force participation rate remains at a nearly four decade low. If you are Mr. Obama or his friends on Wall Street, if you are President Bill Clinton and have accumulated over a hundred million dollars – much of it from foreign governments and companies doing business with the government – while your wife, former-Secretary of State Hillary Clinton was in office, or if you are a member of Millionaires Club known as the United States Senate, it’s all good.

While Mr. Obama and his progressive friends, including a succession of Democrat governors in Oregon (Gov. Kate Brown being the latest iteration), tout the number of jobs created and the reduction in unemployment, the fact of the matter is that both such number are misleading as used. Yes, the unemployment rate has dropped on a national level to 5.5% nationally and 5.4% for Oregon, but the fact of the matter is that the Labor Force Participation Rate stands at 62.7% nationally and about 62.0% for Oregon – it has been nearly forty years since the rate was so low. Why the disconnect? It’s pretty simple. The unemployment rate is simply a tally of those receiving unemployment welfare benefits and thus, by definition, does not include those who have given up looking or who have exhausted the time period in which they are eligible for benefits. On the other hand, the Labor Force Participation Rate represents the percentage of the total available work force that is actually working or actively seeking work.

Yes, the total number of jobs, nationally, has finally exceeded the number of jobs prior to the Bush/Obama recession but the total number of people of working age has increased faster. In Oregon, the total number of jobs finally exceeded the pre-recession levels (1,752,289) in September of 2014 (1,760,878) but fell back below that level by the end of the year (1,727,275). The total number of private sector jobs surpassed its pre-recession level (1,493,853) in July of 2014 (1,495,572) but fell back below that level by the end of the year (1,455,163). It is interesting to note that while the private sector lost 40 thousand jobs between the 2014 high and the end of the year, the government sector actually increased employment by 7,000, thus accounting for only a 33,600 job loss on a total basis.

And what of the jobs created in Oregon? Well, they reflect Ms. Regan’s characterization as “lousy, low-paying jobs, and they haven’t grown the economy.” For instance, the Construction sector remains 30,000 jobs (30%) below pre-recession levels. The Manufacturing sector remains 32,000 jobs (14%) below pre-recession levels. And the Transportation and Utility sector remains 12,000 jobs (3%) below pre-recession levels. And even that underestimates the losses in those sectors because the figures do not account for working age population growth. In contrast, the Leisure and Entertainment sector (primarily replete with minimum wage jobs – maids, dishwashers, etc.) grew by nearly 17,000 jobs and the Other sector (characterized by laundry workers, animal groomers, and auto detailers) grew by 5,000 jobs. The largest growth was in the Education and Health Sector (private) which grew by 35,000 jobs – almost all of which were non-professional and were characterized by janitors, nursing home workers, etc.

The point of this is that it is not sustainable. If the labor force available continues to grow faster than the job availability it is a license for disaster. If the labor mix continues to migrate from good paying skilled jobs to unskilled minimum wage jobs, it is a license for disaster. If the stock market continues to grow based upon increased profitability from efficiency gains (doing more with less) instead of growing based upon expansion and job creation it is a license for disaster – there is only so much “inefficiency” that you can wring out of a system. In the end we are setting up even the Wall Street class for a catastrophic failure when continuing expectation of future profitability fails to materialize.

Progressive policies have concentrated on redistributing the existing wealth rather than expanding the total wealth so that others may claim their share of the American dream. The results in major city after major city have been disastrous – Baltimore being the latest. And states such as California and Illinois have incurred debts (mostly unfunded PERS liability that clearly exceed the ability to pay and are unfortunately coupled with a stubborn refusal to address the causes because they are dominated by the public employee unions – the source of the excesses. They have compounded the problem by increasing the regulatory burden on small business – the primary job creators – exponentially. As reported by the New American:

“Just in the last few weeks, the Obama administration has proposed or imposed over 1,200 new regulations on the American people that will add even more to the already crushing $2 Trillion per year cost burden of the federal regulatory machine. According to data compiled from the federal government’s Regulation.gov website by the Daily Caller, most of the new regulatory schemes involve energy and the environment — 139 during a mere two-week period in December, to be precise. In all, the Obama administration foisted more than 75,000 pages of regulations on the United States in 2014, costing over $200 billion, on the low end, if new proposed rules are taken into account.”

