It may not be entirely fair to say that the siblings moved down in the world or that Duane and his sister “lost” one and two-thirds houses during their working years. But it is fair to say that the current generation of investors owns one and two-thirds more houses. They may not know how to get cash out of them right now, but investors will emerge from this recession owning more of America. The generation that includes Claire’s and Duane’s children will inherit less. They’ll probably earn less too.
Not Your Normal Recovery
I mentioned that during past recessions employers tried to maintain their plants and keep core workers. It was basically a holding operation. But right in the middle of the Great Recession, Big Box went ahead with a major time-and-motion study designed to get more work out of its warehouse hands in the future. The Boutique didn’t just put its saleswomen on short shifts. It used the recession as an opportunity to get rid of its entire commissioned sales staff. As business picked up, returning shoppers were welcomed back by low-paid part-timers.
Normally, salaries are low at the start of a recovery and gradually rise. They may rise “anemically” or “haltingly,” but the direction of recovery is up. But during the three years since the official end of the Great Recession in June 2009, median family incomes went down by 4.8 percent. Black family income declined by 11 percent.
In the spring of 2012 families with these lowered incomes increased their borrowing. This phenomenon was headlined on the financial pages as a sign of “returning consumer confidence.” Before the recession people borrowed to buy houses they couldn’t afford. In recovery they borrowed to buy cars and educations they couldn’t afford but felt they needed in order to find jobs. Is that a sign of consumer confidence or consumer desperation?
In 1929 the United States plunged from a peak of economic inequality into the Great Depression. A decade and a half of political and labor struggles resulted in significant redistribution, and we exited World War II on a leveler and more prosperous road.
By 2007 we’d reached another peak of inequality and plunged again. But unlike the Great Depression, the Great Recession didn’t narrow the wealth gap for even a moment. For all our bruises we merely went into a deep pothole and emerged on the same rough and dangerous road.
Wages are down, borrowing is up. Investors have emerged from a V-shaped recession, while the low line of wage earners’ L seems to extend indefinitely. That might mean that we’re in an unstable recovery with more potholes ahead. But there’s another way to interpret it.
When American companies began moving manufacturing jobs overseas in the 1970s, the idea was to make products more competitively for the American market. Today, American CEOs impress potential investors with their foreign sales figures and their plans to open new markets abroad. The companies that wrote us off as workers now write us off as consumers.
If you’re not a worker, not a consumer, and you don’t earn significant income from investments, then you don’t have much of a place in capitalist society. In the course of this recession millions more of us have slipped into that no place. Most of us will still manage to eat and keep our televisions connected. But it can’t be pleasant to live in a country whose elite have no regular use for us.
In Decline?
The phrase “jobless recovery” gained currency in the 1980s to describe what seemed then like an oxymoron. In the decades that followed, however, our recoveries routinely ended with a smaller percent of the population in the labor force. But once output is up and portfolio wealth has rebounded, the crisis is officially over. If you look at it that way, the horizontal line of our L is neither an extension of the Great Recession nor an abnormal-shaped recovery. That low line is the new norm.
The limbo bar will be set lower after each recession, and Americans will just have to contort themselves to squeeze under. This is inevitable, according to an increasingly mainstream assumption, because the U.S.A. is in decline.
Aspiring politicians don’t usually announce that their nation is past its glory days. I suppose that’s why reporters at a Bloomberg View breakfast in June 2012 perked up when former Florida governor Jeb Bush said matter-of-factly, “We’re in decline.” Columnists from both Slate and the New York Times took Bush’s almost parenthetical comment as a sign that this son of a president and brother of a president was no longer a contender. But while politicians rarely say it, our financiers and industrialists not only think but act upon it.
What a reversal! When I met Duane at the GI coffeehouse, we peaceniks were considered anti-American. We denied it then and I deny it now. Still, there were usually a few on any antiwar march who anticipated the empire’s decline and may even have gloated.
Today it’s not our protestors but our corporate leaders who anticipate American decline. And while they may not gloat, they certainly hedge their bets. The thinking seems to be “We’re in decline; there’ll be less to go around; I want as much as ever, so you’ll just have to take less.” Or, more primitively, “I’m getting mine while the getting is good.”
Are they right? Is our long-term decline inevitable? I tend to think not. But frankly I don’t know any better than they do.
I do know, however, that a nation doesn’t have to be the world’s supreme industrial power nor have its largest economy (however that’s measured) for its citizens to live comfortably.
During the decades when America bestrode the world like a Colossus, many nations peeked out between its legs—producing, buying, selling, and dividing the profits. The nations that divided them the most equally, the cradle-to-grave welfare states like Germany, France, and the Scandinavian countries, also had the most productive economies. During the Euro currency crisis (another top-down financial innovation), the nations with the greatest inequality happened to have the most fragile economies. Yet the fix so often prescribed for us is austerity for the masses and incentives for the rich. In other words, even greater inequality.
How many more recessions and jobless recoveries can we cycle through? How many times can we emerge with the rich richer, the poor poorer, and more of the middle class marginalized? Are there any inherent limits to inequality? What happens to a market economy when all the money winds up in one pocket?
