Once again, Princeton University economics professor and Nobel Prize-winner Paul Krugman double-teams readers of the Opinion section of Friday’s New York Times along with the paper’s editors in an op-ed column and an editorial entitled: “Plutocracy, Paralysis, Perplexity” and “Inequality, Debt and the Financial Crisis,” respectively.
As I was reading Krugman’s op-ed and the NY Times Editorial, and as if to underscore their commentary, the publication of the U.S. Labor Department’s Bureau of Labor Statistics’ (BLS) April 2012 Employment Situation Report (i.e.: our nation’s monthly jobs report) was announced to the press and public. In it, we learn that a very weak, net 115,000 new jobs were added to the nation’s job rolls last month; and the BLS’ U.3 Unemployment Index (the seasonally-adjusted, non-farm payroll rate; “SA NFP” and/or “NFP SA”) dropped from 8.2% to 8.1%; once again for all the wrong reasons: quoting the BLS, “...the civilian labor force participation rate declined in April to 63.6 percent, while the employment-population ratio, at 58.4 percent, changed little.” It should be noted that the labor force participation rate is now at its lowest level in over 30 years (since 1981).
In what amounts to one of the few semi-positive statistical aspects of this latest jobs report, we did learn that total nonfarm payroll employment for February was revised upward from +240,000 to +259,000, and the change for March was revised from +120,000 to +154,000.
Here it is, from the BLS...
...Nonfarm payroll employment rose by 115,000 in April, and the unemployment rate was little changed at 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, retail trade, and health care, but declined in transportation and warehousing.
Household Survey Data
Both the number of unemployed persons (12.5 million) and the unemployment rate (8.1 percent) changed little in April. (See table A-1.)
Among the major worker groups, the unemployment rates for adult men (7.5 percent), adult women (7.4 percent), teenagers (24.9 percent), whites (7.4 percent), and Hispanics (10.3 percent) showed little or no change in April, while the rate for blacks (13.0 percent) declined over the month.
The jobless rate for Asians was 5.2 percent in April (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.1 million in April. These individuals made up 41.3 percent of the unemployed. Over the year, the number of long-term unemployed has fallen by 759,000. (See table A-12.)
The civilian labor force participation rate declined in April to 63.6 percent, while the employment-population ratio, at 58.4 percent, changed little. (See table A-1.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in April at 7.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)
In April, 2.4 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 968,000 discouraged workers in April, about the same as a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force in April had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)
Establishment Survey Data
Total nonfarm payroll employment rose by 115,000 in April. This increase followed a gain of 154,000 in March and gains averaging 252,000 per month for December to February. In April, employment rose in professional and business services, retail trade, and health care. Transportation and warehousing lost jobs over the month. (See table B-1.)...
Here’s a
LINK to Calculated Risk’s take on April’s BLS’ stats.
And, here’s our own Meteor Blades: “Another month of weak job growth as the official unemployment rate drops to 8.1%. U6 at 14.5%.”
In a new report certain to generate consternation in the stock market and the White House but private glee in the Republican Party, the Bureau of Labor Statistics announced Friday that the private sector generated a seasonally adjusted 130,000 jobs in April. Public sector layoffs brought the total down to 115,000.
It was the second month in a row that the economy created a disappointingly low number of jobs. This indicates that the upward trend in job creation of earlier this year has gone the way it did in 2011. Only this time, there is no Japanese tsunami or Arab revolutions interfering with commerce and putting uncertainty into the mix of perceptions about where the economy might be headed…
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Returning to Krugman, today’s column exemplifies his writing at its Democratic best. But, looking closely at the parsing of his words, and the commentary of the Times’ editors, it’s also about the greater truth that, as the Princeton economics professor tells us, “…we have responded to [our nation’s financial] crisis with a mix of paralysis and confusion--both of which have a lot to do with the distorting effects of great wealth on our society.”
That’s ”we” -- in his bipartisan-tense – as in the Democratic and Republican “we.” Of course and of late (since the beginning of the year), the always politically-correct Krugman then proceeds to righteously eviscerate the GOP.
Plutocracy, Paralysis, Perplexity
By PAUL KRUGMAN
New York Times
May 4. 2012
…Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society.
Put it this way: If something like the financial crisis of 2008 had occurred in, say, 1971 — the year Richard Nixon declared that “I am now a Keynesian in economic policy” — Washington would probably have responded fairly effectively. There would have been a broad bipartisan consensus in favor of strong action, and there would also have been wide agreement about what kind of action was needed.
But that was then. Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality…
Krugman points to a new book by congressional scholars Thomas Mann and Norman Ornstein [“
It's Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of Extremism,” Basic Books (May 1, 2012)], and he notes that the authors tell us:
“…our political dysfunction is largely because of the transformation of the Republican Party into an extremist force that is ‘dismissive of the legitimacy of its political opposition.’ You can’t get cooperation to serve the national interest when one side of the divide sees no distinction between the national interest and its own partisan triumph.”
He continues, while wearing his partisan best, that “…the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing [to properly address income inequality] impossible.”
