Yves here. While quite a few economists have thrown cold water on the rosy message of the latest drop of the headline unemployment stat to below 4%, this Real News Network interview with Robert Pollin of PERI does the useful service of providing a more realistic estimate.
SHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
Last week, the U.S. Labor Department announced that the unemployment rate dropped to 3.9 percent. This is the lowest unemployment rate since 2001. Some economists predicted that it will continue to drop and reach 3.5 percent by the end of this year. Now, President Trump has been celebrating the news, of course. In a recent tweet, he wrote: “Jobs, jobs, jobs. Unemployment claims have dropped to a 45 year low. Together we are making the economy great again.”.
However, one issue has puzzled many economists, which is why wages are not rising faster than inflation. Economic theory normally stays that when unemployment is low, wages go up, because there is more competition to attract workers. However, both wages and inflation remain quite low at the moment. Now, President Trump himself offered an explanation six years ago to this issue, before he was president, when he was still a businessman. He said: “Unemployment rate only dropped because more people are out of the labor force and have stopped looking for work. Not a real recovery,” he wrote. “Phony numbers.”
So what is happening now? Why are wages stagnant while unemployment is reaching historic lows? Joining me now to explain all of this is Bob Pollin. Bob is a distinguished professor of economics, and he is the co-director of the Political Economy Research Institute at the University of Massachusetts Amherst. He’s the author of many books. Relevant to this discussion is the book “Back to Full Employment.” Good to have you with us, Bob.
ROBERT POLLIN: Great to be on. Thank you, Sharmini.
SHARMINI PERIES: Bob, let’s take up what the economists are saying about what’s happening, the apparent contradiction between low unemployment and the stagnant wages. Now, if we were to take Trump’s own explanation, he says that these numbers are phony, that the economy is not in recovery, people have just stopped looking for work. What do you make of that explanation?
ROBERT POLLIN: Well, it’s always been true that the headline unemployment number that we hear, the one that you just quoted, 3.9 percent at present, does not fully capture the distress people feel in the labor market. That was true when Trump made his comment six years ago. It was true when he was a candidate. He was saying, you know, the actual unemployment rate is maybe closer to 40 percent, not 5 percent.
So here are the issues. The official rate, this 3.9 percent, first of all does not take account of people that are working part time and want to work full time. So if you have a job that’s for five hours a week and you want a 40-hour-a-week job, you are not counted as unemployed. But the Labor Department does have another category that includes people that are underemployed, and people that have dropped out of the labor force temporarily because they don’t see good prospects for themselves. If you go to that number instead of the official number, the official rate by the U.S. Labor Department today is actually 7.8 percent, not 3.9 percent, if we include people that are taking jobs at just a few hours a week, less than a full week, and people that have dropped out because they temporarily feel distress.
Now, on top of that, if you include what Trump was referring to six years ago, which is that people, the total participation of the adult population in the labor force, that has gone down by a lot, relative to right before the great recession a decade ago. If you said that the participation rate should be the same as it was 10 years ago, well, now we’re up to about a 12 percent unemployment rate. So that’s, you know, you can go that from three point nine percent the official rate all the way up to something like 12 percent if you include the low participation rate, the people that we call underemployed, and the people that are discouraged.
SHARMINI PERIES: All right. Now, another explanation, Bob, comes from Paul Krugman, who says that employers are simply more reluctant to raise wages than they used to. Instead, they are relying on one-time signing bonuses to attract them. Now, we are getting away from the actual numbers here, we’re talking about wages. But what do you make of that explanation for wages?
ROBERT POLLIN: Well, first of all, let’s say, just looking, the Wall Street Journal yesterday had an article saying that wages aren’t going up. So this is the Wall Street Journal acknowledging the reality that despite this, at least according to the official statistics, the lowest unemployment rate in decades, we still are not seeing wages going up. Now, of course it’s always the case business owners don’t ever want to give wage increases. So the fact that if Krugman is saying, well, you know, they’re reluctant, well, they’re always reluctant. They want to keep money in their own pockets, not give money to workers. And the thing that drives up wages is, therefore, workers’ bargaining power. That’s the key now, that’s the key always.
