Okay, let's talk about the economy today. Um, Donald Trump has been touting the current
economy as the best ever.
Trump has been bragging about how strong the economy is in general. He says it's the best
it's ever been for black Americans, the best that's ever been for Hispanic Americans. And
he usually points to unemployment rates and the stock market being high. And yet at the
same time, 40% of the population is still struggling just to pay their basic bills every
single month, which is more than a hundred million people in this country. How is it
possible that we have the best economy ever? And 40% of the population is struggling to
pay their bills? And to really understand this, you actually have to zoom out because
it's bigger than Trump. Of course, when Trump says something like, this is the best economy
ever. It's meaningless political hyperbole. But there's a deeper analysis to be done here
that is beyond left right politics, or at least it's beyond Donald Trump. So let's do
it.
It's true that the economic expansion that the US has seen, dating back to the beginning
of Barack Obama's presidency is on paper the longest economic expansion in the history
of the United States of America. That's true. As defined as as as we define expansions and
still we know that a huge portion of the country can't even afford an unexpected $400 emergency
expense. How is it possible that both are true? The stock market is at record highs.
The unemployment rate is historically at it's lows, and yet there are a record number of
people who are 90 days or more behind on car payments, which is a concerning indicator
that can predict economic trouble and that number continues to climb every single month.
That's not good. How can there be on c a signals on paper that things are so good and at the
same time, nearly half the country can't pay its bills?
And the answer effectively boils down to one word. If we need to boil it down to one word
and that word is inequality. It's a little simplistic, but in a sense it's all about
that one word. Inequality. I'll explain the economic expansion. Dating back to Obama has
been hugely unequal. The gains in the stock market that we've seen dating back to Obama
are a hugely concentrated in a very small portion of the population that owns the vast
majority of the stock. So for a huge number of people, even though on paper the stock
market is way, way, way up, it does very little for a huge number of people that don't own
any or almost any shares of stock wage growth wage has gone mostly to the upper tier net
worth growth has gone mostly to the upper tier, stagnant wages on the lower tier.
So again, on paper you can come up with broad averages that look good or at least look okay.
But for a huge portion of the country, cost of living has continued to go up, but their
inflation adjusted wages have not. So they can't pay their bills even though on paper
they should be okay. Unemployment is low and the stock market is high, just as very little
for a lot of the people living in the United States of America. So when you go all the
way back to 1989 30 years ago, the bottom half of the country is less wealthy today.
Inflation adjusted than they were 30 years ago. This is stunning given the economic growth
that in total the United States has seen in the last 30 years and the explanation is inequality
or specifically unequal growth in almost every aspect of the United States economy. And the
problem with this is that the economy is in a sense hanging by a thread, even though so
many numbers look good.
As Donald Trump talks about, there are like 100 million people in this country for whom
even a mild economic setback in the broader economy can push them into a completely unsustainable
financial situation. This could include a bankruptcy, this could include having to rack
up crushing credit card debt at high interest. This could include a home foreclosure or an
eviction from a place that they rent, vehicle repossession, and of course remember that
in the back of our minds is the possibility that a medical bill could bankrupt us completely.
Our health insurance system fundamentally weakens the economy because of the system
that we have. People who are even in an okay financial position are still at risk of losing
everything because of unexpected medical bills that may not be covered by their insurance.
That's how the system works. That's how the country works, which sheds a lot of light
on the reality that our health insurance system is an economic liability beyond just being
a moral and ethical liability.
So the thing about all of this is that because these things are so political, each president,
each party, they always want to take credit for any wins they can take credit for. They
want to shirk responsibility for any of the losses that they can successfully shirk responsibility
for that. We end up unable to have the real serious conversation. As a result, this is
actually bigger than Republicans and Democrats and now it's true. It's not totally apolitical.
It's true that historically Democrats are better than Republicans in terms of stock
market returns, but that doesn't affect everybody equally. It's true that historically Democrats
are better than Republicans in terms of the average unemployment rate during their presidency.
But that doesn't actually tell us whether people are making a living wage or whether
they have to work multiple jobs in order to make ends meet by the standards we use.
Democrats are better than Republicans, but unfortunately those standards fall very, very
short and these are just bigger that don't even enter into the political election cycles
that we have of two, four and six years, two years for the House of Representatives, four
years for the president and six years for the u s Senate respectively. Automation and
technological unemployment is one of those issues. Inequality is another one of those
issues. Education costs are another issue that around the margins you will hear Poe,
politicians talk about, but nothing serious has been done to deal with that. The health
care system. Fortunately it's entering more into the political discussion, particularly
since the, uh, since 2010 and Obamacare, uh, and Bernie Sanders mainstreaming the idea
of Medicare for all in 2016. But this is why you hear the economy is the best ever, and
there are actually some numbers that sort of seem to reflect that in some way, but yet
almost half the country is hanging by a thread that's not going to change. Listen, if the
stock market, if the Dow goes to 30,000 still a huge portion of the country will be at risk
of a $400 unexpected expense, throwing their financial situation into total disrepair.
Uh, you are not going to change that if the unemployment rate goes from 3.8 to 3.7%. Okay?
These are bigger systemic issues and inequality. If I had to sum it up in one word, tells us
a lot about why this is the case. Let me know what you think. I'm on Twitter at d pacman.
The show is
on twitter@davidpakmanshow