Waiting for this century's Eugene Debs

But over the past week or so, inequality suddenly has emerged as the economic story de jour in the mainstream press - thanks, I think, to the convergence of politics (Kerry puts the "Two Americas" candidate on the ticket) and economics (Labor Department reports that real wages - i.e. adjusted for inflation - declined in June for the second month in a row.) According to the Economic Policy Institute, real hourly and real weekly wages have both fallen in six of the last seven months, and are now lower than they were in November 2001, at the tail end of the last recession. While it's not uncommon for real wages to decline in the early stages of a recovery (in part because hiring tends to lag the upturn in production), for workers to be this far behind this far along in an economic expansion is unprecedented, at least by modern post-World War II standards.

But of course, modern standards might not be the right measuring stick, given that the entire thrust of the last 20 years of economic history has been to push the U.S. economy back towards its pre-New Deal state, in which deflation - and the downward pressure it placed on wages - was a generally accepted economic fact of life.

  Billmon post

All told, real wages dropped more than 20% between 1972 and 1992. I've often wondered what the political fallout would have been if that same decline had been administered the old-fashioned way - through direct pay cuts by employers instead of the gradual, indirect erosion of inflation. Who knows? Instead of Ronald Reagan, we might have gotten an American Lenin.

Inflation is an interesting thing. It's as though we simply accept it as a natural law. Why does the cost of things increase if not because the workers producing them are getting paid more? New technology, new equipment? Raw materials becoming scarce? It seems that much of the increase 'just happens'. But you expect it, don't you? It's just that prices always go up. And actually, it seems that there are always more choices of 'things'. Certainly there's no shortage of junk on the shelves. What determines the inflationary rate anyway? I obviously need an education here. Do you think this would be a good place to start -- Mechanics of Inflation: the great government swindle and how it works. I'll poke around and let you know if I find anything interesting. And Nell (sidebar email) will gladly receive comments from anyone who wishes to offer any inflation enlightenment.

Bushonomics hasn't so much created the problem as aggravated it. The underlying trends were all well entrenched when Bush took office, and are driven more by the incremental changes since the '70s - declining union strength, increased global trade, disinflationary monetary policy, etc.

But by using fiscal policy (i.e. tax cuts) to further skew income distribution towards the tip of the economic pyramid - at a time when real wage growth has been particularly stagnant - Bush has given the process another shove forward. If nothing else, he's generated an economic expansion with some definite 19th century qualities to it - luxury above, relative austerity below.

The more things change....

Certainly, there's no indication that inequality and the disinflationary squeeze are about to generate a major partisan realignment - which may be a credit to the Republican skill at tribal manipulation, a lingering after-effect of 9/11, or just a sign the Democrats haven't given anyone much of an incentive to switch sides (other than Nader, I mean).

...The populist backlash may not be as strong this year as the angry tide that washed out Daddy Bush (tribal loyalities have hardened tremendously since then, and the Democrats have become even less credible as the party of the little guy.) But it might be strong enough to push Bush Jr. out of the White House - particularly if the economic deceleration that began last month continues into the fall.

...[M]anaging the restored Old Deal may not be possible with the policy tools at hand. And building a newer deal, one that reconciles the benefits of globalization with the social problems it creates, doesn't seem to be on Kerry's agenda, or anybody else's.

Maybe it's just a bridge too far.

I don't think actually changing things is even on very many people's minds. After all, we expect to have to tighten our finances and hunker down in the midst of a GWOT. Times will improve once we've routed out all those terrorists, one by nasty one. It's a sacrifice we Americans are willing to make. To make the world a better, safer place. And that is exactly what George the Idiot is promising us in all his campaign speeches - a safer America.

Pretty good move on War Party A's part, because War Party B has no alternative but to promise that one better. And how to do that? By offering up more troops in the GWOT than War Part A has committed.

Don't look for any huge number of citizens to catch on, either. They're getting their "news" from the TV. I was looking at a site that tracks the numbers of people visiting blogs recently. While YWA gets less visits per day than Worst Weblog Ever and Dogsnot Diaries both, the more disheartening thing is that the number of people visiting even the most popular political blogs is but a drop in the bucket of the country's population.

Add that to Sy Hersh's considered judgment that there's really nothing we can do about the criminal actions of our country's policy makers and those that carry them out, and I don't think there's a great deal to be encouraged about. Get excited about election if you will; it's a temporary and distracting event.

....but hey, do what you want....you will anyway.