And the fact is that what we have observed, not just now, but what we observe at this point for almost 50 years since 1972, the average wage for our nonsupervisory worker today is lower than it was in 1972, 46 years ago. So it’s not just a current phenomenon that Krugman is referring to or something, reflecting the sentiments of business owners, capitalists. What it is is that workers’ bargaining power has been attacked for, you know, two generations now. This is the, this is the heart and soul of neoliberalism. And the, the dynamic of it was explained extremely clearly and straightforwardly by none other than Alan Greenspan, who was the chair of the Federal Reserve for 17 years, the longest-serving chair of the Federal Reserve, in the middle of his tenure back in the late 1990s. The last time unemployment was down this low, official unemployment went below 4 percent, wage inflation wasn’t going up then, either.
And so Greenspan had an explanation. He was very straightforward. He said, it’s traumatized workers. That was his term. The workers are traumatized. What does that mean? He said, well, that workers see that businesses have other options, and they are therefore, the workers are therefore reluctant to push for higher wages, even at low unemployment. They’re reluctant because the business owners will say, oh, you want a wage increase? Oh, fine, well, we’ll relocate to Mexico, or we’ll just start importing from China. And as a result of that, workers’ bargaining power, even at relatively low unemployment rates, has been weak. On top of that the institutional forces supporting workers’ bargaining power, mainly unions, has also been attacked. This is also a cornerstone of neoliberalism.
So what we have is this long-term trajectory of even at low unemployment, workers do not have the bargaining power that they used to have. This has not been fully recognized in mainstream economics even now, even almost 50 years after the phenomenon emerged, in reality.
SHARMINI PERIES: All right, Bob. I should add to that that Bernie Sanders just a few days ago introduced a Senate bill protecting employees’ rights in terms of EFCA, the employee protections to organize in the workplace. And this is a bill that had been outstanding throughout Obama’s period, where he promised to pass it. That never got through. And Bernie Sanders has reintroduced it in an effort to address exactly what you were just talking about.
ROBERT POLLIN: Right.
SHARMINI PERIES: And so let’s move on. What about the relationship, Bob, between productivity and wages? Until the 1970s there was a very direct relationship between the two. However, since then the relationship has broken. In other words, even though productivity is increasing, wages are not, regardless of the unemployment rate. Why is that happening?
ROBERT POLLIN: It’s the same explanation. So what we see is that since 1972, again, wages have basically been stagnant. Average worker productivity, meaning the amount the average worker produces in the course of the day, from an average day, with the average level of machinery behind them, the average worker produces about twice as much as she or he did in 1972.
So if the average wage is stagnant and average productivity has doubled, that means the income is rising to the top. So if you want an explanation for the rise of inequality in this country, that is the first and foremost explanation, just in logical, statistical terms. If you’re producing twice as much, and the workers, the average workers are getting paid exactly the same, then the rest of that increased product is going to people other than the workers. And that’s what explains, more than anything else, income inequality and wealth inequality.
And again, why is, why aren’t wages going up relative to productivity? Well, you know, standard economic theory said yes, wage increases should rise with productivity. In fact, Paul Krugman himself way back, twenty-five years ago said this is, you know, this has been all throughout history, it was always the case that wages rise when productivity rises. Well, it’s just not true. It’s just not true, it hasn’t been true for almost 50 years in this country. And the reason, again, is that the bargaining power of workers has been assaulted by neoliberalism. In fact, if you want to name one thing that defines neoliberalism, this is exactly it, that you run an economy in which the benefits of productivity growth accrue to the rich, and everybody else faces stagnating incomes and opportunities.
SHARMINI PERIES: Now, this is rather counterproductive for the capitalists itself and neoliberals, because less money there is in the hands of workers, the less they will be able to purchase and stimulate the economy. Your comments on that?
ROBERT POLLIN: So the alternative path to stimulating the economy and generating profitability under neoliberalism has been to explode the financial sector. And so what we have seen again, throughout neoliberalism, and in particular over the last couple decades, has been the extraction of profits through finance using the financial system as a way through which we can pull profits out.
Now, it is true, as you just said, Sharmini, that underlying everything, even if you, no matter how fancy you make your financial system, how complex, in the very end, you need people to buy products. You need people to buy products. And the fact is that, you know, the U.S. economy, Western Europe, they’ve, the growth trajectory has been stagnant, again, over roughly the same period. Even, you know, right now we are in the longest recovery in the last hundred years in this economy. But the growth rate of GDP has still been modest, in the range of 2 percent, which is way below the growth trajectory for the 50 years up to the 1980, was really about 3.3 percent. So we’re way down in terms of growth, and the underlying pressures are not there, because we do not have enough wealth being spread out so that people have money to buy things. That’s the nature of the economy that we operate under. This is, yes, this is the essence of neoliberalism.
