Washington’s Literal Sinkhole, and Our Idiotic Fixation on Deficits

[eridani]

http://www.nationofchange.org/washington-s-literal-sinkhole-and-our-idiotic-fixation-deficits-1369663205

On Tuesday, a “sinkhole” suddenly sank in Washington D.C. three blocks from the White House. Not a metaphor, but a massive hole in the road as “long as a Ford Explorer,” double the width of a train car and 17 feet deep. The asphalt eroded around a metal plate covering potholes in the street and collapsed over a sewer line that was laid in 1897. The sinkhole will take at least five days to “repair.”

There is an idiocy about our current national politics that is simply stupefying. We are sitting idly, watching, and suffering, as our nation disintegrates into a run-down backwater. Our airports are a global disgrace. Our railroads, broadband, energy grid are all outmoded by international standards. A bridge falls every other day. Our sewage systems are overwhelmed by normal use, and collapse in the extreme weather that has become the national norm. Sinkholes now are becoming a life-threatening peril.

At the same time, over 20 million people are in need of full-time work. The construction industry has still not recovered from the housing collapse. The federal government can borrow money at interest rates near zero. Yet instead of grabbing this opportunity to rebuild the country, Washington is focused on cutting budgets, an austerity that clearly costs jobs and impedes the recovery.

Any business leader with a wit of sense would say this is the perfect time to borrow money to rebuild the country, making investments now that will make us more competitive in the future. That’s why the head of the Business Roundtable, former Republican governor John Engler, says it. At the top of his wish list for the economy is borrowing money to invest in roads and infrastructure. The resulting growth will more than repay the virtually free money. We’ll end up with a more competitive economy, a healthier and modern infrastructure that will make lives easier and safer, more jobs, more income, more taxes and less debt.

[Laelth]

1. Simple Keynsean economics.

I am not an economist, but I think Keynes was right about this. The public sector ought to spend more when the private sector contracts in order to stimulate activity and to lessen the effects of a contracting economy.

Some sane Republicans can see this and say it. Most, however, have to toe the party line.

-Laelth

[JayhawkSD]

2. I don't disagree with you at all, but...

What do you do with the politicians who say we are in a steady recovery? Keynes advocated spending when in recession, but according to politics and the media we are no longer in recession, we are in recovery. If we are in recovery, then all we need to do is continue what we are doing, whichj is printing money (formally known as "Quantative Easing&quot , cutting federal spending, raising taxes, and everyting will eventually, someday in the future, be absolutely perfect.

Now, you and I may have a different picture of what is happening with the economy, but you and I are wrong. The stock market proves us wrong, as do housing prices and "leading economic indicaters."

What are you going to believe? The media and our elected leadership, or your own lying eyes?

[Laelth]

3. Good point, and I do not know the answer.

The alleged "recovery" that we're in is not distributing its benefits uniformly. Most of us are still stuggling, and austerity measures (like cutting SNAP benefits) are compounding the problem. I do not buy the argument that the Dow Jones is a good gauge of national prosperity. Ultimately, I think I would argue that the recovery can only be preserved and sustained by abandoning draconian austerity measures. No clue whether that argument might gain any traction.

-Laelth

[Yo_Mama]

4. We are in a recovery, just a very flat one

But this is due to many factors - the holdover from the massive debt accumulation is one of them:

From 1999 to 2009, the amount of home mortgages outstanding rose more than 150%.

In the meantime, per capita incomes couldn't keep pace, nor are they per capita incomes are not recovering as they normally would in an expansion:


In the meantime, the younger would-be home buyers have disproportionate amounts of debt. The increase in consumer credit seen here is mostly student loans:


Demographics of the US population are also a factor. As people move into their 50s, they naturally seek to pay off debt and plan for retirements. It makes sense that many would raise savings rates:



The construction industry will never recover to its pre-recession point (pop-adjusted), because we had a huge RE bubble:


All of that having been conceded, still this is a recovery:

Although there's a problem with hires:


But among the factors holding it back are reasonably high rates of indebtedness among nonfinancial companies, which really have most of the jobs:


Very high indebtedness of state and local governments:

Which grew very disproportionately to their receipts:


Along with a very high rate of federal government indebtedness:


Debt is constraining growth right across the board, and state and local governments are in the worst fix - and they are not able to raise taxes to redress the imbalance.

[JayhawkSD]

5. A "flat recovery" is a contradiction in terms. n/t

[Yo_Mama]

6. You can see from the graphs

That when I used the word "flat" I was using it in a comparative sense. The graphs are not flat. We are growing - our economy is growing.

