The past always looks better (we were younger, better looking, smaller waistlines, etc.) The resolved worries of yesterday always appear easier than the unresolved worries of today. You might say that hindsight wears rose-colored glasses.

Yeah, but this article makes one of the huge mistakes that the current crop of economic apologists make all the time and basically renders their analysis completely useless and biased.

Mr Easterbrook points to something else about the figures for median household income. A quarter-century ago a typical household had three members. Today, it has just 2.6 members. Simply by this effect, median households have seen their real incomes rise by a half.

If you cannot look at this passage and tell me what the alarming glaring overlooked factor is then you simply are not thinking very critically about this issue.

Well yes, but the fact that I only had one son, and he is now making his way in the world, does very little to detract from the fact that a whole lot of real costs are diminishing.

I was reading one of W.E.B. Griffin's Brotherhood of War novels, and noticed that in 1969, a long distance call from Manila to the States cost $3.95 per minute. Without worrying about constant dollar complications, you will pay one tenth that if you don't shop around.

By the way, the best number to use isn't the median income per household, but the modal income per individual. That's zero, isn't it?

Not prsuming to know about economics, isn't the real point that there is a superficiality about the sources of most news relied upon by most Americans? Facts such as the cost of a phone call at a time when very few spent any money on phone calls a a bit beside the point. When you get a deeper analysis such as the Economist provides, the scare mongering of TV news just fades. There still may be facts of contention in the deeper analysis but at least you are in the analytical game and thinking.

The optimist believes that we live in the best of all possible worlds.

The pessimist fears that this is true...

I work in retail (I am a refugee from I.T.) And I have devised my own (admittedly less than scientific) litmus test as to the state of the economy. I call it the "crap factor".

The store I work in sells cheap crap that nobody really needs. Nick nacks, seasonal decorations and furniture that is made in China. The people who shop here are certainly not "Benedict Arnold CEOs" or "George Bush's wealth friends". This is where average, Walmart loving, obese Americans come and shop.

Well, the Crap Factor looks as how much crap Americans can afford to buy at any given state of the economy. In a horrific economy, people will spend less. When the economy is better, people will buy more useless things. The employees are also bitter, overworked and are for the most part always looking for a better job.

My keen observation is that over the last few months people are buying more and more useless crap. As more and more tax refunds have become available, our store has become mobbed by mullet-wearing people in jean shorts with spare cash to burn. This is not the sign of an economy in an tailspin.

Another part of the crap factor is how willing people are to stay in their crappy jobs. When the economy is bad, people are less likely to quit because there are not as many jobs available to them. In the past few months, people at my store have begun to quit as they have moved onto better jobs. And in the last month there has been an exodus of people who have fled the place like it was the plague.

Like I said, this is a not-too-scientific analysis of the economy with more than enough holes to be poked in it. But when it comes down to it, the Crap Factor doesn't lie.

"2)" has been going on a lot longer than the past 50 years. Try the last 50,000.

Nice non-partisan article, faulty analysis however, typical of an advocate piece which tries to justify a conclusion instead of examining all evidence and reaching a verdict based on the facts. Very telling is is the dismissive: "Even here, the rate of job “churn” has, for unclear reasons, been falling since mid-2001." Taking immigrants out of the economic calculous is equally specious. Reality bites when you're making a meretricious argument.

Last month, the very same Economist magazine that is now saying everything's rosy, described the Phoney Recovery as primarily a product of asset appreciation and increased debt burden which has enabled continued spending while wages, salaries, and the jobs market have remained stagnate. If you've got it, it's growing (wealth that is, tangible marketable assets, especially real property) and you can borrow against it at a low rate, but if you are dependent on wages alone to increase your family's prosperity you will have to wait until the jobless recovery reaches the labor sector.

The 90's tech stock bubble reflected the unsustainable difference between stock price and corporate asset valuation. Naturally dot-com's with minimal tangible assets, negative revenue and no appreciable stock in trade -- but merely a neat idea with speculative possibilities, were going to fail. The credit/real estate bubble now is more dangerous and has the possibility of dramatically effecting every American home owner. The asset to debt ratio is out of proportion and growing at an alarming rate. Even if large gains are made in hiring and wages, the debt created by cashing in on low mortgage rates and increased home value will remain and diminished savings will take a long time to rebuild.