SHARMINI PERIES: All right, Bob. I thank you so much for joining us today, and I’m sure we’re going to have another opportunity to talk about this when the summer numbers come out. When the students and temporary workers, summer workers join the workforce, I’m sure we will be presented with another positive report where it says that the unemployment numbers have hit a new low. But we’ll save the conversation for then. I thank you so much for joining us.
ROBERT POLLIN: OK. Thank you,.
SHARMINI PERIES: And thank you for joining us here on the Real News Network.
44 comments
Comments are closed.
“In other words, even though productivity is increasing, wages are not, regardless of the unemployment rate. Why is that happening?”
Pollin spends 3 paragraphs on the most eloquent definition of ‘greed’ I’ve ever read.
Pollin defines the financial arm of, and puts the blame on the neoliberals where it belongs.
Related to demand, globalisation was/is always supposed to provide a market where the high wages of consumers need only be high relative to the cheap labor on another part of the orb, but in this race to the bottom we can see that we are nearing the bottom when the gov’s main purposes are debt collection/enforcer (student loans and the aca) and MMT slush fund for the defense industry and wall street. If the unemployment rate is truly as stated then all those homeless people must have jobs…
Some of the homeless DO have jobs, while exact statistics are hard to come by it’s about 25% I believe. Of course homeless themselves are probably under counted since at this point there are homeless living in the mountains etc. that are unlikely to ever be counted unlike those living on city streets (and I’d assume they are unlikely to have jobs).
High cost of living in Western countries means wages must also be high. High asset prices + overhead (regulatory, safety, environmental, health and wellness) are the reason for high costs. If asset prices were lower — specifically housing — wages could be lower and therefore more “competitive” with the rest of the world. The alternative is capital controls and an active trade/industrial policy, but those are forbidden under neoliberalism. Housing prices increase to the extent a bank is willing to lend against the asset, meanwhile labor is priced out of a job vs global competitors.
Employers want cheap labor, and workers don’t want jobs to go overseas, but the groups who control the economy have no interest in low asset prices. Those groups include the finance industry, banks who loan against real estate, and homeowners (who vote in much higher numbers). Homeowners who own outright don’t want their main nest egg to drop in price. Homeowners with a mortgage don’t want to be underwater on their loan. They and the banks oppose people who want a house but can’t afford one at current prices, and employers who want cheap labor.
But all this is a sideshow compared to the environment. First, “peak energy” says our headroom for growth is lower now than it was during the 20th Century. If the economy were to grow at the rate it formerly did, energy prices would quickly rise, and this would put the brakes on growth. If that’s correct, the only remaining source of “growth” is what we refer to on NC as “groaf”: financial games, marketeering, and adjustments to statistics. There can be no wage increases in Western countries because workers would buy SUVs and compete for energy with developing economies, and the Fed will squash the economy before that’s allowed to happen. But in the long run, environmental deterioration means our way of life must change and will change. The debates we’re having now will be moot 30 years from now, though we may not even be conscious it, much like so many people don’t realize their inflated real estate and vanishing jobs are fundamentally related.
I’m sorry, but it’s far too easy to see the sick, the mentally ill, the destitute, and the hopeless wandering the Bay Area for me not to rant. This reminds me of the argument that racism, sexism, and any other -ism means white privilege, which means the massive unemployment, decreasing wages, and the shortening of the average American’s life expectancy, should not be the focus. Can we say Donald J. Trump?
While excessive consumption is a perhaps lethal world problem, my back-of-envelope figures gives something like 1-2% of San Francisco is homeless. That’s living on the street, under the highway, or in Golden Gate Park. So maybe, just maybe we can make my hometown less like an open toilet, build some small apartments for the 8-12 thousand, many of whom do work, or for the perhaps tens of thousands of homeless in the rest of the Bay Area) put in public toilets in places other than a very few in the tourist areas, maybe do a few other things like ask why the eighth largest economy on the planet can’t get that state public healthcare proposal through our bought for legislature, and considering that with inflation and the doubling of productivity the minimum wage should be $21, why isn’t it? And this is just the smaller part of one state.
