Physicians take care about something known as differential diagnosis, because if one doesn’t accurately identify the source of a problem the likelihood of treating it effectively is greatly reduced.
Are those headaches a patient complains of the result of needing new eyeglasses, sinusitis, untreated hypertension or a brain tumor? A good doctor will work through the possibilities, carefully and methodically ruling out one after another on the way to prescribing proper treatment.
Would that President Obama and his crack team of financial industry insiders were doing differential diagnosis concerning our weak, seriously ill economy — as opposed to assuring us the recovery light is coming into view at the end of the recession tunnel.
In an excellent post at his blog, Robert Reich has done the necessary differential diagnosis on what’s ailing our economy. Here’s the gist:
The real locus of the problem was never the financial economy to begin with, and the bailout of Wall Street was a sideshow. The real problem was on Main Street, in the real economy. Before the crash, much of America had fallen deeply into unsustainable debt because it had no other way to maintain its standard of living. That’s because for so many years almost all the gains of economic growth had been going to a relatively small number of people at the top.
President Obama and his economic team have been telling Americans we’ll have to save more in future years, spend less and borrow less from the rest of the world, especially from China. This is necessary and inevitable, they say, in order to “rebalance” global financial flows. China has saved too much and consumed too little, while we have done the reverse.
In truth, most Americans did not spend too much in recent years, relative to the increasing size of the overall American economy. They spent too much only in relation to their declining portion of its gains. Had their portion kept up — had the people at the top of corporate America, Wall Street banks and hedge funds not taken a disproportionate share — most Americans would not have felt the necessity to borrow so much.
So, what’s wrong with our economy is the predictable result of 30 years of conservative, Robin Hood-in-reverse policies. Three Republican presidents prescribed trickle-down snake oil and the patient damn near died. One DLC-type Democrat (Republican-lite, if you will) president eased off on the snake oil with one hand, while bleeding the economy of jobs and manufacturing with the other, resulting in severe anemia.
Right now, Obama’s future as president is suffering early symptoms of the weak and shakies. If he doesn’t bring in some new and better economic specialists — Reich, Paul Krugman and Warren Buffett get our endorsement — his presidency stands a good chance of succumbing to a fatal case of middle-class backlash stemming from chronic joblessness.
If that happens, Obama needn’t look to Wall Street for thanks and sympathy. As they’ve made clear during the past year, the splendidly bailed-out ingrates who get fabulously rich there are all about greed, not loyalty and good citizenship.
The American working classes have been put firmly back where they belong, on the outside looking in. The Unions get blamed for the demise of Detroit, the people that ran the auto business did very nicely thank you. People got sucked into no money down 100% mortgages, the day they moved into their dream home, they were upside down or underwater, while the people in the chain got all of their commissions. When the bubble burst, the people hurting the most bailed out the people who had skinned them in the first place. I don’t see this as something that just happened, it’s just part of the tradition of rolling over the masses.
Maybe if Wall Street had gotten bailed out further, there would be more trickling down to Main Street, but you socialists never thought of that, did you? Of course not, Benedict Arnold.
Then there needs to be an independent party because the choice now is no real choice.
Randal they already stuffed every pocket they had with greenbacks. The trickle down was from Gates to Buffet not Main Street.
Holte, your points are all right on target. One of the most appalling and depressing aspects of what has happened is that “the masses” walked into their own fleecing fat, dumb and happy. Some did it by voting for Reagan and riding the neoconservative bandwagon for decades. Some did it by not bothering to pay attention and vote their own best interests. Some did it because they believed they were in line to get rich too.
Randal, what’s with this Benedict Arnold? It’s Comrade S.W. to you, sir.
Demeur, the choice now is not as much of a choice as you or I want and need it to be, but believe me, there is a difference. Most independents are independents because they don’t want to associate with one party, whatever its label. Many independents will tell you they don’t give a rip about party, they vote “for the person. Trust me, if you’re adrift at sea, you’re better off with even a crude raft than a passel of loose planks.
Very good diagnosis. Now the question is, will Obama have the integrity and/or the spine to prescribe what the patient needs?
Your type of “blame the rich” populism never ends well.
Reich’s weird notion that people over consumed because the wealthy fleeced their paychecks is an idea we should back away from.
Of more concern is the declining production and innovation from our country. This is tied into many factors, such as the declining smart fraction of the population, low skilled immigrants, and fewer innovative young people. Such demographic debate is taboo, so we must get more blather about increasing spending on education and infrastructure blah blah blah.
Indeed, Fred, it is the “declining smart fraction of the population” bilked into voting for Republicans that is largely responsible for their problems: give the lemmings a map to the cliff and let them find their own way.
Republicans know that their problem is not running candidates conservative enough. I’m clear that Democrats’ problem is not running actual liberals as candidates. Unfortunately, Republicans already understand that one moves the center to the right by pulling from the extreme, far right; Democrats stupidly stand where they want to end up and pull from there.
