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In trying to explain the rise in the unemployment rate from 3.2% in 1929 to 24.9% in 1933 the economic mainstream of the day was forced by the limitations of its theories to conclude that one-quarter of the U.S. workforce had quit their jobs to go on vacation. This was in the midst of the worst economic downturn of the twentieth century. As late as 1938 – 1939, ten years after the stock market crash that announced the onset of the Great Depression, New York was still considered the global center of finance capitalism. And while the wealth share of the very richest began to decline in the early 1930s, it didn’t reach its (temporary) low point until the late 1940s.
At the time Barack Obama entered office in 2009 Democrats controlled both houses of Congress and the White House. The U.S. economy was in free-fall and financial markets were in chaos in circumstances eerily reminiscent of that earlier episode. With the template of FDR’s New Deal to work from and an electorate looking for bold action to restore the economy, Mr. Obama put forward a milquetoast, quasi-Republican stimulus ‘package’ and went about restoring the fortunes of Wall Street and the reigning plutocracy and their agents, corporate executives, who had sunk the economy. When Mr. Obama had political support for rebalancing the economy in favor of the middle class and poor he chose to keep it firmly in the hands of the very rich.
Graph (1) above: the modern version of the Great Depression era explanation of unemployment is ‘demographics,’ the claim that in 2008 older workers retired en masse coincident with the worst economic downturn since the 1930s. In fact, the percentage of employed workers over the age of fifty-five is higher now than it was when the Great Recession began in 2007. It is younger workers who have borne the brunt of Mr. Obama’s economic malaise. And while Mr. Obama didn’t create the circumstances that led to economic crisis, he restored the forces that created it while studiously ignoring the plight of the unemployed. Source: St. Louis Fed.
When Mr. Obama claimed in his most recent State of the Union (SOTU) speech that the U.S. economy has recovered from the Great Recession he joined Western economists in locating it well away from where most actual human beings live. It isn’t that statistics to support the claim can’t be found. Like any measures, they only reveal what they are intended to reveal. By other measures there has been little recovery from the Great Recession for most people. And it was only after Republicans had regained both houses of Congress that Mr. Obama proposed his ‘progressive’ economic agenda making it the political equivalent of the Republicans’ 54 votes to repeal Obamacare that were never intended to accomplish the task.
Given the particular economic circumstances that Mr. Obama inherited he ‘owns’ the state of the U.S. economy to a greater degree than any other U.S. President in recent history. The oft made contention that he got all of the fiscal ‘stimulus’ that was politically feasible to restore the broader economy runs headlong into the tens of trillions of dollars in direct and indirect aid that he and his Treasury Secretary Timothy Geithner and chief economic advisor Larry Summers made available to Wall Street banks. And while this is yesterday’s news to most readers, what makes it relevant is that Mr. Obama’s claim of economic recovery conflates the full restoration of Wall Street and the already wealthy with the other 99.9% of us have who have seen little evidence of recovery.
Graph (2) above: the statistics that report economic recovery like GDP (Gross Domestic Product) are premised on the Western economists’ conceit that ‘distribution doesn’t matter.’ In this view, if one person becomes wealthy to a greater extent than 319,999,999 people are made poorer then we all benefit. And in fact, in terms of income and wealth, this is only a slight overstatement of what has taken place. While the trend preceded him, since Mr. Obama took office a few thousand very wealthy families have seen their fortunes restored while both incomes and wealth fell off of a cliff in 2008 and have yet to recover for the overwhelming majority of the population. Of note is how many more zeroes follow the wealth of the very rich (left scale) than that of the ‘bottom’ ninety percent of us (right scale). Source: Emmanuel Saez.
The claims of economic recovery being made by Mr. Obama have the effect of (1) diminishing the political necessity of resolving the economy for the vast majority for whom it remains unresolved, (2) redefining economic normalcy in terms that exclude this majority and (3) posing social failure as personal economic failure, as failed ‘economies of the self.’ As the Great Depression unfolded the social nature of the economic catastrophe became clearer. Today, with over half of public school children now living in poverty, forty-seven million people receiving food assistance and millions of adults either unemployed or underemployed, the term ‘recovery’ is conspicuously unrelated to economic wellbeing.
Mr. Obama’s SOTU speech is being framed by his supporters as strategic and symbolic when the more straightforward explanation is that he is serving his economic sponsors by misleading his nominal constituency with bluster and bullshit. As strategy, the argument that Mr. Obama’s proposal to raise taxes on the wealthy will pit Congressional Republicans against ‘Main Street’ requires believing that most Americans don’t already know that Mr. Obama in particular, and the Democrat Party in general, are wholly owned subsidiaries of Wall Street. As symbolism, Mr. Obama had a real opportunity to go beyond the symbolic and get ‘progressive’ policy proposals enacted when he first came into office. That he waited until it is impossible to get them enacted to propose them strongly suggests that he doesn’t want them enacted.
Graph (3) above: the average length (duration) of unemployment illustrates that there is something fundamentally different about the Great Recession than other post-Great Depression recessions. When combined with the decline in the proportion of the population that is working (Graph (1) above), the much touted decline in the unemployment rate is explained in large measure by people giving up looking for jobs because they can’t be found. Both Graphs (1) and (3) contain data up to the present illustrating a labor market catastrophe that shows few signs of abating. Units are weeks of unemployment. Source: St Louis Fed.
What is implied is the distance between Mr. Obama’s words and his actual policies is contempt for the very idea of governance. From FDR through the Presidency of Richard Nixon there existed the idea that government could solve social problems. The much-despised Nixon created the EPA (Environmental Protection Agency) and put forward economic policies that are far to the left of any Mr. Obama ever considered. There was no hesitancy on Mr. Obama’s part to apply the full array of government resources to the bailouts of Wall Street and the bloated, corrupt (management, not workers) automakers. And the bailouts were claimed to resolve a failure of markets, much as widespread unemployment has been understood to be since the Great Depression.
What abandonment of the idea of governance means for the rest of us is (1) the economic forces in whose service the government now works are intact and in charge of official policies and institutions and (2) ‘we,’ as those outside of this corporate-state nexus, are on our own with respect to economic, political and social resolution. This isn’t to abandon the frame of the state, but rather to recognize that for it to again serve the public purpose it must be re-taken. What is implied in Mr. Obama’s capacity to occasionally articulate constructive policies while doing their opposite is that he understands on some level what needs to be done to bring about economic resolution and that he has absolutely no intention of acting on that understanding. Mr. Obama is, and has always been, a foil against the public interest.
Ultimately Mr. Obama is merely a care taker for the economic interests that he represents. But his success as a politician provides insight into the utter moral and intellectual bankruptcy of the political process he sits atop. The tragedy for the American people is that there are real problems in dire need of social resolution. Political tipping points are difficult to see in real time. But with Jeb, Mitt and Hillary on the horizon, the stakes have been sequentially raised for some forty years now. Another world is possible. But it is only possible after the existing powers that be have been displaced. With Mr. Obama as evidence, that isn’t going to happen at the ballot box.
Rob Urie is an artist and political economist. His first book, Zen Economics, is written and awaiting publication. A sampling of Rob’s art can be found here.