The Audacity of No HopePosted: August 12, 2011
I don’t recall a time when political discourse has been so disconnected with reality. It’s like there’s some form of drug that’s been planted in the Potomac that’s created a stupor from which the media and politicians refuse to awake. They seem to think if they create the message, we will come. The truth is that most Americans are not quite that stupid. It’s really a shame that the looking glass of TV political discourse does not reflect Main Street. It reflects only Wall Street, K Street, and Madison Avenue.
How more out of touch can punditry and pols become? This is the reality that US households see.
Confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey.
The biggest one-week slump in stocks since 2008 and the threat of default on the nation’s debt may have exacerbated consumers’ concerns as unemployment hovers above 9 percent and companies are hesitant to hire. Rising pessimism poses a risk household spending will cool further, hindering a recovery that Federal Reserve policy makers said this week was already advancing “considerably slower” than projected.
“The mood is very depressed,” said Chris Christopher, an economist at IHS Global Insight Inc. in Lexington, Massachusetts. “Consumers are very fatigued and very uncertain. In the short term, people are going to pull back on spending.”
Estimates of 69 economists for the confidence measure ranged from 59 to 66.5, according to the Bloomberg survey. The index averaged 89 in the five years leading up to the recession that began in December 2007.
Here’s one example of the reality disconnect via Michelle Bachmann who has been cheering on the idea of a US default and had the temerity to suggest last night in the Ames Alternate Reality Debates that the S&P downgrade occurred because the debt ceiling was raised. The S&P downgrade stemmed from her brazen example–as well as those of her compradres–of a complete disconnect from economic reality. How much time was spent on discarded notions like gold standards and politically controlled central banks? This is the stuff that only dictators in banana republic adopt!
A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.
Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.
“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”
I mentioned in this morning’s post the brazen political rationale behind the President’s persistent message that it’s the deficit driving the bad economy. This too is a message that’s not based in reality. This Reich quote bears repeating here.
So rather than fight for a bold jobs plan, the White House has apparently decided it’s politically wiser to continue fighting about the deficit. The idea is to keep the public focused on the deficit drama – to convince them their current economic woes have something to do with it, decry Washington’s paralysis over fixing it, and then claim victory over whatever outcome emerges from the process recently negotiated to fix it. They hope all this will distract the public’s attention from the President’s failure to do anything about continuing high unemployment and economic anemia
Krugman–who shall now be known as the depressed one--made similar claims today in his NYT op-ed. He tells us that we should be angry. I think he needs to get out of the confines of his New York condo or his Princeton office, because we are angry out here in the great fly over. I’d say if he went to the right parts of New York City or New Jersey, he’d likely find the anger there too.
But there’s another emotion you should feel: anger. For what we’re seeing now is what happens when influential people exploit a crisis rather than try to solve it.
For more than a year and a half — ever since President Obama chose to make deficits, not jobs, the central focus of the 2010 State of the Union address — we’ve had a public conversation that has been dominated by budget concerns, while almost ignoring unemployment. The supposedly urgent need to reduce deficits has so dominated the discourse that on Monday, in the midst of a market panic, Mr. Obama devoted most of his remarks to the deficit rather than to the clear and present danger of renewed recession.
What made this so bizarre was the fact that markets were signaling, as clearly as anyone could ask, that unemployment rather than deficits is our biggest problem. Bear in mind that deficit hawks have been warning for years that interest rates on U.S. government debt would soar any day now; the threat from the bond market was supposed to be the reason that we must slash the deficit now now now. But that threat keeps not materializing. And, this week, on the heels of a downgrade that was supposed to scare bond investors, those interest rates actually plunged to record lows.
What the market was saying — almost shouting — was, “We’re not worried about the deficit! We’re worried about the weak economy!” For a weak economy means both low interest rates and a lack of business opportunities, which, in turn, means that government bonds become an attractive investment even at very low yields. If the downgrade of U.S. debt had any effect at all, it was to reinforce fears of austerity policies that will make the economy even weaker.
So how did Washington discourse come to be dominated by the wrong issue?