Tom, Reich’s the one with the correct diagnosis. As long as Obama gets all his economic advice from Summers and Geithner, who don’t seem to get it, all the integrity in the world isn’t going to fix the problem at its core.Think GIGO.
RSF, your call for “demographic debate” smacks of, at best, soft core racism. Our young people are as innovative, if not moreso, than ever before. And workers, immigrants or otherwise, can upgrade their skills fairly fast, provided there are decent-paying jobs awaiting those with enhanced skills.
Reich’s piece isn’t “blame-the-rich populism,” any more than the N.Y. attorney general and media were doing that when they informed Bernie Madoff’s victims about who ripped them off, how and for how much. But hey, if the truth hurts, try to dismiss it with a catchy, misleading phrase. That approach has worked for the right before.
Jeff, excellent insights. A big thing many Democrats are missing is that it’s past time to confront the radical right on their bankrupt and bankrupting, for most of us, ideology. It’s like the difference between putting a little salve on a few ugly lesions and determining the patient has smallpox and needs systemic treatment.
S.W. … My thinking exactly, and “Feliz Año Nuevo”!
Gracias, Kvatch. Te deséo lo mismo.
SW: Huzzah! Great post, and right on the money.
RightSaidFred: Give me a break, please! At this time, the top 5% have a more disproportionate income share than they had even during the Gilded Age, and that’s saying something. Fact: Every time I walk into a grocery store for the past 2 years or more, the price has gone up. A box of Honey Bunches of Oats that I paid $1.88 for 4 years ago is now topping out near $4. This is not a random sample, the same holds true for nearly everything in the local Food Lion. The electric bill went up over and over again, and really jumped when gas hit $4 a gallon here in VA last year. It has not gone down. Again, food prices went up proportionately across the board, with no reduction now that gas has held steady between $2 – $2.75/gal for a year now, and nothing – NOTHING has had a price decrease except Netbooks at christmas. Now, tell me, dear, when wages have dropped across the board without even counting the unemployed, benefits dropped across the board (everything from 401-K matches to health insurance to PTO), and the cost of living increasing, again across the board, by anywhere from 25% – 30%. This is simply unsustainable in the populace at large, which forces the average joe to make a decision: Pay the electric bill, put the groceries on the credit card, hope for a cost of living increase next year from the company that posted profits this year but still held onto the cost-of-living-raise-freeze, as happened in my own company, and in several companies in the building I work in.
During every campaign, we hear politicians (Obama included) yammering on about families of 4 making $40K per year. This, my friend, is poverty level, and is also socially and economically unsustainable. This is not 1930, where if one can buy a chicken, one can have it in the backyard and at least have fresh eggs. This is the age of communities with zoning laws that disallow, and indeed make it a legal violation, to have a chicken or two in the backyard, much less a cow for milk and sometimes even a garden for vegetables in the summer. A populace that is beholden to the local grocery store, and increasing prices, is again unsustainable.
The fact is, we cannot continue this way. The middle class is indeed an endangered species, but it is the middle class, not the wealthy set, that holds this country and its economy together. Great wealth is amassed on the backs of the middle to lower class workers, and it is NOT trickled down, it is NOT shared, in fact, as we’ve seen during the course of this past year with the industry-manufactured teabaggers and brou-ha-ha over something as simple as putting some reins on the health insurance industry, those with the wealth will not let go of it easily. They could care less about the economy, evidently, because every single one of their actions seems geared toward the further decimation of the middle class. This is a shot in the foot for the wealthy, as well, but foresight and common sense does not seem to be en vogue at the moment.
Blame the rich – you’re damned right, because they’re the ones who have raped and pillaged this economy, in fact the world economy, and given little to nothing back to it other than phantom industries (finance) and lip service.
your call for “demographic debate” smacks of, at best, soft core racism.
Well, if demographic debate is now code for racism, please tell me the code word for demographic debate.
if the truth hurts
The Chinese work long and hard for little pay, so their paychecks must really be uberfleeced, yet their national wealth has grown tremendously. Macro economics adds up a nations wealth regardless of the niceties of the wage scale. I suspect the USA is not as wealthy as it once thought is was. One hallmark of a recession like we are having is a past overpayment for some goods and services (hello home sellers.) As John Kenneth Galbraith said, “a recession finds what the bookkeepers missed.”
So just shuffling money around on the right side of the equation doesn’t change anything, but liberals love to pencil in good times for all.
Jeff S.: Democrats…stand where they want to end up and pull from there.
Hmmm. Let’s see. Most liberal Representative in the Congress becomes…Speaker of the House. Most liberal Senator becomes…President sans a birth certificate. If one party is about to go over a cliff, I suspect it is in another direction from what you think.
Bee, I love it when you go on a fact-filled tear like that. Excellent response. I’ll just add that if the wealthy few had to depend on themselves to get highways built, swamps drained and wars fought, they’d travel on rutted washboards and wade through waist-deep muck trying to hide from the invaders — hard to do with moneybags weighing you down, don’t you know.
