Krugman: Summer of Our Discontent

[RamboLiberal]

For the last few months there has been a running debate about the U.S. economy, more or less like this:

American families: "We're not doing very well."

Washington officials: "You're wrong - you're doing great. Here, look at these statistics!"

The administration and some political commentators seem genuinely puzzled by polls showing that Americans are unhappy about the economy. After all, they point out, numbers like the growth rate of G.D.P. look pretty good. So why aren't people cheering?

<snip>

American families don't care about G.D.P. They care about whether jobs are available, how much those jobs pay and how that pay compares with the cost of living. And recent G.D.P. growth has failed to produce exceptional gains in employment, while wages for most workers haven't kept up with inflation.

http://www.nytimes.com/2005/08/26/opinion/26krugman.html?pagewanted=print

[Jack Rabbit]

1. Stastistics mean nothing when stacked up against personal experience

A high tech worker who has been stocking shelves at WalMart since the unemployment checks stopped coming probably doesn't consider himself employed, even if the government does.

Ronald Reagan wasn't being a total demagogue when he appealed not to statistics but the voters' personal experience to gage the state of the economy. Are you better off now than you were four years ago? was a fair question; when he asked it in 1980, an awful lot of people honestly said No. Reagan then proceeded to accelerate the maldistribution of wealth in America, although during an economic expansion fewer people noticed.

Bush has accelerated the maldistribution and created a paper recovery. As Krugman points out, the benefits aren't trickling down. In reality, there is no such thing as a jobless recovery.

As for our high tech worker who is now stocking shelves at WalMart, the gurus of the new world economic order blame him for his plight. He priced himself out of the market. Why should an American firm pay him $75K/yr when it can get somebody in Mumbai to do the same work for $30K?

Is that how the Republicans are going to appeal to this fellow for his vote?

[phantom power]

2. Your post touches on something that has mystified me for a long time.

I don't know how it is in other countries, but here in America we seem to be averse to the concept of "pay-cut". It usually seems to play out as either you keep your job, or you get laid off. In theory, a company could keep all it's workers, but cut everybody's pay.

I wonder why the "pay-cut" solution is not used more often. As a guy who works for a living, I'd sure as hell rather take a cut in pay than lose my job outright.

[Jack Rabbit]

3. That's an interesting point

Of course, before unions were strong, employers simply cut pay when it suited them.

Labor unions theoretically were supposed to put an end to that, but there were cases where unions negotiated wage and benefit cuts if there was no other way to save jobs. Think, for example, of the auto workers in the seventies or airline employees at various times.

At least with a union acting as a collective bargaining agent, there is some accountability and it can be said that the workers, as a whole, have agreed to have their pay cut.

However, with the decline of unions, everybody's a free agent and the assumption is that one's pay is not cut but the employee is let go.

[RamboLiberal]

4. Probably cause there are other costs to keeping an employee

for instance health care. Cheaper just to dump you.

IMHO paycuts have been used a lot. Maybe not as much recently, but it was really the fashion back in the merger/acquistion days during Reagan/Bush.

During the Clinton years I thought employees had finally gained back a lot of power they lost during Reagan/Bush. But alas the SCOTUS and sheeple installed *.

[phantom power]

5. We had more power under Clinton, mostly because unemployment was low.

It was just a supply/demand situation favorable to employees. Now the shoe is on the other foot.

[Strelnikov_]

6. "But When Your Numbers Tell You That People Should Be . .

feeling good, but they aren't, that means you're looking at the wrong numbers."

Krugman would have made a damn good engineer or physical scientist. Too bad his talents had to go to being a damn good economist.

[Strelnikov_]

7. "The Last Good Summer"

is what I have been calling it.

I am afraid the economic, national security and energy tsunami that has been building is going to arrive this winter.

There are just too many things out there now that can derail what prosperity we have left.

[bemildred]

8. I think we have a year or two of slow decline left.

But nobody really knows. The thing is none of the players has
an interest in ending the game yet.