Three major changes will provide the necessary incentives for economic expansion – tax reform incorporating a flat tax and elimination of most tax credits, deductions and deferrals; re-imposition of “workfare” standards for public assistance, and imposition of a “right-to-work” standard for public employees to reduce the self-serving influence of public employee unions. But I don’t hear anyone talking about these concepts other the Gov. Scott Walker (R-WI). Absent addressing these issues, ten years from now our economy will look like France and we will be wondering how China, India and Japan passed us in a walk.

 

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Posted by at 05:00 | Posted in Economy, Employment, Government Regulation, Hillary Clinton, Oregon Government, PERS, Preident Bill Clinton, President Obama, Public Employee Unions | 21 Comments |Email This Post Email This Post |Print This Post Print This Post
  • sol668

    Its so cute when Conservatives embrace a faux economic populism!

    What is the conservative solution to rising inequity and an economy which increasingly serves the needs of a few wealthy individuals while the conditions for life of the average american deteriorate?

    Why those rich people need a tax cut!

    We need “right to work laws” to tamp down labor costs for the wealthy!

    We need to deregulate, wallstreet!

    Never mind that the trends creating inequity, have been in place for decades, its clearly obamas fault that modern capitalism serves only the rich!

    Dear god we’ll look like the french!!!..just imagine the horror…

    france… the top 20% of the population earn close to five times as much as the bottom 20%.

    USA.. the top 20% of the population earn approximately eight times as much as the bottom 20%.

    life expectancy at birth in the United States is almost 79 years,

    life expectancy at birth in France is 82 years

    US poverty rate 2012 15%

    French poverty rate 2012 7.9%

    If you want a more equitable society with less poverty and longer life spans, well the french model appears superior

    • guest

      Sew So666-8,
      ASSumed Demkompf-witted hip-hop-wallaby PERS boner: Tale US with Michael Moore-onisms – lo, au contraire to common senses instill abiding with US, monsieur!

    • IhateLiberals

      Only useful idiots and political hacks worry about most of what you mention. By the way, income inequality has grown under Obama. And the recently reported 0.20% GDP growth in the first quarter hasn’t helped a bit.
      And don’t forget, that miniscule 2/10th of 1% GDP number might get revised downward by the Labor Department – meaning there WAS NO ECONOMIC GROWTH UNDER OBAMA in the first quarter at all!

  • Jack Lord God

    At this point you have to be partisan to the point of denying reality to claim that this administrations policies have been and are going to be good for the middle class. By any metric, the middle class is doing worse and will continue to do worse if we continue on this path. They need to accept the blame for that, but they won’t. Party over reality is what’s going on here.

    • DavidAppell

      When was the last time any administration’s policies were “good for the middle class?” Reagan was the first to attack them, and corporations now buy enough politicians to ensure the war will continue to be waged….

      • .

        Ha!

  • Bob Clark

    Reinvigorating the work ethic in governmental policy does seem like it would provide substantial boost to prosperity. The marginal benefit loss/tax rate for the average American of working age increased sharply under the Obama administration (especially after the ACA) from just about 40% to now over %50; meaning for every extra dollar the average worker makes, he/she loses 50 cents either in lost government transfer benefits or increased taxes and or a combination thereof.

    Effectively the expansion of entitlements under Obama has accentuated the portion of the the population being moved to the sidelines and one dependent on government handouts, which kind of is a flat line existence providing little growth prospect and also a decline in self worth. The latter can have negative feedback in suppressing creativity.

    It is most telling nudging and rewarding the work ethic actually is showing in most recent job gains. Besides easy money helping ease debt loads, these accentuated job gains up until most recent month or so may have been helped when Congress ended extended unemployment benefits (providing a stick of encouragement to getting a job for those taking their time doing so).

