Prosperity: the condition of being financially successful, flourishing
Pipe dream: illusion (orginally related to smoking opium)
“Oh, you’re just a bunch of whiners,” said a McCain advisor last month. Everything’s great – just a little problem in the housing and mortgage end of things. Yeah, maybe gas is more expensive than it was, but drill a few more wells and we’ll be fine. Quitcher bitchin’.
Tell that to the people I know. To a person, we’re feeling the pinch and we’re cutting back on all fronts.
According to Robert Reich, former Secretary of Labor in Clinton’s administration:
…This isn’t a normal downturn. The problem lies deeper. Most Americans can no longer maintain their standard of living. The only lasting remedy is to improve their standard of living by widening the circle of prosperity.
The heart of the matter isn’t the collapse in housing prices or even the frenetic rise in oil and food prices. These are contributing to the mess, but they are not creating it directly. The basic reality is this: For most Americans, earnings have not kept up with the cost of living. This is not a new phenomenon, but it has finally caught up with the pocketbooks of average people. If you look at the earnings of nongovernment workers, especially the hourly workers who comprise 80 percent of the work force, you’ll find they are barely higher than they were in the mid-1970s, adjusted for inflation. The income of a man in his 30s is now 12 percent below that of a man his age three decades ago. Per-person productivity has grown considerably since then, but most Americans have not reaped the benefits of those productivity gains. They’ve gone largely to the top.
Inequality on this scale is bad for many reasons, but it is also bad for the economy. The wealthy devote a smaller percentage of their earnings to buying things than the rest of us because, after all, they’re rich. They already have most of what they want. Instead of buying, the very wealthy are more likely to invest their earnings wherever around the world they can get the highest return.
This underlying earnings problem has been masked for years as middle- and lower-income Americans found means to live beyond their paychecks. But they have now run out of such coping mechanisms.
Coping mechanisms we have used and outgrown include:
- Women joining the workforce to augment family income
- Working more hours
- Borrowing. Big time. Credit cards, home refinancing.
Proper progressive that he is, Reich suggests:
…the long-term answer is for us to invest in the productivity of our working people — enabling families to afford health insurance and have access to good schools and higher education — while also rebuilding our infrastructure and investing in the clean energy technologies of the future. We must also adopt progressive taxes at the federal, state and local levels. In other words, we must rebuild the American economy from the bottom up. It cannot be rebuilt from the top down.
I’m with him on this. It’s a standard public health approach, with long term benefits to be reaped only after the pain of spending preventive money up front. It’s the right thing to do, just as the right thing to do in Iraq and Afganistan is to build schools, roads, hospitals – ask Greg Mortenson hero of the bestseller Three Cups of Tea.
Will we do it?? Not till the Republicans are in a much greater minority.
Meanwhile, I know that as I buy less, the folks who built the stuff I’m not buying have less to build, and the folks who own the factory where these folks are building less stuff are buying fewer raw materials, which means the folks who mine or ship or create those raw materials have to cut back too…. and pretty soon everyone is hurting.