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Concluding paragraphs: Has this recession, which has reduced hiring more than it has increased layoffs, left the kind of people who converse with the powerful

Concluding paragraphs: Has this recession, which has reduced hiring more than it has increased layoffs, left the kind of people who converse with the powerful in Washington secure in their jobs and thus communicating calm while the unemployed are engulfed in panic? Are we passively watching an unrepresented underclass of the long-term unemployed created before our eyes? I don’t know. But this unseemly calm does astonish me.

hga 16y ago
It is ... more than curious. Although I don't quite remember the early '80s as this author does, e.g. a long lag in recovery was baked into the pie when the Congress required a phasing in of the Reagan tax rate cuts (which as I recall also didn't result in tax revenue cuts, since the rates at the time were way past the Laffer curve point of diminishing returns (e.g. maxes of 50% for "earned" income and 75% for "unearned" income)). The author also forgets the massive and regressive 1982 Social Security and Medicare tax rate increases which added to the maelstrom that we exited in due course when it became "Morning in America" (the theme of the Reagan 1984 reelection campaign). There was certainly some panic, e.g. this was the start of when reporting on the homeless depended on which party held the White House, but Washington was deadly serious about the economic and defense situation, something we just don't see today when unemployment is much larger (the official U-3 rates are not directly comparable due to Clinton changing how it was scored. Use U-6 and/or http://www.shadowstats.com/ http://www.shadowstats.com/) and e.g. Iran is close to getting The Bomb. The other big difference is that the '70s to early '80s economic situation was vastly different. Back then we had a nasty case of stagflation to cure (high unemployment + high inflation, the death of the Phillips Curve). And there was a bipartisan deregulatory consensus, e.g. it was Ted Kennedy and Jimmy Carter who deregulated trucking and civilian aviation. For that matter as I recall Carter started the cutting of capital gains tax rates. Today we have a deflation, and those are much harder to politically deal with (the irresistible temptation starting with Hoover to indefinitely delay the wringing out of speculative excesses). The Great Depression and Japan's two Lost Decades and counting show one approach that doesn't work, why it's call "pushing on a string". We're trying the same approach so there's no wonder a) it isn't working and b) politically it's "OK" (FDR and the Democrats kept winning elections till after WWII, Japan's LDP didn't get turned out of office until very recently). It's not (yet) an existential crisis for our ruling class and the danger they're in is from too much "government" (e.g. ObamaCare) and too much (deficit) spending. And as long as limited government (e.g. Calvin Coolidge following Wilson's WWI excesses) remains a dead and mostly forgotten principle there's always going to be a party of the government, so the Democrats aren't in an existential crisis.
starkfist 16y ago
It's not just political elites, everyone employed by state and federal governments are in a vastly different economic situation than people employed in the private sector.
- hga 16y ago
  Indeed; here's just the most recent (this morning) ideological but not partisan essay/rant I've come across on this topic, which says that "that federal employees now earn double the compensation of those in the private sector" on average (quoting a Cato Institute guy): http://www.powerlineblog.com/archives/2010/06/026436.php http://www.powerlineblog.com/archives/2010/06/026436.php That said, it's not universal at the state and local level. In Missouri and my SW corner of it, state and local workers are getting laid off, having the salaries frozen, etc. Again, this is again an "ideological" vs. partisan thing, our new as of 2009 governor who's laid off thousands of state employees is a Democrat. He, the Republican legislature and the state colleges and universities have worked out an agreement whereby if they don't raise tuition they won't get their state funding cut. To tie this back to the original essay, Reagan famously noted that the reason the D.C. suburbs were some of the wealthiest in the nation was "that's where your money is going to".

hga 16y ago

It is ... more than curious. Although I don't quite remember the early '80s as this author does, e.g. a long lag in recovery was baked into the pie when the Congress required a phasing in of the Reagan tax rate cuts (which as I recall also didn't result in tax revenue cuts, since the rates at the time were way past the Laffer curve point of diminishing returns (e.g. maxes of 50% for "earned" income and 75% for "unearned" income)). The author also forgets the massive and regressive 1982 Social Security and Medicare tax rate increases which added to the maelstrom that we exited in due course when it became "Morning in America" (the theme of the Reagan 1984 reelection campaign). There was certainly some panic, e.g. this was the start of when reporting on the homeless depended on which party held the White House, but Washington was deadly serious about the economic and defense situation, something we just don't see today when unemployment is much larger (the official U-3 rates are not directly comparable due to Clinton changing how it was scored. Use U-6 and/or http://www.shadowstats.com/ http://www.shadowstats.com/) and e.g. Iran is close to getting The Bomb. The other big difference is that the '70s to early '80s economic situation was vastly different. Back then we had a nasty case of stagflation to cure (high unemployment + high inflation, the death of the Phillips Curve). And there was a bipartisan deregulatory consensus, e.g. it was Ted Kennedy and Jimmy Carter who deregulated trucking and civilian aviation. For that matter as I recall Carter started the cutting of capital gains tax rates. Today we have a deflation, and those are much harder to politically deal with (the irresistible temptation starting with Hoover to indefinitely delay the wringing out of speculative excesses). The Great Depression and Japan's two Lost Decades and counting show one approach that doesn't work, why it's call "pushing on a string". We're trying the same approach so there's no wonder a) it isn't working and b) politically it's "OK" (FDR and the Democrats kept winning elections till after WWII, Japan's LDP didn't get turned out of office until very recently). It's not (yet) an existential crisis for our ruling class and the danger they're in is from too much "government" (e.g. ObamaCare) and too much (deficit) spending. And as long as limited government (e.g. Calvin Coolidge following Wilson's WWI excesses) remains a dead and mostly forgotten principle there's always going to be a party of the government, so the Democrats aren't in an existential crisis.

starkfist 16y ago

It's not just political elites, everyone employed by state and federal governments are in a vastly different economic situation than people employed in the private sector.

hga 16y ago
Indeed; here's just the most recent (this morning) ideological but not partisan essay/rant I've come across on this topic, which says that "that federal employees now earn double the compensation of those in the private sector" on average (quoting a Cato Institute guy): http://www.powerlineblog.com/archives/2010/06/026436.php http://www.powerlineblog.com/archives/2010/06/026436.php That said, it's not universal at the state and local level. In Missouri and my SW corner of it, state and local workers are getting laid off, having the salaries frozen, etc. Again, this is again an "ideological" vs. partisan thing, our new as of 2009 governor who's laid off thousands of state employees is a Democrat. He, the Republican legislature and the state colleges and universities have worked out an agreement whereby if they don't raise tuition they won't get their state funding cut. To tie this back to the original essay, Reagan famously noted that the reason the D.C. suburbs were some of the wealthiest in the nation was "that's where your money is going to".