RSF wrote: “Macro economics adds up a nations wealth regardless of the niceties of the wage scale.“
Indeed it does, so if the U.S. wants to increase its wealth tremendously, it’s time to reintroduce slavery, right? Cuts costs so much that even if the slaves aren’t all that productive profits still swell.
Americans don’t need trollery (your last comment) or simpleminded nostrums based on economic Darwinism. Why don’t you see if you can get a job in China managing prison labor or marketing organs from the executed? Despite the communist trappings, I think you’ll find the raw capitalism that lies beneath copacetic.
RSF,
I was just about to respond to some of your comments when I saw
” President sans a birth certificate “. Please. Silly statements like that invalidate ones credibility. It’s like a liberal claiming Bush was behind 9/11 or that Katrina was a setup.
SW,
I agree Obama has been listening to the wrong people on economic policy. Retreads like Geithner and Summers are hardly going to direct proper regulatory/oversight legislation when they were involved in many of the decisions which led to our debacle. If memory serves wages adjusted for inflation have been stagnant since the mid-seventies ?
Bee
I agree with all you said. The middle class/working class is the backbone of our nation. It’s not class warfare to suggest that fiscal policy work to get $ out of the hands of the uber-wealthy and into the hands of the middle/working class. It’s simple economics. When too much $ concentrates at the top the velocity of $ slows and GDP suffers.
SW,
I forgot to add “Happy New Year” to you.
Oso, thanks for joining the fray. Happy new year to you also.
it’s time to reintroduce slavery, right?
Slavery was found to be very inefficient. That is why it was dropped in all but the most backward places.
Nice way to avoid dealing with the pertinent issues.
For that matter, I’d say modern socialism is a closer approximation to slavery when so much income is taxed away by the
plantation ownersdemocrats in congress all we have left is the drippings.RSF,
I would respectfully disagree with a charge of socialism. Fiscal policy can certainly redistribute wealth. Dems/Reps both use it. But there is no govt control over capital and services so IMO referring to certain policy as socialism is misleading.
Oso said: I was just about to respond to some of your comments when I saw
” President sans a birth certificate “. Please. Silly statements like that invalidate ones credibility. It’s like a liberal claiming Bush was behind 9/11 or that Katrina was a setup.
Right on, Brutha!
Oso, Bee, to our friends on the right, anything they don’t like, understand, trust, find in sync with their ideology and political aims, etc., is socialism. A half century ago they claimed all such things were communist. But that bogeyman went out of style when the Soviet empire dissolved and the right wingers’ backers found they could make big money doing business with China. So now its socialism.
RSF, in a democracy, people have a right to choose whether they want, for example, to buy health care insurance from a government agency or commercial insurers. After decades of being ripped off and otherwise treated badly by commercial insurers, Americans decided they want a public option. They have that right. It’s not a matter of preferring socialism. It’s a matter of preferring to do business with an outfit that treats them better. It’s a matter of wanting to create some real competition so maybe commercial insurers will start treating people better. But even if the insurance-buying public made their choice out of a preference for a socialist approach, they have that right.
BTW, people who can’t hack democratic outcomes and a system that blends capitalist and public services are free to move to some Ayn Randian free market paradise — if they can find one.
S.W., Happy New Years. Your blog is jumping these days.
Funny thing about cheap labor and cheap products—the owners (both in China and the U.S.) keep cutting corners. My wife and I, for example, bought a Black and Decker toaster oven a couple of years back. I was startled after I bought it to realize it was now made in China. The toaster oven lasted 15 months. Alas, the warranty was for 12 months. Black and Decker. Ouch.
SW,
thank you. I enjoy your site and your well-thought out commentary and knowledge.
Craig,
I share the feelings about cheap labor and products, stuff often breaks before you can get it home but it’s so cheap it doesn’t seem to be worth the effort to return it. Black and Decker now Chinese. Who else is now Chinese? Harley-Davidson?
Craig you should make a list !
Sorry, couldn’t resist that.
Craig, good to have you stop by and comment again. Happy new year to you also.
Years ago, early in my military career, I bought a major brand, made in U.S.A. percolator that had a one-year warranty. Thirteen months later it went phhttt. I took it apart and discovered a relay contact in the timer mechanism which easily could have and should’ve been made of solid brass was instead made of ceramic with a thin coating of brass. It was designed to fail after a certain number of cycles.
I coated the ceramic piece, about the thickness and half the diameter of an aspirin, with solder, then filed and sanded it until the relay gave the proper perking time. About a year later, I had to repair it again the same way. The third time it failed, I just bought a different one.
So, this kind of thing isn’t new, and it’s not just a matter of cutting costs. Sometimes it’s meant to hasten the day consumers have to buy replacements.
OSO, I think some of these outfits count on the boxing, shipping costs and telephone hassles to deter people from returning bad products for warranty replacement or repair.