#134

sent to press February 17, 2012

Occupy this and that!

INSIDE
Over the summer, in despair over the political situation, Team LBO asked some writ-
ers we like and admire to ponder the question: “Why fucking bother?” Here we were,
Occupying discourse stuck in the midst of the worst economic crisis in 80 years—but without any of the ener-
getic political response we saw in the 1930s. There were no Communists organizing rent
strikes, and the bourgeoisie was unable to produce an FDR. Instead, we had the Teabag-
Corporate personhood: not gers, right-wing nutters who looked to be on the wane, and Obama, who pronounced
the problem Lloyd Blankfein and Jamie Dimon to be “savvy businessmen” who deserved their com-
bined $26 million in bonuses in 2009, just after they’d been bailed out by the government.
This newsletter has never been one to look to economic crisis as some sort of politi-
2010: terrible year, income & cal deus ex machina; economic crises often produce reaction rather than progress. But
poverty-wise one might have expected something. Anything. Was the left, such as it is, still in the grip
of Obamamania? Didn’t this page argue back in 2008 that disillusion with Obama might
lead many of his former supporters to conclude that the problem was The System and not
MONEY  U.S. picking up personalities or parties?
steam? Europe sure isn’t. The phenomenon was first diagnosed by Garry Wills in Nixon Agonistes. As Wills explained it, through-
out the 1950s, left-liberals thought that the national malaise was the fault of Eisenhower, and a Democrat

MISCELLANY  jobs of the would cure it. Well, they got JFK and everything still pretty much sucked, which is what gave rise to the
rebellions of the 1960s…. Never did the possibility of disappointment offer so much hope [as it does
future: not so great with Obama]. That’s not what the candidate means by that word, but history can be a great ironist.

Optimal disillusionment finally kicked in. On September 17, a small crowd gathered in
what recovery? Zuccotti Park in lower Manhattan and, just months later, political discourse in the U.S. has
105 median household income changed remarkably. That gathering did what those of us who’ve been nattering for years
January 2000–November 2011 about inequality and the malign power of finance couldn’t do. There suddenly seemed a
January 2000 = 100 good reason to bother.
100
The discursive change is undeniable. Bush speechwriter Matthew Dowd once said
that if you disagree with us while using our language, we’re winning. By that measure,
95
Occupy is winning, because you can’t go anywhere without hearing about the 99/1
thing. When both Nancy Pelosi and Newt Gingrich steal your language, you’ve got some-
90 thing going on—and not just about words, but also social power.
shaded areas are
recessions At this point, the critical critic butts in to say, well that discursive stuff is all very nice,
85 but what is Occupy Wall Street anyway? Is it more than a few kids with distemper? Thanks
2000 2002 2004 2006 2008 2010 to the proliferation of occupations around the country, it was no longer just about Wall
Household income continued to fall for Street. And thanks to the NYPD, the original ceased to be an occupation of Wall Street.
two years after the recession officially Configurations change. These things matter, but it’s not clear exactly how. Working
ended, according to a new monthly groups continue to meet and plan actions, and various disruptions—like of Bloomberg’s
series from Sentier Research, a project rubber-stamp school policy board in New York—continue to proliferate and grow.
of two Census Bureau alums. It’s now Back to the critical critic. “What do they want?,” he inquires. “It’s obvious,” is the
about 10% below where it was in 2000. frequent response, but few things in life are obvious,and those are often wrong. “Less
More on p. 3. inequality” is another frequent response—but how do you get there? When pressed,
2 Left Business Observer

some Occupiers channel Ron Paul and
talk about ending the Fed. Others will talk
about the urgency of ending corporate
personhood (see p. 2). Still others will talk
about progressive taxation and reinstating
Glass–Steagall. And a hardcore will talk
about creating new institutions yet only
partially imagined, withdrawing from capi-
talism, and ending the state and money.
This will exasperate the critical critic,
who might then ask, “Well how to we get
to any of those places?” And answers vary
as much as the destinations. Take over
the Democratic Party. Vote Green. Ignore
electoral politics and create prefigurative
institutions, like occupied parks (which
didn’t last all that long). Perhaps last on the
list: create some new organization(s) and
devise an agenda or three.
This cacaphony leaves the critical critic
a couple of options. There’s always the
comfy one of grumbling from the side-
lines. But there’s another, more pleasing
possibility: that the Occupations have cata-
lyzed and/or inspired all kinds of action,
organization, and even thought. You can’t
have political change without organization
and goals, for sure, but maybe that’s not
Occupy’s responsibility. Occupy is just a
shorthand name for a turn in political tone.
Who knows where all this is going, but
maybe it’s somewhere better than where
we’ve been. o

