Tuesday, August 31, 2010

Third World America ~ Our Race to the Bottom !

Third World America ?
Leo Hindery, Jr..Chairman, U.S. Economy/Smart Globalization Initiative at the New America Foundation
Posted: August 31, 2010 09:30 AM

Ms. Huffington has precisely described the current sad state of the middle class, with especially sharp perspective on what she calls the economic "nightmare on Main Street." And she offers particular insight into "America the dilapidated", her short-hand way of expressing her distress at the sorry state of the nation's infrastructure, which will require a staggering $3 trillion or so of capital expenditures to fix and upgrade. For years I have argued that the only economic measure that really counts is the vibrancy of the middle class, which needs to grow robustly from the bottom up. And the best indicator of that vibrancy is our nation's nearness, or not, to full and fairly compensated real employment. Ms. Huffington clearly shares this view. As a member of the "professional left", which is White House Press Secretary Robert Gibbs' epithet for those of us who believe that campaign promises made by Candidate Obama in 2008 should be kept by President Obama in 2009 and 2010, it's easy for me to have distress over the true state of the U.S. economy. And this same sense and level of distress are what I believe motivated Ms. Huffington, obviously a fellow 'member', to write her book. She realizes, as I and others have,

The top 10 percent of Americans now earn half of our national income, while the bottom 90% collectively own less than 2 percent of the nation's wealth. There is more income inequality in America than at any time since 1928, when this statistic was first kept.

61 percent of Americans "always or usually" live paycheck to paycheck, which is up from 49% in 2008 and 43 percent in 2007.

Approximately 21 percent of all children in the United States are living below the poverty line, which is the highest rate in 20 years.

Only the top 5 percent of U.S. households have earned enough additional income since 1975 to match the rise in housing costs.

83 percent of all U.S. stocks are in the hands of just the top 1% of Americans. And the top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.

As Edward Luce wrote recently in an important piece for the Financial Times entitled "The Crisis of Middle-Class America", which theme Ms. Huffington picks up on, the slow economic strangulation of millions of middle-class Americans started long before the Great Recession of 2007, which merely exacerbated the "personal recession" that ordinary Americans have been suffering for years. This 'median wage stagnation' means that the annual incomes of the bottom 90 percent of U.S. families have been essentially flat since 1973, having risen by only 10 percent in real terms over the past 37 years. During this same period, the incomes of the top 1 percent have tripled. Ms. Huffington also distinguishes herself with her chapter entitled, "Who Killed The American Dream," and with her precise prescriptions. Her 'indictment' of lobbyists is sobering and her call for campaign finance reform compelling. Also compelling are her demands for modernizing our government institutions' technology, meaningful education reform instead of test scores chicanery, and "closing down the Wall Street casinos." But it's at the end of this great read where Ms. Huffington really got my attention with her not-so-gentle reminder that if middle-class Americans are to keep their American Dream alive, then "it's the jobs, stupid". For the past four years, during which I was first Senior Economic Policy Advisor for John Edwards and later an unofficial adviser on jobs and trade issues for Barack Obama, I have railed against the inanity of counting each month only those unemployed workers actively looking for jobs -- and leaving uncounted the millions of workers so "discouraged" that they no longer actively look for work or who've accepted, out of necessity, part-time jobs even when they want and need full-time ones. In 1947, both major Parties decided to adopt this flawed methodology because it was (and obviously remains) politically 'helpful'. Politically and statistically, this country has always cared about how many Americans are employed -- doing so lies at the heart of what we are as an economy. But in the last sixty years and especially in the last thirty years we've lost sight of how many of our fellow Americans are unemployed, which more importantly lies at the heart of our democracy and our commitment to equal opportunity. If we were focused today on all unemployed workers, we would be asking ourselves how our economy can create the 21 million jobs needed in order for the workforce to be fully employed in real terms. We would be developing jobs policies that are especially sensitive to those newly unemployed workers who will have more difficulty being re-employed: older workers, the less educated, the handicapped, African-American and Hispanic workers, and those previously employed in construction and manufacturing. In doing so we would quickly see that the root of our current jobs problems is the dogmatic free-market approach of Tim Geithner, Larry Summers and the administration's other Bob Rubin acolytes, an approach which is keeping us from having an industrial and manufacturing policy, buy-domestic government procurement requirements, and fair free trade instead of the unbridled free trade we have now. It's more than illustrative that these individuals and the Obama administration decided to zero out in the FY 2011 budget request the very office within the Department of Labor that collects global economic and jobs statistics. Ms. Huffington is a committed ally of America's workers, which is why her latest book is such a critically important read. My only disappointment, and it's barely that, is that she did not add a full chapter on an issue that I know is important to her and workers everywhere, which is strengthening union representation and workers' rights, especially through passage of the Employee Free Choice Act, which right now is just another stalled if not broken campaign promise. When Ronald Reagan came to power in 1980, the conservative agenda which he advanced sped up the decline of unions and reversed the most progressive features of the U.S. tax system. Now fewer than a tenth of American private sector workers belong to a union, while workers in Canada and Europe, who are subjected to the same forces of globalization and technology as American workers, belong to unions in much larger numbers and are the beneficiaries of much more stable wages and benefits, especially health care.
But now I'm just picking nits. Third World America by Arianna Huffington is perceptive, eloquent and timely.

Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband.

Editorial : This writer has been saying this, for how long now ? Until TRADE is fixed, things are not going to get better !
"In Deo Fiducia Nostra"

No comments: