Jim Hightower gives a failing grade to the geniuses who hollowed out our economy.They say you should never ask a barber if you need a haircut. Likewise, never ask the geniuses in charge of our economy if things are going well, for they are always waving the pom-poms of economic cheerfulness.
Take last spring, when the establishment media first began to notice that something called the subprime mortgage industry seemed to be cratering. By year’s end, the crash would bury the homeownership dreams of almost half a million Americans, but officials in Washington and on Wall Street kept assuring us they had this little hiccup under control.
It is “largely contained,” Treasury Secretary Henry Paulson said last March, using his most dismissive tone. A month later, a federal banking official reassured anxious investors that the signs of collapse were “mostly contained.” Not to worry, echoed Bush’s new Federal Reserve chairman, Ben Bernanke, the problem is “contained.” Then in June, Stan O’Neal, CEO of Merrill Lynch, chimed in that the subprime glitch was “reasonably well contained”—a comforting thought that he offered just a few months before Merrill Lynch reported a $2 billion loss, mostly on these shaky mortgages, costing Stan his CEO-ship.
It’s a strange world, isn’t it? Media and political leaders who laugh at fortune tellers take pronouncements of these financial officials seriously. For example, Alan Blinder is an economic guru who is a policy confidant of such leading Democrats as the Clintons. Yet, he recently expressed bafflement at people’s deep pessimism toward their families’ economic future: “People are more sour about the economy than the data would seem to warrant,” he mused.
Could someone buy this guy a clue? Yes, America has had a boom—but for whom? Macro stats showing growth in the Gross Domestic Product are nice, but the problem with such happy data is that people can’t eat it, gas up their cars with it, or put it in the bank. For most folks, the gross number that matters is whether their income is keeping up with their outgo—and it isn’t. For the past five years, while GDP has grown, real wages for the workaday majority have declined. It’s not irrational anxiety that is souring people on the economy, it’s reality.
Now we’re being asked again to believe that these gooberheads know what they’re doing. Finally admitting that, well, yes, there does seem to be a little recession in the works, the economic spin doctors have prescribed a dandy elixir to cure it: $168 billion worth of stimulus checks. Take your $300 to $600 and “go shopping,” they exclaim!
Do they think we have suckerwrappers around our heads? If we all rush out to buy some electronics, toys, clothing, and stuff, whose economy are we stimulating? China’s! That’s because these same economic geniuses have helped hollow out our economy, shipping our middle class jobs offshore, and reducing us from producers to consumers. Only, we now don’t have the wages to consume our way to prosperity.
Instead of a stimulus, America needs a full-tilt grassroots recovery based on reviving the middle class. How about rebuilding America’s crumbling infrastructure? How about upgrading our Internet and phone systems to the high standards of Europe and Japan? How about investing in a national health care system to lift all boats? How about putting Americans to work in a green-energy revolution, doing everything from conservation retrofits for all of our buildings to constructing high-speed train networks?
John Kenneth Galbraith once said, “If all the economists were laid end to end, it would be a good thing.” It’s time to quit listening to aloof, clueless Wall Street prognosticators and start bringing economic policy back to the ground level, back to reality.
Jim Hightower produces The Hightower Lowdown political newsletter and is the author of the new book “Swim Against the Current: Even a Dead Fish Can Go with the Flow.”