Interest rates are bottomed out and will not remain so indefinitely. Individual debts as well as Washington's overwhelming deficits cannot be sustained without increased revenue. For a family that means a raise, second job, or new career; for the government it means tax increases. Both individually and for the administration, spending will have to be curtailed. If you add in the rate of individual bankruptcies, and the gross amount if discharged debts in the US, you will see that the conveniently disregarded facts of the current economic situation could easily destroy the "good times" your referenced article touts.

The foundation of this recovery is built on a house of cards. It is driven by increases in debt and wealth. Americans' paranoia about the jobs market is entirely justified. Federal and private debt (which has increased by $6.5 Trillion since 2000) cannot continue that kind of growth. That piper you heard yesterday at the St Patty's day celebration will be sending his bill COD.

By the way...the media is just trying to show both sides of the argument.
1) The conservatives foster the feeling that there is perpetual crisis and only their strong (read arrogant) leadership will protect us from thje "evil-doers."
2) Liberal want us to believe that things perpetually suck and only they can protect us from the "real" evil-doers," conservative robber barons.

Hey, ya gotta sell papers don't ya?

Dean, I believe most people would agree there is some kind of spiritul crisis afoot. Having more money and an affluent lifestyle does not make one happy- it's better than not having it, but it brings worries of its own.

I read a review on a book that discusses this very topic- if I remember correctly, the author seemed to think it is a matter of too many choices, and the concern that we may make the "wrong" choice. Usually, the choices we make are perfectly fine, but we are constantly thinking of the "what-ifs".

I completely understand his line of thinking. Twenty years ago I would not be losing sleep over a real estate investment that might not be a pot of gold. It's funny, I never bought the place thinking it would be- but then it became one. So, at worse, I am back where I started- but that's not good enough. What if I buy my plane ticket today and the price goes down tomorrow? What if I buy the wrong peanut butter out of twenty brands? What if I decide on a career and the job prospects are better in another by the time I'm done with my training? What if I wear black and everyone else has decided that brown is the "new black"? The more you make, the more your choices, the more the chances to be wrong.

I wish I could remember the name of the book, but I can't and I've already looked all over Amazon and the NYT Book Review. But, I think this guy is right. It sure explains my thinking, anyway. It's not that I go around making bad choices all day, but that I am always worried I won't make the BEST choice.

I think it helps to have faith in a higher power- but you have to believe in Providence as well. And if you're not very spiritual, then a "que sera, sera" attitude would go a long way!

I notice both criticisms of the article came from those who are, shall we say, slightly-left-of-center. Heaven forbid nonpartisan analysis derail the efforts to unseat W.
I'm just sayin' (apologies for the use of the trademark Ara)

I don't know that it's "most" people, Dean. I'm thinking just the noisiest.

John
Not everyone who is questioning the job situation is left of center. In fact I am in the awkward position of backing Bush's foreign policy but am 100% against his domestic agenda. Where does that put me on your spectrum?

As Mark Adams notes, the economic recovery is a house of cards - a fact that the Economist itself pointed out just a few weeks prior to this one. People are in debt up to their eyeballs, and eventually they have to pay it off. The only way to do this is:
1. Hope the Fed lets inflation come back to erode the value of the debt (fat chance)
2. Live miserly

Unless the job situation perks up, people will have to stop buying homes. This will pop the real estate bubble (another issue the Economist has whined about for over two years), which will in turn stop people from using their home equity to buy "crap" as SaWb points out.

The jobs are disappearing, and I am not being alarmist because I see it happening everyday first hand as well as hear about it from my resources at the ITPAA. Our best resource, by the way, is the Indian media. They cover our job situation much better than the American media does.

About 10 years ago one of my buddies criticized me for subscribing to the Economist for the same reason that we are noticing here: their failure to be consistent when it threatens their point of view. But I continue my subscription anyway.