Once are on the far end of the path to fix these problems I will be happy to focus on over consumption. Just saying.
If we are focusing on overconsumption, then it is the wealthy we need to be targetting, not the vast majority of struggling employed and even more struggling unemployed.
Target them; tax them heavily for the sake of the environment. I promise you the rest of us will not mind at all.
very well, however .. the homeless may be the only people living sustainably in rich countries period. So kind of a problem there (no the way of life of say Denmark or Finland etc. while it may be admirable is not sustainable either really, it’s more sustainable than the U.S. on aggregate but maybe only the homeless actually live sustainably.).
This may be taken as a defense of homelessness in the U.S.. It is really no such thing. It’s just if we want to get down to brass tacks and deal with reality we better first face it.
Here in the mid-west we are just beginning to see pressure on wages for the low-end food service/retail jobs. They are having trouble filling positions at 10-11/hr (part time no benefits). It’s going to take a long time for those positions to de-crapify, or that pressure to build up to the positions that are already full time living wage.
Here, (American Deep South) we see ‘cheap’ jobs going for $8.00 USD per hour, all over. (One semi-regional mini fast food chain actually defines their servers as ‘tipped employees’ and pays them below minimum wage.) The chain fast food joints and Bigg Boxx stores pay above that mainly due to decisions made at distant points of control. WalMart being the big visible case of “compassionate capitalism” here, do notice the chains’ enhanced surge in rolling out a new model ‘self serve’ check out section. I joked with the young woman ‘overseeing’ the new self check out section in one of the two WalMarts in our town yesterday that “… the company is now getting the customers to do the work of checking out that actual employees were once paid to do.” She laughed and replied; “And the store doesn’t give you guys employee discounts either!” That was a ‘twofer’ I hadn’t thought of.
Meanwhile, prices in the shops continues to rise. As for utilities, well, our local natural gas company was bought up last year. Several employee positions were eliminated, as goes the ‘word’ on the street. (Whether true or not, the perception of such a dynamic being in play helps inform the publics’ attitude towards said utility company.) Now, with the latest monthly bill comes another step in the rent seeking process. The monthly charge, previously unified, is now split into two parts. One, smaller for now, is a monthly “basic charge,” whatever that means. The second part is the normal monthly usage charge based on volume of product consumed. We’ll see soon enough if the ‘price’ of natural gas goes up independently of supply.
The pressures to bring local wages up to “living wage” standards are being circumvented by trends toward group living quarters and the re-extension of ‘extended families.’ The very definition of the ‘American Dream’ is being degraded.
>. . . One, smaller for now, is a monthly “basic charge,” whatever that means. . .
That portion of your bill has been transformed into a fee for being hooked up to the system, so that if you ever get your consumption close to zero, they can still bill you something. Expect it grow like an aggressive cancer, something about new massive debt service charges will be the reason.
That’s the beauty of monopolies. They can’t be fired and can charge whatever they want. The CEO wants another two million next year? No problem, raise that fee another ten bucks a month, five for debt payment and five to the brilliant CEO.
When you look at the motivations behind the “cost plus” pricing models employed by utilities, healthcare providers, insurers, and defense contractors, you see that there is absolutely no incentive to keep costs low.
At least in theory, it makes sense.
A person who uses $100 of natural gas a year still requires the whole pipeline and distribution infrastructure to be in place, the same as of they were using $10000 of gas. So separating the charges for ‘maintaining the network’ and ‘supplying the gas’.
Of course, the practical effect of separating these factors out in the bill is that there is a ‘minimum bill for being connected’. Essentially, poor customers with low usage are ‘encouraged’ to have their gas cut off entirely, saving the utility the bother of supplying loss-making customers.
Here in southeast Michigan my utility breaks down the overall charge into two sets of charges, one for natgas, and one for electricity.
For natgas, there is the charge for being hooked up to the gas system, and also a charge for the amount of gas used. I am not sure I can argue with this. It costs time, matter and energy ( expressed as “money”) to keep the gas grid in existence and functioning. If I used so little gas that they could hardly charge me for it at all, I would still like to have the grid in functioning existence “upstream” from my dwelling unit so that if I suddenly needed to use more gas again, I could get it and use it.
