Sunday, June 10, 2007

Bush's Gilded Age

By Cernig

Ezra Klein is scathing today about this particular bit of idiocy from conservative op-ed writer George Will:
How do you exclaim, as Hillary Clinton does, that today's economy is "like going back to the era of the robber barons" and insist that the nation urgently needs substantial tax increases, in the face of these facts:

In the 102 quarters since Ronald Reagan's tax cuts went into effect more than 25 years ago, there have been 96 quarters of growth. Since the Bush tax cuts and the current expansion began, the economy's growth has averaged 3 percent per quarter, and more than 8 million jobs have been created. The deficit as a percentage of gross domestic product is below the post-World War II average.
Ezra correctly notes the logical ineptitude of this - that growth via increasing population and thus an increasing appetite has nothing to do with how much of the profits of that growth the "robber barons" are suckling out of the economy like fat capitalist piglets.

Kevin Drum, meanwhile, has some figures on just how much suckling is going on.
Two professors — Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California, Berkeley — have found that the share of gross personal income of the top 1 percent of American earners rose to 17.4 percent in 2005 from 8.2 percent in 1980.

....It is commonplace to hear that the current set of arrangements and policies is the only possible way the economy can work, given trends like the rise of China and global economic integration. As Professor Levy said, "That's a very convenient argument for people to make if they're doing very well."
But how about the rest of us, the ones that the current system doesn't do so well by?

Here's what we're facing (H/t Kat):
In the past year, food prices have increased 3.7 percent and are on track to jump by as much as 7 percent by year's end. The current increase is more than double the 1.8 percent jump seen the year before, according to the consumer price index.

...Prices are rising in each grocery aisle. In April, eggs cost 18.6 percent more than a year ago. Whole chicken prices increased 7 percent. Bread is up nearly 6 percent and beef steaks up 5.5 percent.

...many price increases haven't made their way to all stores yet, and many stores are absorbing the costs rather than passing them on to customers. "Right now the margins are simply being squeezed," he said.

"But that's not going to last forever," said Wells Fargo & Co. agricultural economist Michael Swanson, predicting no end in sight to food inflation. Swanson forecasts that food inflation will have risen at a rate not seen since 1990, when prices ended the year 5.8 percent higher.
The 'robber-barons" can afford that kind of increase, but the rest of us cannot. It will have an inevitable knock-on effect on other sectors of the economy.
Because food is a category that consumers can't cut from their budget, it's the cups of coffee, the entertainment dollars, and the clothes-and-jewelry budget that are scaled back first. In April, retail sales fell 0.2 percent, the first decline in seven months, according to the Commerce Department. Yet consumer confidence rebounded in May, mainly because of to consumers' cautiously optimistic view of business conditions. Still, a stew of high gas prices, food costs , a slumping housing market and adjusting mortgages could be a recipe for trouble for strapped Americans with little wiggle room in their budgets.
If CEO's are writing themselves wage hikes that now have to be expressed as a percentage of their company's profits to be comprehensible (the numbers having grown so large) while ordinary Americans are struggling to afford eggs...then yeah, the Bush administration has brought the nation back to the bad old days when the have-nots were ignored by the have-more-and-more-and-mores. Ezra even has a graph to prove it.

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