How 100%? Opposed to tax cuts? Why, and how do they impede the economy? Free trade? Wasn't that one of the issues the previous President got elected for? Jobs overseas? Aren't we supposed to be promoting trade? Trade in the Information Age isn't just cars, cheese, or PC's, its data, from advertising (telemarketing) to programming. I view it as a big plus in the War on Terror to have countries dependent on the US for their economy, most of them have more sense than France then to piss off the goose that lays golde eggs. Also note I referred to the two previous criticisms, the early responders (both of whom, while being very intelligent and articulate, would respond to Bush walking on water by kvetching that he must not be able to swim) so your "position" is irrelevant to my statement, while still being pertinent to the discussion.

Or maybe by 'domestic agenda' you mean Bush's stands on social issues. Well, I disagree with him on many of those too, but they hold less relevance to me than the War on Terror.

I work in an industry thats fairly well known as a pigeon in a coalmine for the econmy, and we're doing great. That's from major economic improvement across the board, not single-sector increases or decreases. Confidence is growing, and thats the single most important aspect of any economy, and it's in spite of fairly one-sided media reports. That may be the biggest change to come out of Bush's first term, the widespread recognition that even the biggest media have agendas and work heavily to push them.

Note to Self: Bush can't swim.....

John
It boils down to whether you believe we are at war or not. If you do, you vote for Bush. If you don't, then other issues such as the state of the economy, gay rights, whatever take precedence and you vote for Kerry.

The issues on globalization are so complex that we really can't argue about them here. Suffice it to say that in my industry (banking) they are offshoring everything that isn't nailed down - except for the corporate boards.

I've seen outsourcing from all sides, and I am convinced now more than ever that it is a strategic threat as well as an economic one. For example, increased dependence on China by American business will make it even more dovish on our policies towards that nation. What happens if Taiwan pisses off China one too many times? This morning I just posted news about the theft of customer information in India from the Economic Times of India. I can't install a new desktop image on my PC yet my client sends critical business information to the other side of the world. So the two are connected.

Still, Kerry or Bush. For me the answer is obvious - and this coming from someone who voted fo Gore in 2000. Why? Because we are at war with someone who wants to wipe us out. That issue trumps all others.

"Interest rates are bottomed out and will not remain so indefinitely."

Talk about your specious arguments. Any good economist knows nothing remains indefinite.

What happens if Taiwan pisses off China one too many times?
Not a lot, I'd imagine. Unless China decides to wrathfully spend a decade or so trying to build troop transports. Missile attacks or WMD's would result in them being thoroughly stepped on, and they know it. We're not likely to cease support of Taiwan regardless of China's economic ties. Those ties work both ways, and we have the more mature and resilient economy to survive a major financial face-off.

All hail the Crap Factor!

It's gotta be as good an economic indicator as any other right?

Dani,
(nice name, by the way: it's the name my wife chose)
I think the book you are looking for is Gregg Easterbrook's "The Progress Paradox".
On the other hand, it might have been "The Paradox of Choice" by Barry Schwartz.
By the descriptions at Amazon, both seem to say exactly what you were describing.

Nathan,
Thanks- on two counts!

John Irving
“Opposed to tax cuts? Why, and how do they impede the economy?”

Well, for one thing taxes can create jobs IN THIS COUNTRY. Jobs that need doing, too: firefighters, teachers, healthcare providers, scitentists, engineers, construction workers, police officers, etc., etc., etc. And when these people have jobs in America they buy things and pay taxes in America. And that’s just one, John.

You have more confidence in Communist China than I do, John. And I'm not all that sure that we would risk nuclear war if China "stepped on" Taiwan. China, after all, has ICBMs and the temptation would be quite strong for any administration to view it as an "internal Chinese affair". All I know is that the American Chamber of Commerce was biting at the bit to get back into China after Tiananmen Square, and the Bush Administration waited only 3 months before sending in the sec of state (if memory serves).

Just because 90% of what Wal-Mart sells is made there doesn't assure me that China has a warm & fuzzy feeling about the USA. They are a competitor in all arenas - not just economic - and - unlike Taiwan, Japan and even India - they are not a democracy.

