Whither the US economy?

Let’s start off with an initial factoid: according to census data, the median household income in America has been stagnant for twenty five years, rising only 0.4% between 1990 and 2014 (in constant dollars; $51,735 in 1990, $51,939 in 2013).  Wealth has increased, as the economy and the population both grew, but it has all been sucked up by the top 1% of the top 1%, that is to say the top 0.01%. 

While people like those in the Occupy movement are troubled by this, the increasing income disparity appears to be of less concern for most Americans.  One reason for this might be the fact that in the 2000’s, moribund household incomes were masked by a borrowing binge.  People used their home equity, helped by creative financing from lending institutions, to live in bigger houses than they could afford and buy more amenities than their budget could support.

But then the bubble burst in 2008 (during, it should be noted, the Bush administration, not on Obama’s watch; a recent poll found that 50% of Americans surveyed said that the recession was caused by President Obama).  Some superficial reforms were adopted, but nothing like what happened after the Great Depression hit.  Despite massive fraud in the lending industry no banking executives were sent to prison.  The economy slowly got better despite the federal government’s commitment to do as little as possible.

So where are we now?  Incomes are still where they were three decades ago, so what is distracting the proletariat?  Now there is a growth industry in car registration loans, allowing people to live slightly less beyond their means than they could with home loans.  The news media pronounces itself relieved when the unemployment rate goes down to a level that would have been unacceptably high in the 1980’s (the official unemployment rate is 5.6%, but when discouraged workers and those employed part-time who want full-time work are factored in the rate is 11.2%).  Nearly one-fourth of California’s population (23.8%) lives below the more extensive definition of the poverty line, and the only people who seem concerned by that fact are the poor, and well who listens to them?

The general state of things is reflected in our advertising.  A commercial with Montel Williams declares that a woman who needs a payday loan to pay her utility bills is a good mother and not fiscally irresponsible.  Commercials for sites like Quibids tell people they can buy big screen TV sets for under $50, just don’t ask why anyone would sell a TV set for so little.  We rely on retailers like Amazon and Walmart to provide low-cost goods by using cutthroat business tactics we'd rather not know about.  Maybe it is the TV programs I watch, but I find there are an amazing number of commercials for bankruptcy protection, defenses for tax non-payment, and schemes to get something for nothing, from flipping houses to the state lottery.

One reaction to median incomes not going up for twenty-five years is the movement to raise the minimum wage.  If economic growth can’t pull median incomes up from above, maybe raising the minimum wage can push it up from below.  I may be happy making whatever I am making (even if I haven’t gotten a raise in ten years), but if I find out the counter person at McDonald’s is making more, I’m going to agitate for a pay increase, and if I don’t get it I might consider singing “You deserve a break today,” for a living.

What is the answer?  Let me quote the movie Network--not the most famous quote from that movie, but a line that came before it.   Before Howard Beale got to, “I’m as mad as Hell and I won’t take it anymore,” he said that he didn’t know what the answer was, but “All I know is that first you’ve got to get mad.” As long as voters are willing to accept no growth in median household income for twenty-five years, things won’t change.  As long as we as a society are okay with the unemployment rate as long as it’s below 10%, nothing will change.  As long as politicians know they can get re-elected by telling voters that during a recession government must “tighten its belt” just like Herbert Hoover used to say, we're on a treadmill to nowhere (in fact we’ll be going backwards).

After the Great Depression, it was felt that only a radical restructuring of the role of government could avoid the collapse of the capitalist US economy.  After the Great Recession, there was no attempt to correct the root cause of the crisis, and Congress is eagerly repealing the meager reforms that were passed.  Meanwhile voters seemingly accept that what is good for billionaires must be good for them, even while the quality of their lives diminishes.  In the words of Frank Underwood on the TV show House of Cards, “Democracy is overrated.”