He then proceeds to even more brutally eviscerate the Republican Party, in general. But, rather than pass along some of his best lines to you now, I’ll refrain from attempting that and suggest that you read the column to enjoy them for the first time on your own. (See the link, above.)
But, as I infer at the outset of this post, there are discernable patterns to the delightfully partisan tack that the Professor--frequently in conjunction with the Times’ editors, such as it occurs in today’s edition of the paper--takes in his columns this election cycle. And, one of those inconvenient realities is that there’s almost always a more subtle reminder from Krugman concerning this greater truth: the political problems with our economy are not just about one Party’s failings, but about our entire government being, for lack of a better word, broken.
And, that’s why he closes out today’s column with the following, carefully chosen words as to why inequality continues to escalate and our economy, in general, is still in a “depression,” as he states: ”…the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority.”
So, while it is about a GOP that now seeks out those beyond the fringe of political sanity among us, it’s also about the failings of our entire system. Which is why he ends his column talking about the other minority, the one percent, as he states in his final words: “And the key to economic recovery lies in finding a way to get past that minority’s malign influence.”
As they’ve done numerous times, and as I’ve also noted it in my own posts (see: HERE, then HERE, HERE, and HERE for examples of this editorial coordination), the Times’ editors echo Krugman’s content today, but with a slightly more directly-bipartisan approach to the theme du jour.
Inequality, Debt and the Financial Crisis
Editorial
New York Times
May 4, 2012
Recent research by economists from the International Monetary Fund and academia offers some new insights about income inequality, with important implications.
The researchers compared the top 5 percent of United States households from 1983 to 2007 with the remaining 95 percent. What they found is that as the rich got richer in the decades before the Great Recession, everyone else tried to maintain his standard of living by going deeper into debt. As income inequality grew over that period so did debt levels, because the rich increasingly invested their growing wealth in bonds and bank deposits, in effect providing money for ever more lending to the poor and middle class.
The top group’s increasing wealth, and the bottom group’s increasing reliance on debt, spurred the growth of the financial sector. But with ever increasing debt, the financial system — and the broader economy — became ever more vulnerable to crisis.
The data is eye-opening…
The Times’ editors continue noting that, back in 1983:
“…the top 5 percent had 80 cents of debt for every dollar of income, while the remaining 95 percent had 60 cents for every dollar. By 2007, after decades in which an increasing share of income flowed to the top, the situation had reversed. The top 5 percent had 65 cents of debt for every dollar of income, while the remaining 95 percent had $1.40 in debt for every dollar. The situation remains skewed today.”
Keeping it real, the truth is the situation not only “remains skewed today,” it’s gotten worse.
I’ve written about income inequality in my posts quite frequently. My most recent diary where I covered this subject, exclusively, was on March 5th: “Saez' 2010 Inequality Update: Incomes of 1% Grew 11.6%, Incomes of 99% "Grew" 0.2%.”
As the Times’ editors point it out to us, today, the first step in any truly equitable economic recovery is to achieve “orderly debt reduction.” They cite the obvious reality that a major aspect of that effort would include “…mortgage modifications.“ The editors also note: “The second and more important step is to reduce income inequality by raising wages, possibly by strengthening collective bargaining.”
Bringing this post full circle, I want to note that the bigger realities that (both Krugman and) the Times’ editors mostly ignore today are…
--Led by Treasury Secretary Tim Geithner’s and Fed Chair Ben Bernanke’s completely Wall Street-centric “recovery” efforts since 2009, our own Party has done a pathetic job as far as succeeding at pushing through any truly substantive mortgage modification (i.e.: “orderly debt reduction”) results are concerned. To posit that a primarily taxpayer- and investor-funded (the lion’s share of these comparatively meager funds are not coming out of the banks’ pockets), $25 billion “mortgage fraud settlement” will, in any way, shape or form, effectively address the net six +/- trillion dollars in home equity losses that Main Street has suffered over the past five years is just one of many travesties that remind us that—when all’s said and done--moreso than ever, “The banks run the place.”
--While efforts to strengthen collective bargaining should be heartily encouraged by our Party and our government, in general, given the bigger reality that union membership comprises only about 12% of the working population in this country, means that any effort along those lines represents a mere drop-in-the-bucket towards guaranteeing that Main Street’s income inequality glass is half-full anytime in the foreseeable future.
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For more on all of this, you might want to checkout these three recent posts from yours truly...
"As Pragmatic As It Gets: 'Is The Fiscal Cliff Coming Before The Election?'" (4/30/12)
"No End In Sight" (4/27/12)
"Our Party's Road To Hell Is Paved With Income Inequality" (4/17/12)
And, here are links to two, recent and quite pertinent pieces I've published on Joseph Stiglitz' sentiments...
"Joseph Stiglitz via The European Magazine: 'Austerity and a New Recession' (Breaking Update)" (4/25/12)
"Stiglitz Eviscerates Spin In Tuesday’s Financial Times: U.S. Jobs Market Still 'Is A Shambles'" (3/13/12)
8:44 AM PT: Sorry I missed this when I first published this post, a short while ago. I'd strongly suggest a read of Kossack gjohnsit's (one of my all-time favorite bloggers...period) latest post: "Millions to lose unemployment benefits this summer."