Our Economic Quandary
27 June 2017 | Pago Pago, American Samoa
Inflation-adjusted median incomes in the US have remained virtually stagnant since 1998 or earlier, as we look back.
Globally, your household is --
1) poor if your income is less than $2,920 a year;
2) low income, if your income is less than $14,200 a year;
3) middle income, if it is between $14,600 and $29,200; and
4) upper middle income if more than $29,200 and less than $73,000; and
5) above that, you are upper income, globally.
Most people in America are not well off. The bottom 50% of Americans have an average income of $16,200. The top 1% have 81 times more income that everyone in the bottom 50 %.
Consumption is 70% plus of our economy, but growth in consumption since about 2000 has been slowed because of no real wage growth and has been financed by minimal savings and mostly debt. Debt too is now reached a rough limit.
Corporate profits have risen by debt financed consumption, corporate cost cutting and various accounting gimmicks. But profits too are facing a ceiling and that translates to a elastic ceiling on stock prices as well, with some adjustment flexibility.
The point is we are maxed out and a bit out of balance, while our infrastructure, government and future planning are all a mess. Our rich and super rich are sitting on and hoarding literally trillions of dollars, over and above what they spend on real investment and consumption. The Fed has flooded the economy with liquidity, but most of it is hoarded by the rich. Interest rates fall with the Fed's ZIP policy, even as the Fed is trying to abandon ZIP now with a few hikes.
Congress is controlled by republicans who are determined to cut taxes for the oligarchy and continue national policies of austerity. Trump threatens the income of the bottom half and government itself. Political turmoil attends and displaces much else.
In this quandary, which way can we go? Good options are few.
1) Divided between liberals and progressives of all stripes and overrun by Obama/Hillary styled do nothings, the democratic party stands little chance of a noteworthy real revival. A new Progressive party is odd man out in our two party system of government. Old liberals barely recognize a need for change. Democrats are out smarted, in shambles and have no game plan.
2) America is now well divided between liberal and libertarian economic thinking, thanks to the huge and well funded libertarian propaganda campaign that began in the early 1970's when Koch brothers and their friends misappropriation of the Powell Letter and began implementing their propaganda campaign. Economic consenses are no longer really possible. We have been rendered a nation divided and thereby neutered by the oligarchy. We cannot oppose them.
3) Austerity will therefore remain. The oligarchy has a tight fist on the purse strings and wants more tax cuts following the Obamacare repeal. Forget a worthwhile infrastructure program. Everything politicians have ever done has been too little, too late. Government is effectively stalemated, not by political parties, but by starvation of funds.
4) We will have our end of cycle recession soon enough, but I do not think it will be a mega crash. More like a run of the mill recession and we will continue living on in our new lower low with most Americans remaining on edge and some going under.
5) If the Supreme Court were to rule in the upcoming redistricting case that no districting nor redistricting may give any party a political advantage and establish worthy test criteria for determining that, it would be a great result for our democracy, but with this Court that type of macro solution is unlikely. The problem of politicians bought off with campaign dollars remains and will get worse and more blatant. Efforts to deal with this problem have all gone in the wrong direction. Many now unabashedly seek social, political and economic injustice, without apologies. It is a tight fisted, mean spirited age.
6) The prospect of a stacked constitutional convention to bulldoze sleeping liberals and progressives is a very real likelihood and God only knows what disasters might ensue from that, beyond a balanced budget amendment to destroy the safety net. The process is shaping up like the healthcare bill in the senate.
7) Impeaching Trump won't change much here. Pence could even be worse and get much more that is bad done than Trump is.
There is little good change in our prospects and more that is bad to worsen things. The future, aside from any war with Korea, is most likely to resemble and be a replay of the present, although somewhat degraded in several regards.These are not happy results.