[Marxism] America's economic vulnerability
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
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
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
“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
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
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
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
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
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