It’s Time for a Jubilee
A child who’s beating his parents at Monopoly knows that the game will end if he gets all the money and all the properties. But the more he gets, the more he gets. If he wants to keep playing past his bedtime, he has to find a way to slip some money or houses over to the other sides of the board. But that’s not that easy to do, at least not if you stick to the rules. If he really wants to keep the game going, the child will have to cheat.
Throughout history, societies have faced economic paralysis when too much wealth wound up in too few hands, so they invented cheats to keep the game going. American Indian communities practiced periodic redistribution rites like the potlatch. Ancient Babylonian kings issued occasional debt cancellation decrees to counter the tendency for all the good land to fall into a few hands. The ancient Hebrews prescribed debt cancellation and land return every forty-ninth year. It was called a Jubilee.
For four decades a variety of corporate and governmental policies converged to transfer wealth from the poor to the rich. As a result, workers developed a need to borrow, and investors had an even more desperate need to lend.
This has played out as forty years of “innovation” in the financial world and as anxiety and exhaustion in the daily lives of American families who took on more jobs and more debt. It’s time for a Jubilee.
TO BE CONTINUED …
How do you end a book about people whose lives are still up in the air? None of the recession sufferers we spoke with in Down the Up Escalator were hungry, and only one was truly homeless. But most of them couldn’t be sure where or when they’ll work, how long they’ll be able to stay in their homes, whether they’ll ever be able to retire or to have a baby, and more generally what will happen next.
Uncertainty i
s painful to human beings (and to other species too, I suspect). I can’t quite bring myself to leave people I got to know personally—not to mention millions of others—in such distress. So I’ve created a Web site that we might call the ongoing book on the ongoing recession.
A book eventually gets printed. But no deadline stops me from getting back to individuals to find out how they’re getting along. Their updates, taken together, may also give us some idea how the country is getting along.
You can catch up with the folks you met in these pages at www.downtheupescalator.com.
INFLUENCES, DEBTS, AND LOVE
I subscribe to the Financial Times and the Left Business Observer—two surprisingly well-written publications. Despite their different takes on capitalism, they almost always come up with the same statistics about the current economy. Those are the figures I most often cite in these pages. The Financial Times is a salmon-colored paper available at newsstands. To subscribe to the Left Business Observer, go to: www.leftbusinessobserver.com.
While writing this book I attended Professor Richard D. Wolff’s monthly Update on the State of Global Capitalism (see www.rdwolff.com). Wolff’s forthright Marxist analysis highlighted the fatal folly of lending to workers instead of paying them sufficiently.
From the very start of the Great Recession, economists including Joseph Stiglitz and Paul Krugman described it as a crisis of insufficient demand. They struggled against a sea of pseudo truisms to show that the kindly policy response would also be the hard-nosed and effective one. Economists from URPE, the Union for Radical Political Economics, did the same in their circles.
None of the economists I’ve mentioned agree entirely with each other nor are they responsible for my conclusions. But this unusual collection of credentialed economists who happen to speak and write clearly gave me confidence in my own observations.
I feel a twinge of guilt whenever I use the figures 99 percent or 1 percent, because so many other people did the collective work of making statistics about inequality mean something. Thanks to the folks I spent time with at Liberty Square and to others who occupied Wall Street and elsewhere.
Despite the vicissitudes of the publishing industry, great books will always emerge somehow. But books like mine would not be written without passionate, literate, traditional editors like Gerald Howard and old-fashioned, on-your-side agents like Joy Harris. Thank you both for keeping on.
Friends who know my darling husband, Frank Leonardo, wonder why I don’t thank him for his support and inspiration the way other authors thank less deserving spouses. Frank loves me no matter what I do or don’t accomplish in the world, and he shows it. This unconditional love inspires me to sit comfortably on the couch for hours. Without it I might write more, I suppose. That’s O.K., though. I love him back the same way.
Salutations, in order of age, to Miriam Zissel, Chaya Mushka, Stefan, Menucha Rachel, August, Alice, and Rifka.
Also by Barbara Garson
Books
Money Makes the World Go Around: One Investor Tracks Her Cash Through the Global Economy
The Electronic Sweatshop: How Computers Are Transforming the Office of the Future into the Factory of the Past
All the Livelong Day: The Meaning and Demeaning of Routine Work
Plays
Mac Bird!
Going Co-op
The Dinosaur Door
The Department
Security
About the Author
BARBARA GARSON is the author of three books: All the Livelong Day: The Meaning and Demeaning of Routine Work, The Electronic Sweatshop: How Computers Are Transforming the Office of the Future, and, most recently, Money Makes the World Go Around: One Investor Tracks Her Cash Through the Global Economy. She has also written several plays, including Mac Bird! and the OBIE award–winning The Dinosaur Door, and her work has appeared in Harper’s, The New York Times, Newsweek, and The Nation.
For more information on Doubleday Books:
Visit: http://www.doubleday.com
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