Is it any wonder President Barack Obama can’t catch a break when pundits regularly choose to garble history and rewrite economics in order to make their point?
In a recent piece columnist George Will, that quintessence of 19th century illumination, compared the current “anemic” recovery following the 2008-09 recession with the “robust recovery” of the 1981-82 recession. He knows full well there are different types of recessions caused by different economic factors that result in widely variable recoveries.
Economists informally characterize the seriousness of recessions by the shape of their recovery as depicted in line graphs; for instance, V-shaped and W-shaped, a double dip recession, are the least serious and result in a rapid rebound. U-shaped and the most catastrophic L-shaped are very brutal recessions characterized by severe disruptions to financial markets in which global liquidity is frozen for investment and capital expansion, and overloaded with consumer debt, grinding the world economy to a halt.
The early 1980s recession was W-shaped. The Great Recession and recovery is L-shaped. Will knows that and yet makes the facile comparison that had Obama acted more like Ronald Reagan, he could have changed the facts on the ground.
His insistence that getting more money into the hands of the “job creators” through tax breaks will solve the problem is ludicrous. The so-called job creators are the wealthiest they’ve ever been. Corporations and the top quintile have recovered just fine, thank you, with the stock market, corporate profits, capital reserves and income inequality reaching historic highs and their taxes at the lowest rates since the 1950s. The ratio of CEO compensation to worker pay for the top 350 companies is almost 300-to-1, up from 30-to-1 in 1980.
The reason the recovery remains sluggish has nothing to do with Obama policies versus Reagan policies as Will alleges. The simple fact is the middle class has not benefited from the rebound to anywhere near the same degree as the rich. The top 1 percent — a good many of them the culprits of the recession — has taken in 95 percent of all the productivity gains since the recovery began.
This has been going on since Reaganomics was inflicted on the country; the recession merely exacerbated it. From 1947 to 1979, wage increases consistently mirrored productivity gains. If that had continued for the past three decades, middle-class workers would have earned approximately $15,000 more and the working poor $7,000 more in 2012. Instead, people in the poorest quintile of the population saw their share of national income decline from 7 percent to 3.4 percent and people in the middle three-fifths saw their share drop from 50 percent to 42 percent.
Jobs are “created” when the middle class has enough money to generate demand. But every teacher and cop laid off by Republican governors, every cutback in public assistance by Republican congressmen, every reduction in public- works spending by Republican legislatures is one more blow to middle-class recovery.
Will didn’t get close enough to the truth to tip his hat.
Marty Moore is a freelance writer living in Port Richey.