The Surreal World of The Villagers vs. The Nightmare Reality of the 99 Percent

This is going to be sort of a cross between a morning reads post and a rant.

Yesterday, Dakinikat and I were talking about how lately it seems like it’s hard to find things to blog about because there’s nothing really new happening in the political world. Sure, there’s news coming out of DC, but it’s pretty much the same thing every day. The Republicans hate President Obama and continue to do their best to block everything he tries to do. Obama sort of sounds like a liberal at times, but he’s still offering that “grand bargain” to the Republicans who hate his guts and still letting down the voters who elected him in the process.

Republicans pretend to obsess over the federal deficit and debt and economic writers like Paul Krugman and Robert Reich repeatedly try to explain that the problem with our economy right now isn’t the deficit or the debt, but the high unemployment and stagnating wages that keep the lower 99 percent of us from spending our money as freely as we’d like.

Lugubrious Game, by Salvador Dali, 1929

As I looked around for Thursday reads last night, I began to feel as if I’d entered a surreal alternative reality–almost as if I had awakened to find myself in a Salvador Dali painting in which everything seems crazy and nothing ever changes. The only breaks from the tedium of the Village come when there’s news of another shooting and the media covers it for a few days–like the recent obsession with ex-cop “Rambo” Christopher Dorner.

Now that Dorner has gone down, there’s another high-profile shooting for the media to focus on. USA Today reports: Olympic runner Oscar Pistorius charged with murder.

South African police on Thursday said they would charge Olympic athlete Oscar Pistorius with murder after his girlfriend was shot and killed at his home earlier Thursday morning.

The circumstances of the incident are still unclear but police in South Africa said they would oppose bail when the Paralympic gold medalist appears in court Friday. The hearing was scheduled for Thursday afternoon but was delayed to give forensics investigators time to do their work, the Associated Press reported.

Police in South Africa do not name suspects in crimes until they have appeared in court but police spokesperson Brigadier Denise Beukes said that Pistorius was at his home after the death of the victim and that “there is no other suspect involved,” The Associated Press reported.

Britain’s Sky News first named the woman as Reeva Steenkamp, a model and recent contestant on Tropika Island of Treasure 5, a South African reality TV show. A talent agent for Steenkamp said she was the victim. However, police have yet to confirm the woman’s relationship with the Olympic and Paralympic athlete.

South African Olympic athlete Oscar Pistorius and Reeva Steenkamp attend an awards ceremony in Johannesburg, South Africa last November.(Photo: Lucky Nxumalo, AP)

Meanwhile, as the Villagers ignore the need for gun safety legislation and argue about the deficit and the supposed out-of-control government spending that isn’t actually happening, the rich get richer and the lower 99 percent get screwed. Case in point, please read this piece in The New Republic by Timothy Noah that the Villagers will either ignore or mock: The One Percent Gobbled Up the Recovery, Too. In fact, it put the 99 percent back in recession.

Emmanuel Saez, the Berkeley economist who (with Thomas Piketty, an economist at the École d’economie de Paris) first mapped the enormous 34-year run-up in income share for America’s top 1 percent, came up last year with a statistic that was widely quoted by people who care about rising income inequality. In 2010, the first year of economic recovery after the 2009-2010 recession, 93 percent of all pre-tax income gains went to the top 1 percent, which in that year meant any household making more than about $358,000. This was, I quipped at the time, a members-only recovery. No 99-percenters need apply.

Saez has now updated (PDF) this statistic to include 2011. When you look at the economic recovery’s first two years, the top one percent (which by 2011 meant any household making more than about $367,000) captured 121 percent of all pre-tax income gains.

How is it even possible for the one percent to capture more than 100 percent of all income gains since the last recession? Looked at from one point of view, it’s not. It is enough to say that in 2010 and 2011 all of the recovery went to the one percent. If you were in the bottom 99 percent, as by definition nearly all of us are, you didn’t see a dime of that recovery.

What happened to the rest of us then?

Over 2010 and 2011, it saw, on average, a slight net decline in pre-tax income of 0.4 percent. This “negative growth” is what, at least theoretically, boosts the one percent’s share of income gains from 100 percent to 121 percent. If you think of income distribution as a Pac-Man game, with the one percent as Pac-Man, imagine your Pac-Man consuming all the pac-dots in one game and then somehow, after you’ve left the arcade, gobbling up some of the pac-dots in the next player’s game too. Another way to put it is that the one percent didn’t just gobble up all of the recovery during 2010 and 2011; it put the 99 percent back into recession.