For electricity, I always got just an “amount of electricity used” charge. Until one fine month when I used so little electricity per day that the bill said ” you have used too little electricity this month for us to be able to charge you for electricity-used. So we are charging you a basic hooked-up-to-the-grid charge”. And once again, I can’t object. It costs time, matter and energy ( expressed as “money”) to keep the whole grid system in existence upstream from my dwelling unit. I understand the necessity of paying my share of the costs of keeping the grid in mere existence during those months when I use so little electricity that my electricity-use can’t be charged for . . . so that I know I can get more electricity during those other months when I may want more electricity.
(I can’t remember what I did that month in order to use so little electricity that it “couldn’t be charged for”).
I wouldn’t object to the concept of a “standard basic charge” if the utilities in question didn’t have other more questionable business “expenses” impinging on their “basic” rate. The local natural gas company has recently been bought out by a Georgia headquartered “octopus” holding company. The main immediate effect of the take over has been the closing of all local service offices. Now bills must be paid by check in the mail, online, or by third party payment vendors. (The closest outlet to me is the offices of a local ‘Rent to Own’ furniture company.) All service concerns now are processed by an ‘office’ purportedly in Atlanta. Thankfully, we haven’t had any service issues.
The other local utility having a dodgy new track record is the electric company. A unit of the Southern Company, the latest ‘scandal’ is the Kemper coal gassification powered electricity generation plant. Now somewhere about five or six billion dollars over budget, yes, billion with a ‘b’, the company has repeatedly tried to have the overages charged off to the customers. At one point, the courts had to be used to have the company return a good bit of money it had been ‘pre-charging’ the customers to build up a buffer fund for when the bills for this disaster came due. At no time has anybody said that the initial investors in the company paper used to initially start the project should take a ‘haircut’ for having invested unwisely.
So, as much as I can agree with your point about basic infrastructure continuing costs, company and stockholder profit levels I do cast a leery eye upon.
I will need a few months to get sufficient data (bills) together to figure out whether or not this new two charge billing system for the gas company is a cover for a rate increase or not.
Some states will not issues a certificate of occupancy unless utilities are hooked up.
Yes. Florida and the electric hookup provision comes to mind. Yet another example of defining deviancy down.
it is becoming impossible to find labour.
customer not willing to pay, and not able to find labour.
I’ve got waiting lists i can’t fill because of this. Can’t raise price because existing customer will run away.
Water water everywhere not a drop to drink.
Politically connected sectors have squeezed everyone out.
The race to the bottom has been won and your business or sector is one of the winners!
Outside the corporate and finance sectors, which official statistics still more or less represent, as best as I can tell the only thing keeping the whole charade going is the balance sheet “leakages” we call “trickle down”.
Absent that, the whole house of cards collapses: maintaining this state has been the Fed’s whole mission for about the last five years.
Well said jsn. Your comment provides the opportunity to vent my spleen at Laffer and his wretched curve which he admits wasn’t even his invention . Apart from the fact that the curve is a fraud ( not populated by numbers ) what Laffer and his cohort never address is what money gives you if you have it is choice . Plain and simple. The only rational consumers are those with just about enough to survive because they don’t have a choice. Above that choice increases exponentially with the quantity of disposable income or capital . Until that is the point is reached when you have all the toys – yacht, cars, wine cellar etc etc – and then only influence gives meaning to your sordid existence – a la the Koch brothers. But because as they admit they want all the gains for themselves the balance sheet ” leakages ” you refer to are drying up rather rapidly and so the whole charade is being exposed for what it is – a scam.
‘right now we are in the longest recovery in the last hundred years in this economy’
The longest expansion [NBER’s term] of the last hundred years was 120 months, running from March 1991 to March 2001.
As of this month, the current expansion has continued for 107 months.
So? The effect on most people’s lives isn’t addressed by numbers expanding.
IANAE, but doesn’t this suggest that the capitalists must seek other markets, outside of the US, where the workers have more money to spend, such as the quasi-socialist countries of Europe?
If host A is out o’ blood, the successful parasite will move on to host B, right?
>. . . doesn’t this suggest that the capitalists must seek other markets, outside of the US . . .
No. Borrow to consume is twice as good from the capitalist’s point of view, because he or she now has their profits and a debt serf to exploit at the same time.
IME, those socialist European countries also kinda sorta swallowed the neoliberal doctrine, just not as hard as the UK and the US did.