I believe the Blogfather has raved about Easterbrook's "The Progress Paradox" and I hope to get it soon myself. The argument that really bugs me is the "this economy is a house of cards" one. IMO, the bubble of the late 90s was the biggest house of cards we have known in the history of this country. It was unsustainable and everyone knew it, and now we are measuring unemployment by the standards of 1999 and finding fault, when 5.6% unemployment is historically quite impressive.

I was in retail in the Carter late-70's when inflation was in double digits. I well remember months and months of empty (shopper-less) stores, and price increases continuously. I could gauge the inflation rate simply by the price increases of our stock. I can buy goods at Wal-Mart now cheaper than I could at a drug or stationery store in 1978.

I do think we're suffering from a spiritual malaise. The more things we have, the more we find we lack in life. When you're young and struggling, you have goals and you're happy striving for them. If you accomplish those goals and acquire things and don't fashion new goals (other than acquiring more things), you will fall into malaise, spiritual corruption, and depression. Ours is very much a rich, leisured society. Misery is inevitable. I believe humans need to strive for happiness because misery comes so naturally to us. Affluence only accentuates it. And if there is a single class of people infused with both affluence and misery, it's the media, who constantly berate us with how miserable everything is.

Mark Adams:
"Note to Self: Bush can't swim....."

LOL, Mark

triticale,

Well that is a factor as well but not the big one. Hint, it is included in the test of the article. Double hint I bloged about it on my site.

Peg C.:
“I do think we're suffering from a spiritual malaise. The more things we have, the more we find we lack in life. When you're young and struggling, you have goals and you're happy striving for them. If you accomplish those goals and acquire things and don't fashion new goals (other than acquiring more things), you will fall into malaise, spiritual corruption, and depression. Ours is very much a rich, leisured society. Misery is inevitable. I believe humans need to strive for happiness because misery comes so naturally to us. Affluence only accentuates it.”

I blame the replacement of at least the concepts of community, the common good and selflessness on behalf the others with the me-first, you are what you own, “vote for me and I’ll cut your taxes” every-man-for-himself ethic of majority politics. Depresses the hell outta me.

I think Dani hit the nail on the head! The very vast majority of the people I know are successful. Yet, lots of them seem to suffer from the life motto: "Good enough" is NOT good enough, which feeds into "I'M not good enough".

Another part of it is that our choices open us to criticism from others, as well as from ourselves. I think our society has gotten more judgemental, or rather perhaps that the media has allowed more people to realize that society judges them lacking in some way. Yeah, how many of us look like cover-models (even before airbrushing)! Yet, thats the standard presented to the public. Its not just affecting women. There's Rogaine and JustForMen haircoloring products.

Perhaps thats the spiritual part. Instead of seeking acceptance from God, people are trying to find acceptance from society. Interestingly, when you find acceptance from God, it comes with peace and joy found through grace. You don't have to do anything to make God love you. IF you can get acceptance from society, all it comes with is a new trickier set of choices that could lead to your downfall at any moment while you jump through hoops and juggle issues trying desperately to stay "current".

Rick,

You raise some good points on your blog about women moving into the workforce, etc. But then you say:

"In other words in order to keep pace we have had to put our women to work in droves. When it took one income 30 years ago to achieve a middle class income it now takes two. Yep, sounds like progress to me if the goal is a return to feudalism."

Your point has some merit, but it's not the slam-dunk you seem to think it is unless you overlook something. Can you see it?

As much as the real estate bubble we're in crashing would suck for most, it's probably the only way my wife and I will be able to buy a house.

And speaking of crap factor, if the economy is so bad then why do I find hour plus waiting at all the steakhouses around here on Friday nights?

People are in debt up to their eyeballs, and eventually they have to pay it off.

Well, I was, 25 years ago. We bought a house we could barely afford (tho not a house of cards). And yes, we did have to live miserly for a while to pay it off, seeing as how we didn't have Wal-mart back then, but we did, in fact pay off the 30 year mortgage in 22 years. Now, even tho our net income in 2002 was $18,000, we aren't even in debt up to our ankles. Total net worth 1/3 of a million, 60 grand liquid, 8 grand in the cash flow account right now, and I can only see things getting better from here.

shep,

Why conflate the community (which is local, like politics) and federal taxes?

