Vibecession: The US economy in the Biden years
An evidence-based assessment by economist Robert Pollin:
The polling evidence on people’s perceptions about the economy are confusingly mixed. Thus, according to the most recent polls, most people respond that their own personal economic circumstances are in good shape. Most even say that conditions are good overall in their home states. But a majority do also still respond that, overall, the U.S. economy is in bad shape.
This pattern has been termed a “vibecession” — that people have a sense that the overall U.S. economy is in bad shape even while they themselves are fine, and even when, objectively, overall economic conditions, by standard measures, are indeed positive relative to the previous 50 years under neoliberalism. To cite now just the most basic relevant measures, the official U.S. unemployment rate, at 3.6 percent for 2023 and 3.8 percent for the first five months of 2024, is lower than at any comparable period over the past 54 years. The expansion of job opportunities has been across the board, in all economic sectors. Average real wages — that is, what you can buy with your paycheck, after adjusting for inflation — have also gone up across the board for the past 18 months, if only by about 1 percent.
I do need to emphasize that I am speaking in relative terms about the good economic conditions under Biden. Over his three years in office, Biden has certainly not reversed 50 years of pro-Big Business, anti-working-class policies under neoliberalism. As just one indicator, the average real wage — i.e. how much your wage can purchase, after controlling for inflation — was in 2023, at $28.90, almost exactly what it was in 1973. This is despite average labor productivity — what the average worker produces in a day — has more than doubled since 1973. This $28.90 average real wage today is also below a living wage standard throughout all U.S. regions, as measured by the MIT Living Wage Calculator.
Read more here.
Promising news on brownfields
The United States is dotted with up to a million brownfields — industrial and commercial properties polluted with hazardous substances. These sites are disproportionally concentrated near low-income communities and communities of color, according to the Environmental Protection Agency, and researchers predict that heavy rains and flooding due to climate change are likely to both spread and increase exposure to these contaminants.
For more than 15 years, Danielle Stevenson, who holds a PhD in environmental toxicology from the University of California, Riverside, has been pioneering a nature-based technique for restoring contaminated land, using fungi and native plants to break down toxins like petroleum, plastics, and pesticides into less toxic chemicals.
The usual way of dealing with tainted soil is to dig it up and cart it off to distant landfills. But that method is expensive and simply moves the problem somewhere else, Stevenson says, “typically to another state with less restrictive dumping laws.”
Read more here.
Coal fleece
It’s not only future generations who get screwed:
In Louisiana in February, an administrative law judge recommended that state regulators reject a request from two utilities that wanted to recover more than $180 million in fuel costs from ratepayers stemming from a coal-fired power plant that was shut down in 2021. The judge found that the utilities fed their customers high-cost power by burning coal sourced from a mine that they also owned. The utilities quadrupled the price of coal to recover an investment made to the mine, a practice that tripled the cost of electricity from their power plant, Dolet Hills Power Station.
Read more here.
Busting the Bankers’ Club
Econ4’s Jerry Epstein talks about his new book on “finance for the rest of us”:
How to fight toxic inequality
Econ4’s Jim Boyce interviewed on Truthout:
In the upper tier of the economic spectrum, wealth generates income, and income in turn generates more wealth. The rich make money even when they sleep. Their economic advantages are compounded by their political influence over the government. At the opposite end of the economic spectrum, the poor make money only when they work. Even then, they often don’t make much. Unless some kind of countervailing force is present, inequality tends to widen over time — an accumulation of advantages and disadvantages.
If the economy were a self-contained perpetual-motion machine, economics would be a dismal science indeed. But it is not…
Read more here.
A new spirit of questioning
Continuing its remarkable run of pieces pulling the comfortable rug out from under mainstream economics, Finance & Development has now published a think-piece by Nobel laureate Angus Deaton. Excerpts:
Like many others, I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century….
- Power: Our emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game. Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.
- Philosophy and ethics: In contrast to economists from Adam Smith and Karl Marx through John Maynard Keynes, Friedrich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who focus on efficiency. We get little training about the ends of economics, on the meaning of well-being—welfare economics has long since vanished from the curriculum—or on what philosophers say about equality. When pressed, we usually fall back on an income-based utilitarianism. We often equate well-being with money or consumption, missing much of what matters to people….
Read more here.
Economics’ original sin: the exclusion of power
Jayati Ghosh deconstructs the multiple failings of mainstream economics – again, remarkably, in the IMF’s Finance & Development:
Much of what is presented as received economic wisdom about how economies work and the implications of policies is at best misleading and at worst simply wrong. For decades now, a significant and powerful lobby within the discipline has peddled half-truths and even falsehoods on many critical issues—for example, how financial markets work and whether they can be “efficient” without regulation; the macroeconomic and distributive implications of fiscal policies; the impact of labor market and wage deregulation on employment and unemployment; how patterns of international trade and investment affect livelihoods and the possibility of economic diversification; how private investment responds to policy incentives such as tax breaks and subsidies and to fiscal deficits; how multinational investment and global value chains affect producers and consumers; the ecological damage wrought by patterns of production and consumption; whether tighter intellectual property rights are really necessary to promote invention and innovation; and so on.
Why does this happen? The original sin could be the exclusion of the concept of power from the discourse, which effectively reinforces existing power structures and imbalances. Underlying conditions are swept aside or covered up, such as the greater power of capital compared with workers; unsustainable exploitation of nature; differential treatment of workers through social labor market segmentation; the private abuse of market power and rent-seeking behavior; the use of political power to push private economic interests within and between nations; and the distributive impacts of fiscal and monetary policies. The deep and continuing concerns with GDP as a measure of progress are ignored; despite its many conceptual and methodological flaws, it remains the basic indicator, just because it’s there.
Read her piece here.
Beyond cookie-cutter economics
Dani Rodrik writes – believe it or not, this is in the IMF’s monthly Finance & Development – in a biting critique of free-market orthodoxy:
Economists who want to be relevant and useful must offer concrete solutions to the central problems of our time: speeding the climate transition, creating inclusive economies, promoting economic development in poorer nations. But they must avoid cookie-cutter Econ 101 solutions. Their discipline offers much more than rules of thumb. Economics can help only if it expands our collective imagination instead of reining it in.
Read his piece here.
Hard times in a ‘good’ economy – 2
The political fallout could be huge:
Nevada has the worst unemployment rate in the country, gas and grocery prices are still among the nation’s highest, and the cost of housing here has soared. President Biden’s policies are squarely to blame, Republicans argue, and former President Donald J. Trump will fix it if voters return him to the White House.
Nevada’s unemployment rate has been cut in half since Mr. Biden took office, gas prices have dropped by nearly $2 a gallon since mid-2022, and more than 200,000 jobs have already been created as the state is receiving $3.3 billion in infrastructure investments. Democrats here say that the economy is finally on the upswing after Mr. Trump and the coronavirus pandemic drove it into the ground, and that re-electing Mr. Biden is critical to keeping it that way.
Which of these disparate economic pictures resonates most strongly with voters could make a difference come November in the critical battleground state.
Read more here.