Fleshing out the corporate person

This originally appeared in n+1’s excellent OWS economic volatility, with wild booms and Back to the economic argument. Cri-
Gazette #2. It’s downloadable here: http://www. busts. Almost half of its last three decades tiques of corporate personhood tend to
nplusonemag.com/GAZETTE-2.pdf. were spent in depression. One reason was blur into critiques of bigness as an evil in
There was a witticism circulating—it that small firms didn’t have the resilience itself. There is a great nostalgia for some
embarrasses me a bit to say—on Facebook to stand up to shocks. (Another was the kind of soft-focus version of the old days
recently that went something like: “I’ll absence of a central bank, about which see when enterprises were small and local. But
believe that coporations are people when my contribution to the previous Gazette.) there’s no way that small, local enterprises
Texas executes one.” I’m no fan of capital I recall meeting Grossman shortly after could make computers or high-speed rail
punishment, but that was the best argu- the pamphlet was published and bringing equipment. Those things require both size
ment in favor of corporate personhood I’ve these issues up with him. He didn’t seem and durability, things that the corporate
ever heard. Because while corporations very interested in the economic arguments. form allows.
have the rights of actual living people— I’m getting similar feelings now that Who’d buy complex, long-lasting
more, maybe—they have none of the corporate personhood has exploded onto equipment from a small firm that could die
responsibilities. Corporations routinely the scene—first in the wake of the Citizens with its proprietor the day after tomorrow?
get away with murder. Is the problem that United decision, and more recently with How could such a firm design and build a
they’re legally persons, or that they’re not OWS. There’s a fixation on the legal status train that does 350 mph while consuming
consistently treated as such? of the corporation at the expense of some minimal energy?
I first came across the critique of cor- other, more important things. Of course, there may be some oppo-
porate personhood almost 20 years ago, Back in a moment to the economic nents of corporate personhood who don’t
when Richard Grossman and Frank Adams angle, but Citizens United deserves a few want a society that builds computers and
published their snazzy little pamphlet, words on its own. Basically, the reasoning fast trains. If so, they should tell us that
Taking Care of Business: Citizenship and is this: corporations are people. Money is explicitly.
the Charter of Incorporation. (Snazzy as a form of speech. So restrictions on corpo- All this doesn’t mean that we have to
in nicely designed. The web version isn’t, rate political spending are unconsittutional make peace with the status quo, however.
alas.) At the time, I was struck by the legal- restrictions on political speech. In one of his more optimistic moments,
ism of the approach. Grossman and Adams Which is the more serious problem with Marx declared the modern corporation,
showed little or no interest in the eco- that chain of reasoning? That corporations owned by outside shareholders and run
nomic reasons for the corporate form— are people, or that money is a form of by their hired hands, “the abolition of the
why, for example, industrial development speech? I’m uncomfortable with the urge capitalist mode of production within the
made the sole proprietorships and small to treat the Koch brothers as the focus of capitalist mode of production itself, and
partnerships that dominated the pre-Civil evil in the modern world, to steal a phrase hence a self-abolishing contradiction.”
War landscape so unwieldy and unstable. from Ronald Reagan, but they could spend That is, there’s no reason why such an
Making complicated stuff requires tons of their personal money spreading enterprise has to be run for the benefit of
organizational stability across time and their poison and the issue of corporate its shareholders rather than its workers,
space; a single capitalist, or even a small personhood wouldn’t figure at all. Rich neighbors, and customers. It is now, but it
gaggle of capitalists, all very mortal, people have a long history in this country doesn’t have to be that way forever.
couldn’t run a transcontinental railroad of buying elections and politicians. They Of course, getting there from here isn’t
that was expected to last decades. The late didn’t, and still don’t, need the dodge of cor- one of those self-evident truths, but it’s a
19th century was a time of tremendous porate personhood to do that nasty work. very enticing prospect to think about. o
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Number 134 3

Crummy year, 2010. Decade too.