But it's not growing strongly, and it really can't because of the excesses of the past and our demographics.


That's our recovery. It's not great, but it is a recovery. We are now entering the fifth year of recovery.


But it's hard to recoup the losses because of the very severe GDP decline and the factors I listed above.

[JayhawkSD]

7. It's still a contradiction in terms.

A "shallow" recovery, prehaps, or some other term, but the word "flat" has a very specific meaning.

And... I believe government charts just like I believe that the government is not spying on us.

Use an extended scale across the bottom and a compressed scale on the vertical left and you get a nice steep line that makes things look far better than they are. Then talk about the raw "number of people employed" and do not adjust for population so that you don't have to worry about the fact that the percentage of people employed is still declining and the number "not in the work force" is at an all time high and not measurably decreasing. Make it even rosier by measuring employment without discriminating between full time and "involuntary part time" employment because the more part time jobs that are in play the more overall jobs there are. Finally, just measure job count and pay no attention whatever to the quality of those jobs in terms of wages, benefits, stability or potential growth.

Oh yes, the stock market is awesome, $500,000 houses are selling like hotcakes, and corporate profits are stellar. Meanwhile middle class wages are still declining and food stamp usage is at its highest since the program began and is still climbing.

Recovery? Stick your recovery.

[Yo_Mama]

8. But those numbers are influenced by retirements!

Your points are all valid, but even if we had a riproaring economy, we would still have a declining participation rate. Demographics force that to be so.

If you were born in 1946, you're 67. And if you were born in 1947, you are 66 this year. The huge numbers of people who retire between 62 and now 66 mean that participation rates must decrease.

It is true that but for retirements and disability retirements, the unemployment rate would be very high, but there's no way that the economy can pick up speed very quickly under these circs.

[JayhawkSD]

9. Not based on how the work force is defined

The work force is defined the population between the ages of 18 and 67, so retirement does not affect the percentage of the work force which is employed. Retirement certainly does not affect the number of jobs that are "involuntary part time." Retirement does not affect the average middle class wage. Retirement does not cause jobs to pay less, offer fewer benefits, be less stable and have less opportunity for growth.

Retirement between age 62 and 67 is not something that is affecting the economy, it is something that is caused by the economy. People retire early because they cannot find a job.

[Yo_Mama]

10. Labor force is all those above 16 who are either working or seeking a job or have recently

The definition of the civilian labor force used by the US:
http://www.bls.gov/dolfaq/bls_ques23.htm

Civilian noninstitutional population: Persons 16 years of age and older residing in the 50 states and the District of Columbia, who are not inmates of institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.

Civilian labor force: All persons in the civilian noninstitutional population classified as either employed or unemployed.

In the US, if you are 70 and working or seeking work you are counted as being in the labor force. If you are 67 and you looked for a job in the last 12 months you are counted in the discouraged.

Your other points are mostly valid. Some people are retiring because they can. Many are retiring because they lost jobs and can't find another too. It varies.

Labor slack is causing the low wages.

The need for older persons to work longer is causing some of the labor slack. Currently 23.2% of persons 65 and older with no disability are working. 24.4% of persons 65 and older with no disability are in the labor force, which is almost 1 out of 4. Nearly 7 million of those employed are 65 or older - 6,965,000 as of May, to be exact.

Older people are working longer because they are poorer. Because they work longer the teens have more trouble finding jobs. All of these are feedback loops. There aren't straight-line causations.

[mbperrin]

11. Not a soul alive can argue that we are in anything but poor shape as a country.

I live in an area supposed to be in a big oil boom, and yet:

1. Construction permits are down 50% from last year.
2. Record numbers of applications for food stamps by employed persons.
3. Hundreds of miles of road in the county that cannot be repaired due to lack of money, yet it is being destroyed by heavy equipment in the oil field, supposedly a sign of good tidings.
4. We're on water rationing and have been, and there is no money to make it better, so just let everything die.
5. The only water park in 300 miles is closed, as well as a 50 year old miniature golf course. There are only two movie theaters left in a town of 140,000 that used to have a dozen.
6. Schools haven't gotten new textbooks since 2003 - no money to buy, although enrollment in schools is up 30% in 3 years.
7. Every upscale restaurant and steakhouse has gone bust, replaced by 5 Guys, McAlister's Deli, Subway, and Jersey Girl pizza.

and we're supposed to be in the best part of the country!