    • DavidAppell

      Data? Links? Proof? Can you prove just one of your many claims, bOb?

  • HBguy

    Income inequality has largely tracked the growth of capital. Income growth tracked pretty evenly across income groups post WWI II until the late 1970’s. Then started to diverge, with the top 1% booming, the top 10% doing OK and the rest flat, starting with 1980’s. This was of course the same time that the top income tax rates went down, and the reduction of taxes on capital gains.
    Since 1992, inequality spiked each time the stock market spiked. (because of low taxes on dividend and interest, favorable treatment of capital, among other reasons)
    It dropped during the great recession, then yest, it has again spiked as the economy recovers and the stock market booms. This isn’t an Obama or Democrat thing. If you want to address the causes of income disparity then go back and look at history.
    But, I do think its mind blowing that the GOP now says it is the protector of the middle class, income inequality is a problem, and the way to address it is to what…..go back and give more tax cuts to those who own the most capital? That’s exactly what US economic policy has been for the past 35 years. Ever since Laffer and Reagan and Alan Greenspan forged our current economic idealogy.

    • DavidAppell

      Yes…. until Ronnie Raygun….

      • .

        Ha, toming from you, the Martian figure of Warner Bros!

  • Ron Swaren

    “Progressive policies have concentrated on redistributing the existing
    wealth rather than expanding the total wealth so that others may claim
    their share of the American dream.”

    Whoa, now. I think there is a difference between economic statistics and quality of life. Sure, maybe Gov. McCall carried things, too far; but the economic statistics can always go higher by simply adding more bodies to the economy—but that could also lead to illegal immigration. To me this doesn’t translate into better quality life.

    Still, I’m sure we are going to see a lot of suburban county commissioners clamoring for zoning changes and higher density—-on their own terms that is, via land subdivision. Then the home builders will say they don’t have enough help. Just like the current wave of inner city apartments also relies on a certain amount of illegal immigrant construction workers.

    Governments–whether they are run by the urban liberals, or suburban conservatives seem to have a common purpose—-increase the tax base for their districts!! This is almost a no-brainer once you think about it. But, it doesn’t necessarily mean a better living environment, even though it may stimulate the numbers. Hopefully enough Tea Party ideals will gain strength to rein in conservative big government, too.

    And in Multnomah County we definitely have economic growth as indicated by a huge number of building permits issue. Likewise in Clark Co. WA. And…we also have huge inflation !

    • DavidAppell

      Tea party ideals??…. like Josephine County, which can’t even afford to lock up criminals?

    • DavidAppell

      2.3% inflation is “huge?” I don’t think so.

      http://www.bls.gov/regions/west/news-release/ConsumerPriceIndex_Portland.htm

      • Ron Swaren

        I think you left out housing prices, ditzo.

        • DavidAppell

          The overall rate of inflation is 2.3%. That includes housing. Look up the data for the CPI. (Need a link?)

        • Eric Blair

          Ooops. Maybe not pull the trigger so quickly next time?

          • Ron Swaren

            Eric, Mr. Appels retort is so obtuse as to be beyond belief. It was way off the overall tenor of my statement, which actually agreed with much of his claim. But apparently I struck some sensitive nerve with the phrase “Tea Party” provoking some out of context accusation of identifying with Joseph. Co.

            I think the rate of outside investment in the Portland RE market would be a better indicator of local inflation than the vacuum government bean counters operate in. Big RE investors don’t figure on their portfolio going south.

          • Ron Swaren

            “Portland-area rents rising nearly twice as fast as home values” Says O-Live.

            Home prices rose 4.7 percent. Rents rose 8.6.

            And they are not done yet, either.

  • DavidAppell

    Larry wrote;
    “The friends of President Barack Obama – the bankers and moneychangers on Wall Street – are doing just fine.”

    Correct me if I’m wrong, Larry, but wasn’t it Bush Jr whose socialism bailed out Wall Street and several other US corporations?

    How many trillions did that cost, anyway, say, to the nearest trillion?

    • .

      DA, You lie like a smug on a Clinton floor at Chappaqua .

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