Offering frequent news and analysis from the majestic Evergreen State and beyond, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Tuesday, January 17, 2006

A jobless recovery is not a recovery Part I

We are told daily that GDP is up and our economy is moving forward, but we are working longer and harder just to keep up, and the quality of life seems to be deteriorating. EPI's snapshot this week shows real income has declined for most of us during the "recovery" of the past three years.

GDP is a bad measure of economic activity. It does not measure the health of the economy, nor the well-being of its citizens, only the agitation on the market side. Wars, crime, alcoholism -- the economy's "bads" -- count just as much as the "goods" of food and shelter.

Environmental damage is completely ignored. Actually, we count the clean-up in GDP, but the original damage? Didn't happen. Also see the current Bush defense of oil-based energy policy. No longer does he doubt the science of climate change, now he says our economy cannot afford to do anything about it. Bill Clinton has labeled the claim "flat wrong." (What happened to "Bull!"?) Clinton has, in fact, proposed an economic future for America based on the development of energy technology.

An alternative measure to GDP -- the Genuine Progress Indicator (GPI) -- which takes into account the facts on the ground is actually down more than 45% since 1975.

GDP counts borrowing as earning. And growing debt is the only explanation for the current rise in GDP. The value of goods purchased, added together, equals Gross Domestic Product. This is like adding your paycheck to your credit card balance and calling the total your earnings.

Am I just a loyal liberal footsoldier dissing the good news of GDP and exploiting the bad news of massive debt, falling incomes and tepid employment growth, all for the prurient interest of my fellow radic-libs? I don't think so.

I am more like the nonplussed Frenchman who objected to the US invasion of a Middle East country on flimsy pretext. When the adventure turned out to be a catastrophe, I was not surprised. The economy is similar. I'm just happy economist jokes are less offensive than French jokes.

The parallels are striking. The Bush-Cheney axis decides what they are going to do, and the facts and "official" rationale are relegated to the PR department, where they will be adjusted daily for public consumption. In Iraq, the "imminent threat of WMD" changed to "getting rid of Saddam" changed to "establishing democracy."

With tax cuts, Bush first promoted them "because it's your money" (talking about the surplus). Subsequently we learned it wasn't our money, after all, it was our kids' money. But, don't worry, it's not going to us anyway, it's going to the rich.

When things started to tank, tax cuts became "a necessary measure to help the economy after the terrorist attacks." This is, in fact, the line that sold Congress. Bull! One, 9-11 had a mild effect at most on the economic trajectory. Airlines, for example, suffered far more from fuel prices than from the temporary discouragement of travellers. Two, and more to the point, the Bush tax cuts and the shameless slicing away at our social and educational programs cannot help the economy. That policy gun is pointed 180 degrees away from the target. To improve spending and consumer confidence, and thus demand for domestic business, fiscal decisions should favor the middle and lower class, not the rich.

Now he says, "Stay the course." If we are lucky, the course is circular, because off the bow it looks like we are heading straight for the rocks.

Next time, a look at employment as an alternative measure of economic health.

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