Sadly, airhead talking heads like Joe Scarborough will continue to have much more influence in the Village than actual economists like Emmanuel Saez and real reporters like Timothy Noah.

Speaking of airheads, after the SOTU speech on Tuesday night we had the pleasure of watching baby-faced Florida Senator Marco Rubio make a complete ass out of himself on the TeeVee. Hullabaloo blogger David Atkins, who–unlike Rubio–is somewhat knowledgeable about economics, tried to explain to the the latest “great Republican hope” (before his speech) that not only do deficits not cause unemployment, but also our federal deficit is steadily decreasing. Of course no reader of Dakinikat’s posts needs any of this explained. But I still want to link to Atkins’ concluding paragraphs.

Why is the deficit shrinking? Mostly, because of the pickup in economic activity. The elimination of some of the tax cuts for the wealthy will also help. The Affordable Care Act will also be taking a bite out of our extravagant healthcare costs.

4. None of this has any impact on unemployment. Generally speaking, there are two kinds of jobs: public sector and private sector. Even though the private sector is doing better, public sector jobs are still declining due to conservative policies theoretically designed to reduce deficits. Private sector jobs, meanwhile, depend on consumer demand–not corporate profit. American corporations are experiencing record profits, but they aren’t hiring because there’s not enough middle-class consumer demand for them to hire workers.

4a. The lack of consumer demand leading to poor private-sector job growth in spite of record profits has nothing to do with deficits or uncertainty in the investing climate. It has everything to do with income inequality and economic insecurity among the middle and lower classes.

4b. The obsession over deficits among conservative politicians is directly responsible for public sector job cuts that are helping to drive up the unemployment rate and kill consumer demand.

All of which means that politicians like Marco Rubio who insist that the deficit is directly hurting employment are either so ignorant of economics that they shouldn’t be handling public policy, or so cynically manipulative that they shouldn’t be handling public policy.

And no “reporter” in Washington or elsewhere should be covering Rubio’s statements without providing a basic lesson in macroeconomics as context for his fact-free response.

Actually, Village idiots “reporters” like Chris Cillizza pretty much ignored whatever substance there was in Rubio’s speech and approvingly reported on the personal history that Rubio discussed. But beforehand, Cillizza wrote that Obama should focus on deficit in State of the Union

It’s the deficit, stupid. A look back at Obama’s first three State of the Union speeches, plus the address to a joint session of Congress in 2009, suggests a similar thematic pattern: He starts with the economy, moves to education and then, in the middle section of the speech, addresses the deficit. (The exception was in 2011, when Obama began his speech with a riff on partisanship.) In 2012, Obama spent just five minutes on the debt — less time than he spent on partisanship (51/2 minutes) or foreign policy (six minutes).

He should flip that script in this State of the Union and spend the bulk of his time talking about the deficit. Here’s why: In January 2009 polling by Pew Research Center, 53 percent of respondents said reducing the deficit was a “top priority.” In January 2013, that number soared to 72 percent, by far the biggest increase of any issue over that time. (By contrast, 85 percent said strengthening the economy was a top priority in 2009, while 86 percent said so at the start of this year.)

The debt is the issue of the day, and one that, if Obama is beginning to eye his legacy as president, could go a long way toward shaping how history remembers him. Make this speech a deficit speech.

For Cillizza and his ilk, “the deficit” (or “the debt,” which he doesn’t seem to understand is not the same thing) is “the issue of the day,” and unemployment and the other struggles of the 99 percent are completely invisible. Oh, and by the way, Dick Cheney loved Rubio’s speech.

I could go on and on like this, but I’ll stop now. I just wanted to rant for a bit in hopes of pulling myself out of my current malaise. I’ve realized finally that there isn’t going to be any real change as because the Villagers (often including the President) are just going to continue focusing on cutting spending and ignoring the problems facing those of us who live in the real world.

If you stayed with me this far, thanks for letting me rant! Now, I welcome your links to whatever you are reading and blogging about today.