Op-ed: Bye-Bye, Bush Boom
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| Tue, 07-06-2004 - 5:11pm |
http://www.nytimes.com/2004/07/06/opinion/06KRUG.html?hp
When does optimism — the Bush campaign's favorite word these days — become an inability to face facts? On Friday, President Bush insisted that a seriously disappointing jobs report, which fell far short of the pre-announcement hype, was good news: "We're witnessing steady growth, steady growth. And that's important. We don't need boom-or-bust-type growth."
But Mr. Bush has already presided over a bust. For the first time since 1932, employment is lower in the summer of a presidential election year than it was on the previous Inauguration Day. Americans badly need a boom to make up the lost ground. And we're not getting it.
When March's numbers came in much better than expected, I cautioned readers not to make too much of one good month. Similarly, we shouldn't make too much of June's disappointment. The question is whether, taking a longer perspective, the economy is performing well. And the answer is no.
If you want a single number that tells the story, it's the percentage of adults who have jobs. When Mr. Bush took office, that number stood at 64.4. By last August it had fallen to 62.2 percent. In June, the number was 62.3. That is, during Mr. Bush's first 30 months, the job situation deteriorated drastically. Last summer it stabilized, and since then it may have improved slightly. But jobs are still very scarce, with little relief in sight.
Bush campaign ads boast that 1.5 million jobs were added in the last 10 months, as if that were a remarkable achievement. It isn't. During the Clinton years, the economy added 236,000 jobs in an average month. Those 1.5 million jobs were barely enough to keep up with a growing working-age population.
In the spring, it seemed as if the pace of job growth was accelerating: in March and April, the economy added almost 700,000 jobs. But that now looks like a blip — a one-time thing, not a break in the trend. May growth was slightly below the Clinton-era average, and June's numbers — only 112,000 new jobs, and a decline in working hours — were pretty poor.
What about overall growth? After two and a half years of slow growth, real G.D.P. surged in the third quarter of 2003, growing at an annual rate of more than 8 percent. But that surge appears to have been another blip. In the first quarter of 2004, growth was down to 3.9 percent, only slightly above the Clinton-era average. Scattered signs of weakness — rising new claims for unemployment insurance, sales warnings at Target and Wal-Mart, falling numbers for new durable goods orders — have led many analysts to suspect that growth slowed further in the second quarter.
And economic growth is passing working Americans by. The average weekly earnings of nonsupervisory workers rose only 1.7 percent over the past year, lagging behind inflation. The president of Aetna, one of the biggest health insurers, recently told investors, "It's fair to say that a lot of the jobs being created may not be the jobs that come with benefits." Where is the growth going? No mystery: after-tax corporate profits as a share of G.D.P. have reached a level not seen since 1929.
What should we be doing differently? For three years many economists have argued that the most effective job-creating policies would be increased aid to state and local governments, extended unemployment insurance and tax rebates for lower- and middle-income families. The Bush administration paid no attention — it never even gave New York all the aid Mr. Bush promised after 9/11, and it allowed extended unemployment insurance to lapse. Instead, it focused on tax cuts for the affluent, ignoring warnings that these would do little to create jobs.
After good job growth in March and April, the administration declared its approach vindicated. That was premature, to say the least. Whatever boost the economy got from the tax cuts is now behind us, and given the size of the budget deficit, another big tax cut is out of the question. It's time to change the policy mix — to rescind some of those upper-income cuts and pursue the policies we should have been following all along.
One last point: government policies could do a lot about the failure of new jobs to come with health benefits, a huge source of anxiety for many American families. John Kerry is right to make health care a central plank of his platform. I'll analyze his proposals in a future column.


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James
janderson_ny@yahoo.com
CL Ask A Guy
Gettingahandle
Ignorance is Nature's most abundant fuel for decision making.
I do not disagree with Adam Smith, I certainly would like to see businesses that embraced ethics. Ethics, may be taught in business school, but it wasn't when I went to school. That's when I learned how naieve I was. My intent has been to tell workers about to the fallacy that these corporations promote. I must say that I have not been successful--people still expect businessmen to live up to the fantasy. My point has always been, you have to look out for yourself--you can't expect employers to be fair. Even my son didn't believe me, he learned a bitter lesson, but he still considers that boss an exception instead of the rule.
I think this use to be the nature of the beast--now, people have found ways to tilt the system in their favor. This is why we need government to be an advocate for the people, not the corporations.
I don't know about you, but I'm tired of being trickled on.
But my original post placed some constraints on how it would be practiced in a moral world.
I get the impression that the phrase is associated with a lot of negative baggage. But, over-regulation and high taxation is not the answer either. If you run a business, you probably are aware of the demands that municipalities, states, and federal regulations and taxes place on a business owner. It's a wonder there's time for the owner to provide the goods and/or services! I also know that businesses can be stifled by taxes, regulations and other factors (like health insurance and pension plans). Look at what happened to the concept of communism.
James, I disagree with you about the value of saving. Our economy currently relies on consumer spending but it's a bubble. When people spend beyond their means on a large enough scale, the bubble eventually pops. At one time, pre-Greenspan, saving was considered a virtue, not a vice. I grew up as the daughter of Depression era parents who knew well the perils of paying and playing on margin. My father acquired a credit card, for the first time, several years ago, mostly so he could use it online if he wanted. He's 81. And frankly, I am getting very weary of living in a society that sells, sells, sells so relentlessly. Seems to me that the concept of buying happiness is morally bankrupt--but that's probably a whole 'nuther thread.
I would also argue that not all rich people save their money. At least some spend it just as fast as it comes in though the extremely rich are probably not in that category. Your example of the percentage of money that flows up was interesting and may well be how the trickle effect works now. But you ignored my clauses about how it could work in a "kinder, gentler" world. Don't you dare throw-up! If the words meant more than just a political phrase, it COULD work!
And were you quibbling about "business having a morality" as opposed to the people who run businesses having a set or moral values. Or are you saying that business is immoral by nature?!
Gettingahandle
Ignorance is Nature's most abundant fuel for decision making.
"She was totally deflated when she found out it was an advance"
I bet many were unpleasantly surprised. Plus didn't they have to claim it as a tax rebate
There's no contradiction--a happy employee is usually a productive employee. A productive employee makes money for the company. It can be a symbiotic relationship not a predatory/exploitive one.
It's interesting--you know I have a son in the military and maybe you're aware that my husband was also military, though he was an officer and our son is enlisted. And maybe you know remember that I was in ROTC as well. In many ways, being an "occifer" in the military is good training for the business world. The first priority of a leader is to accomplish the mission. The second priority is to take care of the troops. Demoralized, strained troops aren't going to be ABLE to accomplish the mission! Ditto employees.
And if employees "demand" a share of the wealth, it will set up an adversarial relationship which is hardly a good basis for day to day harmony or overall well-being. That happened with many of the unions and what eventually happened was that business owners outsourced their work overseas and the union members lost their jobs--do you remember the old ILGW? I haven't seen their tag in garments for a number of years now. That's hardly an effective solution!
"False paternalism" is an interesting phrase. What do you see as false paternalism?
Gettingahandle
Ignorance is Nature's most abundant fuel for decision making.
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