Say What You Will - the Semantic Art of Running Away From Real Economic Consequences.

Modern political discourse – or what passes for it anyway – seems to be mostly about semantics, and not really about substantive discussion and debate to find solutions.  Today’s 113^th Do Nothing Congress (as I hope History will remember them) spends more time parsing what is “revenue” and what isn’t then they do actually proposing policy and legal solutions to the nation’s problems (like 40 plus votes to repeal the Affordable Care Act in the House without a single vote on an alternative).

So, along comes Robert Samuelson in the Washington Post to politely suggest that the final piece holding us back from prosperity in our country is the semantics of what to call our economy. 

Among our problems is a failure of economic language. We lack the words and concepts to describe observable reality. By conventional wisdom, the Great Recession is long over. “Recession” connotes shrinking output. “Expansion” signifies the opposite. That’s how the National Bureau of Economic Research, a group of academic economists, defines business cycles. Following this logic, the bureau determined the economy stopped contracting in mid-2009. Yet, most Americans — 53 percent, says a recent National Journal/Allstate survey — think we’re still in recession, by which they doubtlessly mean “bad times.”

It’s a tempting argument – if our “real” problem economically right now is we don’t know what to call our current decline (if it is even a decline), then the clear solution is to present different language.  The implicit benefit is that if we can better describe the “real world” as we see it, then we can get at those mysterious “causes” that keep Americans from being “confident” and recreating the post-WWII growth era into which so many of them were born.  Samuelson then postulates that if we got the terminology right, we’d be able to overcome a condition in which:

The problem might not be a dearth of investments so much as a surplus of risk aversion. For that, candidates abound: the traumatic impact of the Great Recession on confidence; a backlash against globalization, reduced cross-border investments by multinational firms; uncertain government policies; aging societies burdened by diminishing innovation and costly welfare states.

It all sounds cozy and nice, right?  The problem is that Mr. Samuelson, like so many on the Right side of the political aisle (where Mr. Samuelson sits his own protestations not withstanding), is unwilling to grasp a fundamental – and easily described truth of our current economic situation:

 The problem, then, is not machines, which are doing a great deal to boost productivity; the problem is that the benefits from increased productivity no longer accrue to workers. In a provocative paper earlier this year, Josh Bivens and Mishel argued that the gains for the richest 1 percent were due to “rent-seeking” behavior by CEOs and financial professions, not competitive markets. As John Kenneth Galbraith said, “The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.” The newly minted rich want to blame robots for declining wages at the bottom and their innate superiority for their disproportionate share of the income. But these excuses mask their theft of productivity gains that rightfully belong to the rest of us.

Put another way, when real wages decline against spending power in most jobs as the increased “productivity” in the economy goes to a small group of investors (also known by the counter intuitive term “rentiers”) and isn’t spread across the workforce, that loss of productivity contributes to the further erosion of wages by driving down demand for goods and services.  It also contributes to stampedes at Walmart on Black Friday in which people are killed for deep discounts on consumer goods.  Powerful economic elites probably lament the disorder that all this creates (hence their walled communities and bulletproof houses) but at the end of the day they seem to think many of those at the bottom have earned it.  

The ultra simple version is you can't solve demand side economic problems with supply side approaches or solutions.  But we've been trying ever since David Stockman helped President Reagan create the now infamous (and discredited by Stockman no less) Voodoo economics approach.

Cast against all this – and interestingly so given the professed Catholicism of so many conservative pundits and politicians – are the recent writings of Pope Francis.  Ever the Jesuit (and thus dedicated to the state of the nation’s poor and down trodden as few others are) his recent The Joy of the Gospel calls all this out for the heartless and discordant pursuit it is:

The great danger in today’s world, pervaded as it is by consumerism, is the desolation and anguish born of a complacent yet covetous heart, the feverish pursuit of frivolous pleasures, and a blunted conscience. Whenever our interior life becomes caught up in its own interests and concerns, there is no longer room for others, no place for the poor.

As E. J. Dionne reminds us in today’s Washington Post:

His apostolic exhortation, “The Joy of the Gospel,” is drawing wide and deserved attention for its denunciation of “trickle-down” economics as a system that “expresses a crude and naive trust in the goodness of those wielding economic power.” It’s a view that “has never been confirmed by the facts” and has created “a globalization of indifference.” Will those conservative Catholics who have long championed tax-cutting for the wealthy acknowledge the moral conundrum that Francis has put before them?

But American liberals and conservatives alike might be discomfited by the pope’s criticism of “the individualism of our postmodern and globalized era,” since each side defends its own favorite forms of individualism. Francis mourns “a vacuum left by secularist rationalism,” not a phrase that will sit well with all on the left.

Mr. Dionne is right, of course, that many so-called Liberals have also made their beds with the gods and goddesses of the Market – how else to explain our current “Democratic” President’s interest in placating Wall Street (by not prosecuting them for their crimes in the court of public opinion, to say nothing of the actual courts).  Mr. Dionne goes on:

The difference is that a concern for the poor and a condemnation of economic injustice are at the very heart of Francis’s mission. “In this system, which tends to devour everything which stands in the way of increased profits,” he writes, “whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.” Can you imagine an American liberal who would dare say such things?

Well, as a liberal who has written similar words, why yes, Mr. Dionne, I can imagine it very well thanks you.

But to point is still well made – we as a Nation, a society, and as individuals do indeed have the language we need to accurately describe the world in front of us.  We don’t need to adopt the cumbersome semantic twisting of those who refuse to acknowledge the failures of clinging to economic myths simply because those myths both bolster our socio-cultural myths and shield those who have worked actively against the coming to fruition of our full potential personally and nationally.  If a Jesuit Pope from South America can accurately call out America’s ever failing supply-side experiment, using readily available words (and not in his native language), why can’t you Mr. Samuelson?