For example in Germany, wages have been stagnant for a long time now, and the pay at least in my sector (IT) seems to lag noticeably behind the US, despite higher taxes. Especially with Germany, the joke at least for the past decade is that they have to export all those expensive cars because few Germans can afford to buy them anymore.
No joke, you were robbed blind by your plutocrats, as are all peasants.
Ever read this?
High Wages Versus High Savings in a Globalized World by Michael Pettis
Still other mechanisms used to force up savings involved keeping workers’ wages low to increase international competitiveness which, of course, also limited consumption growth. Germany’s Hartz reforms are the most obvious recent example, and I think Germany in the 1930s is another. In the former case, after the labor reforms, wage growth dropped significantly below GDP growth, driving down the household share of GDP in exchange for an explosion in the share of business profits.
——————-
I do not think this was an accident. While driving up the national savings rate through a combination of financial repression and an undervalued currency turned out to be a very powerful way of doing so quickly, this approach has left countries like Japan and China with specific kinds of balance-sheet distortions that seem especially hard to reverse. As the household share dropped, the share of some other economic sector rose and the latter became very powerful, making it politically difficult to reverse the process once it had reached its limits. The sector empowered by this approach usually was the business sector, but it could also be the government, as in China, or even foreign investors, as occurred typically in certain resource-dependent economies in the post-colonial era.
That goes for both worlds, the so called high wage and high savings.
I think the good prof should rethink his assumptions,no?
Why quote the “number” if it was/is always flawed?
http://www.truth-out.org/opinion/item/14063-the-agenda-for-obamas-second-term-full-employment-and-fighting-poverty
“Starting with unemployment, Obama’s goal should be to cut the official rate in half by the end of 2016, from today’s level of 7.8 percent to 3.9 percent—the unemployment rate last achieved in 2000.
This would be the single most important thing he could do to support middle-class well-being in this country.
It would mean that nearly 7 million people who crannot find work today would become newly employed. But we also must not forget that, at present, 6.2 percent of the labor force is either underemployed—working part-time because they can’t get full-time—or too discouraged to have looked for work within the past few weeks. Obama should cut that figure in half as well by the end of 2016, creating new opportunities for an additional 6 million people and their families. The goal should therefore be at least 13 million more decent jobs by the end of 2016. As I have discussed in previous posts as in Back to Full Employment, pushing the unemployment rate down aggressively will also give workers more bargaining power, which in turn will deliver higher wages and better working conditions.”
Well the number was hit……………
I have a small and somewhat off-topic quibble with this post, though I have absolutely no quibbles with what Robert Pollen asserts. He uses the term ‘neoliberalism’ freely throughout his interview. One of the complaints made about the term ‘neoliberalism’ is that it is a term used as a pejorative by the left but otherwise lacking in content. I think that complaint too well fits Pollen’s usage, which would turn neoliberalism into a term with meaning like the construct ‘free market economics’. Everywhere Pollen uses the term neoliberalism does indeed fit a policy or outcome the application of Neoliberal philosophy constructs and applauds.
But I get heartburn reading assertions like:
“What it is is that workers’ bargaining power has been attacked for … two generations now. This is the, this is the heart and soul of neoliberalism.” and
“On top of that the institutional forces supporting workers’ bargaining power, mainly unions, has also been attacked. This is also a cornerstone of neoliberalism.” and
“In fact, if you want to name one thing that defines neoliberalism, this is exactly it, that you run an economy in which the benefits of productivity growth accrue to the rich, and everybody else faces stagnating incomes and opportunities.”
I thought attacks on worker’s bargaining power have been going on for much longer than two generations and have been the heart and soul and cornerstone of 19th Century capitalism and many of its descendant philosophies. Economic theories reaching even further into the past worked to assure and rationalize that wealth should accrue to the rich. The outcomes Pollen describes can easily be derived from Neoliberalism but I would not equate the definition of Neoliberalism with these outcomes.
I believe a defining characteristic of Neoliberalism is its belief in the Market as an information processor more powerful and able to learn ‘Truth’ better than any human or computer. My poor paraphrase of what I’ve grasped of Philliip Mirowski’s teachings on Neoliberaliam describes a much darker heart than than that of past embodiments of philosophy rationalizing that all power and wealth should go to those who have all. I am very reluctant to allow such a dark and threatening ideology and social construct as Neoliberalism to hide within a mere pejorative. You can’t slay dragons by fencing with their smoke.