When political gamesmanship and legal outcomes funded by corporations and not votes by people become the central goal of policy, a democracy not only loses its authenticity, it ceases to exist. People have been voting for gridlock and throwing the bums out only to create a gridlock that is bringing down the economy and bums so virulent that we can no longer stand for either. People like Allen West, Michelle Bachmann, and Rick Santorum shouldn’t even be given keys to a car, let alone the country. Leaders that would rather distract people from reality than make actual policy decisions–like Obama–need to be called out for their cynical political ploys; not re-elected. How much more of this can our economy and democracy take before we completely collapse into something worse than a banana republic?
Peter Daou has written an excellent analysis that talks about how this toxic environment has brought the country to its knees. He has a list of exactly how far down we’ve gone on the list of countries for many things. Today’s new number is 23. We used to rank 6th in infrastructure, we have now fallen to number 23. Sweden tops the list of countries for global technology and net work readiness. The US has moved to 5th place behind Sweden, Singapore, Finland and Switzerland. This is what we’re supposed to be good at? Right? Information Technology? The only thing we seem to excel at any more is perpetual war.
The basic question is then, what will it take to get these people to listen? Well, in the case of Michelle Bachmann and reality-deniers, there’s no hope there. They cling to religious myth and free market fairy tales over science, economics, and reality. In the case of those who cynically change the political discourse to “distract the public’s attention”, I’m not sure. What do you do with the power hungry who are more driven by campaign contributions and donor concerns, than votes and people? This toxic political environment is bringing toxic results. In other parts of the world, there are protestors risking their lives for real change. People are being gunned down in Syria as we speak. Rioters in England–fed up with no future and no jobs–are burning things to the ground.
Daou points to Bob Hebert’s farewell column for perspective. It’s worth reviewing.
The U.S. has not just misplaced its priorities. When the most powerful country ever to inhabit the earth finds it so easy to plunge into the horror of warfare but almost impossible to find adequate work for its people or to properly educate its young, it has lost its way entirely.
Nearly 14 million Americans are jobless and the outlook for many of them is grim. Since there is just one job available for every five individuals looking for work, four of the five are out of luck. Instead of a land of opportunity, the U.S. is increasingly becoming a place of limited expectations. A college professor in Washington told me this week that graduates from his program were finding jobs, but they were not making very much money, certainly not enough to think about raising a family.
There is plenty of economic activity in the U.S., and plenty of wealth. But like greedy children, the folks at the top are seizing virtually all the marbles. Income and wealth inequality in the U.S. have reached stages that would make the third world blush. As the Economic Policy Institute has reported, the richest 10 percent of Americans received an unconscionable 100 percent of the average income growth in the years 2000 to 2007, the most recent extended period of economic expansion.
Americans behave as if this is somehow normal or acceptable. It shouldn’t be, and didn’t used to be. Through much of the post-World War II era, income distribution was far more equitable, with the top 10 percent of families accounting for just a third of average income growth, and the bottom 90 percent receiving two-thirds. That seems like ancient history now.
The current maldistribution of wealth is also scandalous. In 2009, the richest 5 percent claimed 63.5 percent of the nation’s wealth. The overwhelming majority, the bottom 80 percent, collectively held just 12.8 percent.
This inequality, in which an enormous segment of the population struggles while the fortunate few ride the gravy train, is a world-class recipe for social unrest. Downward mobility is an ever-shortening fuse leading to profound consequences.
What profound consequences await a country where the leaders find these extraordinary levels of income inequality, infrastructure ruin, and joblessness an acceptable status quo? Will parts of the US eventually resemble West London or Damascus where disenfranchised, jobless, and hopeless people resort to measures beyond desperation? These events are truly the results of the audacity of no hope. It’s easier for the media blame the dogs fighting for scraps under the table than to look at the table top and to call out the masters that have stacked the decks in their favor so that the meat never hits the floor. Can simply living in a land of economic fairy tales ala Bachmann and trust fund babies like Romney prevent the US from seeing similar unrest? Corporations are people too? Really? Can giving multiple speeches distract the jobless from their plight or blaming social security recipients and the long term unemployed keep the electorate in a stupor of false hope? I’d say that one check of polls and the consumer sentiment index provides a resounding no answer.
I have never seen a period of time when the issues are so clear, the answers are so obvious, and the political and punditry class appear so clueless. Something better change fast before the growing restless in our undeveloping nation turns into something more than disenchanted polling numbers and falling indexes. How much more disconnect will this country’s citizens take?