Balance

July 13th, 2011 at 7:00 pm

My CBPP colleagues and I have been writing about balance ever since the budget talks around the debt ceiling began.  In that context, we’ve stressed that the deal should be balanced between revenues and spending cuts. 

But let us not overlook that fact that we are in the midst of an extremely unbalanced economic “recovery.”  I know, with recoveries like this, who needs recessions?  But GDP’s been rising  for two years now—demonstrably too slowly bring down the unemployment rate, which has gone up in recent months.

But that GDP growth must be going somewhere, right?

Well, Andy Sum and colleagues from the Center for Labor Market Studies at Northeastern U put this graph together:

Source: Sum et al

Profits typically lead jobs and wages in a recovery, but this seems a lot more serious than a matter of leads and lags.  With so much slack in the job market, workers have zippo bargaining power and for at least the last thirty years in this economy, when such conditions prevailed, growth did an end run around the middle class.

Balance is a wonderful concept, central to Buddhist thought.  It’s also something we could use a lot more of around here.

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10 comments in reply to "Balance"

  1. pjr says:

    Good analysis. This is part of an explanation of why we’re stuck at taxes under 15 percent of GDP even though GDP has more than fully recovered from it’s decline during the recession. But I don’t it’s the whole story behind this phenomenon.


  2. John says:

    Dr. Bernstein…

    Good observation, but this has been obvious for a long time.

    Even using words like “balance” is just another distraction, like the debt ceiling nonsense is a distraction.

    Should there be a balance between, oh, let’s say, good and evil? If the world were all good, would you go looking for evil to balance it? I would hope not.

    The political struggle that comes to my mind is the civil rights struggle. Affirmative action has it’s detractors, but its very purpose is to oppose the notion of balance; when there is no balance, balance itself is not a meaningful let alone a useful goal.

    Pick a side, it’s not that hard. We’re a largely democratic society – that in itself is enough to achieve balance, but no one can achieve the kind of balance you’re talking about alone, by seeking it. Seek the balance itself, and you end up on the dominant side by default. Balance doesn’t come from that – it comes from a critical mass of support from the other side.

    Capitalism is dominant. You want balance, you have to oppose capitalism and advocate socialism. Else capitalism stays dominant. It’s that simple.

    BTW – I don’t want to say I told you so, but I was pointing out the very point this graph makes back when you were blogging on TPM Cafe’. Folks like me shouldn’t have to learn to “talk economist” just to be taken seriously. When the only information you consider has dollar signs attached, you miss some really big things – like the open source movement, for example. Talk about a lack of balance – nowhere is it more clear than in the filter that gets applied to _everything_ by capitalism and capitalists.


    • John says:

      I should clarify – the graph makes a good observation, but it’s been obvious to non-economists and non-capitalists for a long time.

      I wasn’t talking about your philosophical position on the notion of balance. I just disagree about that.

      I’m deaf – 100% deaf, neurally – in one ear. So I don’t have balance in a purely natural sense. If I turn to the side quickly, even standing still, I fall down. I also, BTW, don’t have a stereo sense, since that also requires two good ears. My brain often lies to me, telling me I know where sound is coming from, when in fact I simply don’t. That kind of perception is totally lost to me – with one good ear. Were I totally deaf, I might be better off, since then my brain wouldn’t lie.

      What I’ve learned in the years since I lost hearing in that one ear is that balance presents an illusory perception, in that it appears to be a single, monolithic thing, that balance is a middle position. It’s not, at all – it’s an opposition, always an opposition, of at least two things that are as equal as they can be. And without both sides, and both being equal, it doesn’t exist at all. Moving one side to the middle is at much an absence of balance as having only one side.

      I can’t speak to what Buddhism believes, but I don’t need to – I’m not a Buddhist.

      We’ve fallen down as a society. We don’t even recognize it. We could stand up. But we first have to recognize that we’re not standing at all, that we’ve been on the ground for longer than our memory can tell us.

      When 25 million of our fellow citizens have no income or less than a viable income and we’re spending all our political energy on a non-issue that has been a bureacratic afterthought since it was instituted, we don’t get it. We just don’t get it. We see with one eye and hear with one ear. And it’s not because we have a disability – it’s by choice. And that’s worse than sad or tragic.

      It’s evil.


    • John says:

      Let me make the point more specifically, and this is repeating myself here.

      Someone needs to be on the side of totally opposing spending cuts and totally on the side of revenue increases.

      Jame Galbraith is there; and wrote about it recently (sorry, no link handy, I’m in a hurry).

      But when the rest of those who call themselves on the left or call themselves Democrats talk about balance instead, they confuse the issues, by preventing there from being two clearly opposing sides. Might as well say nothing – or maybe better to say nothing – since such attempts at balance will never, ever, achieve it. If it’s even a worthy goal; in this case, according to folks like me and Galbraith, and any Keynesian who speaks clearly – it’s not a worthy goal. We need spending increases, not spending cuts, period.

      Folks like you should be saying as much, instead of playing “could vs. should” politics and diluting your own true message and intent. Pick the side that matches your rhetoric, instead of trying to act “reasonable” by talking about balance. Else, the talk of balance sounds like a lie, even if only an unintended one.


  3. Kevin Rica says:

    Jared,

    Andy Sum — he does good work.

    You should have mentioned his work in your immigration post. Andy Sum does a lot better work on that subject than Andy Card.


  4. John says:

    Democracy – by Langston Hughes

    Democracy will not come
    Today, this year
    Nor ever
    Through compromise and fear.

    I have as much right
    As the other fellow has
    To stand
    On my two feet
    And own the land.

    I tire so of hearing people say,
    Let things take their course.
    Tomorrow is another day.
    I do not need my freedom when I’m dead.
    I cannot live on tomorrow’s bread.

    Freedom
    Is a strong seed
    Planted
    In a great need.

    I live here, too.
    I want freedom
    Just as you.


    • John says:

      Problems – by Langston Hughes

      2 and 2 are 4.
      4 and 4 are 8.

      But what would happen
      If the last 4 was late?

      And how would it be
      If one 2 was me?

      Or if the first 4 was you
      Divided by 2?


  5. Michael says:

    No balance!

    Balance is sociopathic. Right now, there is 9% unemployment. Increasing revenues OR cutting services at this time is horrible. There should not be balance between the shit and the sandwich. There should just be no need for the shit sandwich in the first place. Later, we can talk about what kind of bread we can buy, long-term. But right now, no eating of icky things.

    “Balance” is a way for good people to persuade themselves they’re not doing bad things.


  6. Artie Gold says:

    On airplanes, when they give the safety information, they always talk about how, if the oxygen masks should happen to come down, parents should put *theirs* on first and *then* get the oxygen on their kids.

    Why?

    Because if the adult takes too long getting the kids’ oxygen masks adjusted, they run the risk of passing out and not being able to help *anybody*.

    Similarly, if we don’t put enough money in the economy *now* we run the risk of so many people being displaced through consistent unemployment and corresponding lack of demand that the economy would continue to be disfigured for decades (imagine the depression generation had the even more displacing experience of WWII occurred).

    Long run? Health care. Gain of revenue from the part of the income curve to which so much income has been diverted. Perhaps some means testing.

    Short run? Get people working. There’s plenty to be done without resorting to digging holed and filling them in. Get demand bubbling up. Hell, be a little more radical: Restore the concept of economic security to the system; not the “real estate will make you rich” or “just invest in the stock market that will go to 36000” bubble nonsense, but, rather, the sense that if things get a little slow you won’t go under. Strange how the “moral hazards” only seem to apply to those in danger of being marginalized…


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