Pollin NOT Pollen! UGH!
Which is proof that the governing institutions of our political economy are solidly against the interests of workers. It isn’t just the Supreme Court through rulings like Citizens United. Is it really any surprise that approval ratings for Congress are so low or that Trump’s brand of anti-politics politics triumphed over Clinton’s bland promises of incremental reform? Labor unions aren’t just an institutional force underwriting the wages of workers though. They’re a means of accumulating political power and enforcing their own method of governance.
It wouldn’t hurt to go right back to the Supreme Court ruling on the 2000 election non-count. We ordinary citizens got shafted then, right out in broad daylight. And the beat goes on.
I have always looked to http://www.shadowstats.com/ to get a better idea of the real numbers when it comes to unemployment and inflation statistics. “Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting…”
This is interesting. A whole video interview and going by the transcript, there was not a single mention of the U6 unemployment rate (The U6 rate shows people that are unemployed for economic reasons). According to this chart I found, the U6 rate is currently at 7.8%.
Unemployment Rate
It’s alluded to though:
“But the Labor Department does have another category that includes people that are underemployed, and people that have dropped out of the labor force temporarily because they don’t see good prospects for themselves. If you go to that number instead of the official number, the official rate by the U.S. Labor Department today is actually 7.8 percent, not 3.9 percent, if we include people that are taking jobs at just a few hours a week, less than a full week, and people that have dropped out because they temporarily feel distress.”
It’s really simple to figure out how the percentage is so low, just don’t count all the workers who’ve given up. John Williams over at shadowstats calculates unemployment using the old formula:
http://www.shadowstats.com/article/c810x.pdf
Interestingly his figures show that the unemployment, and l assume the economy too, is ⅓ of way back up from the last cycle’s low in 2008. It is likely that the “next” recession is going to happen in 2018/19 before we truly end the current recession. (and I don’t mean end by some economic sleight-of-hand that says we have.). We’re gonna have some good times soon. Yes, good times.
Trump admitting the unemployment numbers were bogus on the campaign trail:
Link
Because he was looking at the participation rate, which is still below historical highs.
https://mobile.twitter.com/realDonaldTrump/status/992395376039727104
Trump celebrating 3.9% unemployment.
Good thing the right has a long memory.
I don’t buy the ‘underconsumptionist’ argument, originally of Rosa Luxemborg but adopted by Keynsians the past few years, that our current malaise is caused by a lack of demand. It used to seem like it made sense but I’ve seen it taken down by Marxist blogger Michael Roberts several times, especially here, here, and, most recently, here.
To quote the last post, “In the six recessions since 1953, personal consumption fell less than GDP or investment on every occasion and does not fall at all in 1980-2…of the 12 post-WWII crises, 11 have been preceded by rising wages and only one by falling wages (the 1991 crisis).” And Roberts points out in the second link that ” economic growth was faster from 1982-97, when profitability was rising, than it had been between 1965-82, when it was falling.” Wages were a smaller portion of national wealth in the 82-97 period yet it had faster economic growth.
Our current malaise, rather, is explained by a falling rate of profit.
The argument is legitimate and it takes the form of other metrics of GDP, such as; disposable household income, stagnant wages, less-skilled, or lower paying opportunities, rising healthcare and education costs.
There are authors who have contemplated a theory, we hit the wall in the seventies, and any, or most, economic performance since that period can be attributed to deregulation of the economy, both financial and trade, and rising debt level.
Does he mean this falling rate of profit?
tradingeconomics.com (click on the MAX button for the full effect)
Something does not compute.
I don’t think that chart relates to how Marxists define profit when they talk about “falling rate of profit”, which only relates to industrial production (not FIRE etc.). That chart is for the whole economy.
The Soviet Premier would win with 98.87% of the vote in the 1970’s and the west would laugh, why couldn’t he have just won by a majority, say 58%?
We’re doing the same thing, it’s the big lie.
This really isn’t new. The employment figures have been inaccurate for decades. The way people are counted leads to big errors. I have a rule of thumb I use when I see unemployment figures. They are usually twice or more than the stated numbers.
Like measuring virginity if you were to take into account the underutilized portions of the anatomy.
According to John Williams at shadow stats its more like 22%. which reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.