[Marxism] America's economic vulnerability

Louis Proyect lnp3 at panix.com
Mon Aug 8 07:15:19 MDT 2011


(Key quote from article below: "Any American economy would suffer 
compared with the one that emerged as a dominant force after World 
War II." Compare that to Felice Pace's Counterpunch article that 
observed: "The architects of post-war US government policy 
recognized that the US could not control 60% of global wealth 
forever.")

NY Times August 7, 2011, 11:40 pm
Voters Want a Change Politicians Can’t Deliver
By JOHN HARWOOD

WASHINGTON — Here is the bad news for President Obama and 
incumbents in both parties: it can get worse — and stay that way 
for a long time.

That might sound like catastrophic thinking after Mr. Obama’s 
nerve-jangling birthday week, during which he got several gag 
gifts: a near default, a 500-point market drop and the first-ever 
downgrade of United States debt by a major credit ratings agency.

But step back from events this month, this year or even this 
decade, and a more ominous portrait comes into focus.

It shows an American economy under ever-increasing competitive 
pressure, demographic trends making those pressures more acute and 
a voting public facing repeated disappointment as it yearns for 
better times.

That disappointment may represent the long-term political 
consequence of a financial crisis and recession that has forced 
the nation to finally come to terms with its economic vulnerability.

For a generation, “our economy has been, for the majority of 
people, a slow-growth economy,” said Robert D. Reischauer, who was 
the director of the Congressional Budget Office in the early 
1990s. “But our standards of living have improved much more, due 
to some factors that can’t and won’t be repeated.”

Republicans felt the voters’ wrath in 2008, as Democrats did last 
year. There is no sign of a Morning in America in 2012, or anytime 
soon.

“We’re going to see turbulence” in more elections, Mr. Reischauer 
concluded. “It’s a very grim picture.”

Then and Now

Any American economy would suffer compared with the one that 
emerged as a dominant force after World War II. In 1960, according 
to the World Bank, the United States accounted for 39 percent of 
global economic output.

Millions of soldiers came home to attend college under the G.I. 
Bill, lifting worker productivity and expanding the suburban 
middle class. Annual economic growth topped 5 percent four times 
each in the 1950s, ’60s and ’70s.

Those trend lines eventually turned down. But changes in American 
society helped mask the effects.

While international competition shrank the American share of the 
global economy, women poured into the work force and gave more and 
more families two breadwinners instead of one.

While men’s median income declined slightly between 1970 and 1990, 
the median income for women rose nearly 50 percent. So household 
income rose.

While overall growth slowed — the economy expanded at least 5 
percent in a year just once in the 1980s, and not since — so did 
the rate at which Americans had children. Smaller families 
stretched family incomes further.

And as increases in education and the number of women in the work 
force reached a plateau, cheap and easy credit encouraged 
Americans to consume more. So did the “wealth effect” from the 
Internet-fueled stock market of the 1990s, and the real estate 
boom after that.

 From 1980 to 2005, personal savings as a proportion of disposable 
income shrank to 1.5 percent from 9.8 percent. All the while, 
politicians and voters grew accustomed to more government services 
than they were willing to pay for.

“The 2007-2009 collapse brought this era to an end,” Mr. 
Reischauer said. In the new one, ordinary Americans “are going to 
be very frustrated, because the political system can’t deliver the 
rising economic performance and living standards they’ve come to 
expect.”

Electoral Turmoil

That does not mean that Mr. Obama will lose his bid for 
re-election, though his approval rating in a New York Times/CBS 
News Poll last week remained 2 percentage points below the 50 
percent mark.

Nor does it mean that Republicans will lose their House majority, 
even though the same survey showed a record 82 percent voter 
disapproval of Congress.

Given the advantages of incumbency, even sluggish growth and a 
glacial decline in the 9.1 percent unemployment rate could 
preserve the current divided government.

“Americans traditionally are much more interested in the direction 
the economy’s going than in the absolute level,” said Mark 
Mellman, a Democratic pollster. “The absolute level can be not so 
good, unemployment can be relatively high, and incumbents can 
still get re-elected as long as things are moving in the right 
direction.”

But it does suggest that after “change” elections in 2006, 2008 
and 2010, stability is no longer the presumption.

Thus, most incumbents enter each contest on the defensive — from 
intraparty rebels in primaries if not from the other party in 
general elections. The opening for a third-party insurgency has 
grown wider should an independent candidate emerge with the right 
profile and financial backing.

“It’s a problem for everybody in office,” said Tom Davis, a former 
chairman of the National Republican Congressional Committee who 
describes himself as happily retired from the House.

“The political system, Republican or Democrat, over the last 
decade has delivered two failed wars, an economic meltdown, 20 
percent of homes underwater, stagnant wages,” he said. “Voters 
look at the political system as a whole as just not giving them 
anything.”





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