I blame the desire to delagate community work to the federal government and the secularization of America. What the heck do federal taxes and federal programs have to do with my community? Where's the selfless volunteerism in having Washington raise my taxes and force me to pay?

My wife and I met doing volunteer work. It was a local program run at a local level helping the local comuunity, like most volunteer efforts. (It may have received federal funding, though, nobody told us how they made up their budget.) Mother Teresa, the Salvation Army, Catholic Charities, the Red Cross (is there a common theme here?) and thousands of other efforts work very well without being run by the feds. (Again, they may receive federal funding, but that is a relatively recent change. I'm sure they did not receive such funding before the forties.) Why the constant need to federalize everything, I'll never know.

I find the constant increase in the size of goverment and the constant trashing of Christianity depressing, myself.

Yours,
Wince

A return to feudalism...someone's been reading the same stuff as me.

Glad to hear that you're doing your part, Wince, and that you see how federal taxes support the fine work you're doing. Do you think the organizations you name could do what they do without USAID money? Do you think they meet all the need even with it? I guess my concept of "community" is just broader than yours.

By the way, I don't believe that approaching "community" from the broadest perspective "trashes" Christianity in any way. Quite the contrary.

Brad, you are putting the cart before the horse with women entering the workforce.
One of the reasons we had high unemployment in the 70s was the number of women who returned to work out of choice and I find it amazing that our economy was able to fully absorb that extra labor within a decade.
When women first started working, the 2nd income was significant. The most affluent part of working society got their own acronym: the DINKs (double income no kids).
But Supply and Demand reared its ugly head, and the plain, awful truth is that with women in the workforce being the trend, the extra competition for jobs meant that employers could pay less, and the advantage of the 2nd salary eroded to the point that it isn't much help anymore.

But still, people currently below the poverty line live far better than the upper middle class did in the 60s. These days even the poor have televisions, video games, cars, cable TV, telephones, air conditioners...things only the very richest could afford in the 50s and 60s.

(Remember the lady on welfare in Seattle lamenting that if she had to make a monthly $5 payment for medical care that she'd have to give up either her cellphone or internet service to pay for it?)

I'm in diametric opposition to Shep, in that the problem is not the people voting for someone who will cut the taxes, the problem is the people voting for someone who promises to take care of them for life. The problem is that people are looking for guarantees that nothing bad will ever happen. The problem is that people insist that they can do whatever they want as long as it doesn't harm someone else...and then they refuse to acknowledge when their actions do hurt other people (see: HIV transmission rates).

We've lost society and become a mass of squabbling individualists who only care about pursuing our own interests and satisfying our own desires. We need to reconnection behaviors to consequences, and need to regain a sense of personal responsibility for choices.

"We've lost society and become a mass of squabbling individualists who only care about pursuing our own interests and satisfying our own desires."

Actually, nathan, I think we're in surprising agreement. The critical difference I see is in our respective views of the diffrence between ourselves and others.

There is a clear correlation between charitable giving (0f all kinds) and conservative viewpoints as the Generosity Index clearly shows. Mississippi is dead last in income and number one in giving. The Northeast is highest in income and dead last in giving.

Now is this a product of religious sentiment or lower taxes in those states? I was originally going to bet that it was due to more secularism in stingy states, but then I ran across this study that shows Canadians are extremely stingy in the amount they donate. I do not have any idea how religious Canadians are, but I know they are more heavily taxed than US citizens.

The correlation is clear, however. High taxes and a sense of irresponsiblity for one's fellow man goes hand in hand. I personally would like to direct where my charity money goes and not have Uncle Sam do it for me.

shep,

My point is that federalization destroys community by taking responsibility far, far away. People begin to say, "I pay taxes for that", rather than rolling up their sleeves. Instead of figuring out what would help, they wait for the feds to tell them what to do. Instead of raising the money themselves they apply for a government grant. I live in a rich county. My local battered women's shelter should be hitting up our local bigwigs for cash, not taking tax money from poor people in Fresno. (Actually they do both.) Let national charities like the Red Cross and the Salvation Army move money from rich areas to poor areas. When the government does it everything depends on whose Congressman has the most clout.

I haven't mentioned the corrupting influence of all that cash in one place.

Sure we use our taxes for good things. But in so doing we destroy our ability to use the money for better things.

My community, like yours, eventually broadens out to all of humanity. But the best thing for humanity is for us all to do what Voltaire said, and tend our own garden.

Yours,
Wince

Quote: 'But still, people currently below the poverty line live far better than the upper middle class did in the 60s. These days even the poor have televisions, video games, cars, cable TV, telephones, air conditioners...things only the very richest could afford in the 50s and 60s.'

Anyone who thinks that only the richest people could afford cars, televisions, telephones, and cable TV in the 1950s and 1960s is seriously out of touch with history (A/C was just being popularized and video games didn't come along until the 1970s). And to say that the poor people if today have it better than the upper middle class of the 1950s and 1960s did really reflects an abysmal ignorance of what constitutes a quality life.

RD

Perhaps Nathan has my car hidden up his ass, as this poor person doesn't appear to have one!

Shocker, neither do the other working poor I see on the bus.

Perhaps some other 'oh the poor don't have it so bad' cheerleaders would like to come over and coerce a dentist to take out the infected teeth from my head, since no one of that profession appears to do charity work, and I don't (being white with no children) qualify for any of the Federal or State low income health programs in AZ.

But you see I don't really want a govt. handout, I'd really like the onerous regulations in our quasi-private health system to give a little so that prices fall. Not that I'm likely to see either anytime soon.

Oh, and those who linked to that AlterNet "Free Market De-Bunked" piece? Freakin' Aristotle had it figured out that a democracy without a middle class was doomed to redistributionary bread and circuses, as the lower classes would vote them for themselves from the Treasury. He also doesn't even MENTION WWII as a factor in the economic recovery from the Great Depression. And maintains that 'all markets are the creation of govt.' in a very absolutist way.

All of which is bull to anyone very widely read in history and economics at all. Markets form spontaneously anywhere there are goods to be traded (law of comparative advantage). (I somehow doubt the author has been to a Rainbow Gathering, where there is much spontaneous barter, mostly of legal goods. Funny when the monkeys mistake their conception of reality with reality, isn't it? :-)

"Funny when the monkeys mistake their conception of reality with reality, isn't it? :-)"

It's hilarious. Apparently, they can even imagine their banana trading is comparable to the regulation required to maintain a $30-40 trillion global marketplace.

Wince:
“My point is that federalization destroys community by taking responsibility far, far away. People begin to say, "I pay taxes for that", rather than rolling up their sleeves.”

From what you wrote earlier, you haven’t say that. Neither have I. I think we both know from real-world experience that our efforts and the efforts of all of those who feel as we do will still leave gaps that won’t be filled by private philanthropy. Why should we assume that we’re so much different from everyone else?

The answer, to me, is mere ideology. Barry Goldwater probably put forward the last honest “liberal” question about the proper size and role of government in out society. But he had already lost the argument he gave as his answer, at least with the majority of Americans. At the time, they thought government had a much larger role to play than just the common defense.

Even after a generation of anti-government, anti-poor propaganda, people still want a government role in providing high-quality education, environmental protection, border, port and critical facility security, science and space exploration, national transportation infrastructure, national parks, corporate accountability, healthcare for the uninsured, a reasonable social safety net; the list goes on (I could argue that many of these roles can only be played by a federal government). Said propaganda has only succeeded in convincing them that they shouldn’t have to pay for these things with taxes.

Since we never can, we should never stop trying to perfect government functionality, efficiency and transparency as well as strike the right balance between public and private roles. But absolute beliefs about government action corrupting motivation seem simple-minded and counterproductive to that pursuit. I’ll give you an important clue to motive and purpose here: average taxpayers did not invent or promote the ideology at work here.

if the economy is so bad then why do I find hour plus waiting at all the steakhouses around here on Friday nights?

If the economy is so good then why aren't people opening more steakhouses to serve this obvious demand?

David Mercer:
"Perhaps Nathan has my car hidden up his ass, as this poor person doesn't appear to have one!"

Watch those jokes about nathan's ass, there, Mr. Mercer; he might think you're some kind of recruiter.