As the Census Bureau reported a few hold fell by 2.3% (average in this instance last decade is milder than that for house-
months ago, 2010 being the median, the holds, down a mere 6% since 2000—but
was not a bounti- .525 Gini index, 1913–2010 income right at the the contrast with balmier days is stark. For
ful year. Average .500
middle of the distribu- the ten years ending in 1959, median family
household incomes tion, with half of house- income was up 43%. Growth moderated
.475
were down for the holds having higher, in subsequents years, but the ten-year gain
third year in a row, .450 and half having lower, didn’t break below 30% until 1974. It went
and poverty was .425 incomes). Over the last a little below 0% in the early 1980s, but the
up for the fourth. .400 ten years, real median Clinton-era boom took it over 10% before it
Not only was 2010 .375
income is down 7%; for fell victim to depredations of the 2000s. That
a miserable year— 1913 1928 1943 1958 1973 1988 2003 the ten years ending in recent –6% reading is almost twice as bad as
it’s been a miser- The Gini index is a measure of income 1977, it was up 9%. its previous low, set in 1983.
able decade. In the inequality, ranging from 0 (complete equality) That’s for house- A new monthly index of median income,
eleven years since to 1 (complete inequality—one person has all holds, which include produced by Sentier Research (run by a
the income). Data for 1913–1946 from a 1992
2000, income has paper by Eugene Smolensky and Robert
singles and other couple of Census alums), which is graphed
fallen and the pov- Plotnick; afterwards, Census data. arrangements. Families on p. 1, shows that median household
erty rate has risen in have higher income income continued to fall through most of
eight. We’ve never than households and 2011. It’s bounced back in the last couple
seen anything like this since modern statis- generally do a little better in hard times. of months, but that bounce looks more
tics began. Next to that, the modest increase
in the number of people without health 325,000
real annual income of
insurance barely qualifies as news. 300,000
poor, middle class, and
A few technical details before proceed- 275,000 rich households, 2010 richest 5%
ing. These annual figures are drawn from 250,000 dollars,
225,000 1967–2010
a special edition of the monthly Current
Population Survey (CPS), an a monthly 200,000
survey of about 50,000 households that 175,000
150,000 1973–2010 2000–2010
began in 1948. Its main function is to pro-
125,000 poor –0.9% poor –14.2%
duce the monthly labor market figures like
100,000 middle +7.5 middle –7.8
unemployment, but in some months, they
75,000 rich +58.0 rich –10.0 middle 20%
ask supplemental questions about school
50,000
enrollment, worker displacement, voting 25,000 poorest 20%
patterns, and other things. Every March, the
CPS is expanded to include detailed ques- 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
tions about income and health insurance
status. Though the sample size is very large, Unfortunately for long-term comparisons, like a correction of an overstated drop over
the Survey does miss the extremes of soci- the household data goes back only to 1967; the summer than a serious turnaround.
ety—the Real incomes, by the Sentier measure, fell
very rich 1,600,000 life at the top
1,500,000
7.5% after the recession’s official end—and
and the income by group, 2010$ despite the pickup in October and Novem-
very poor. 1,400,000
1,300,000 Census vs. Piketty–Saez ber, remain almost 10% below where they
That 1,200,000 were on the cusp of recession in December
said, it’s 1,100,000
1,000,000 2007. In a recovery, incomes are supposed
still an
900,000 to recover.
excel- 800,000 Inequality: up. The rising tide
lent look 700,000
600,000 PS: top 1%
that lifts all boats was supposed to make
at the PS: top 5%
500,000 inequality more tolerable, but now the tide
material 400,000 is way out and the boats are leaking.
welfare 300,000 Graphed at the top of p. 3 is a long-
of most of 200,000
100,000 Census: top 5% term history of the Gini index, a measure
the popu- of inequality. The higher it is, the more
lation.
1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 unequal the distribution of income. Over
So here nearly a century, we’ve only seen higher
goes.
the family stats go back another twenty levels of inequality once before—in the
Income: down. After adjustment for
years. The hit to family incomes over the 1930s. The rich had gotten richer during
inflation, the income of the average house-
4 Left Business Observer

the 1920s boom, and though some of them took a hit in the Great 27% lower. As the graph at the top of p. 4 shows, black incomes
Crash, the poor got seriously poorer and more numerous. are down relative to white since the turn of the millennium; the
In the first couple of decades after World War II, the distribution gap closed markedly in the 1990s, but about three-quarters of that
narrowed, giving rise to a theory—soon proved wrong—that as improvement has been reversed. Hispanics (the government’s
capitalist economies matured, growth spread generously down term) have seen some of their 1990s gains reversed, but not as
the social ladder, reversing the polarizing trends of a booming harshly.
economy’s youth. Progress in closing gender gaps has slowed, though
With few pauses, the 80% household incomes not reversed. Graphed at the middle of p. 4 are women’s
U.S. has been getting percent of non-Hispanic white incomes as a percent of men’s. Women with income of any
more unequal for three 75% kind took in 65% as much as men with income in 2010,
decades. 70% down slightly from the previous year, but well up from
The Gini, though Hispanic just about any starting point you’d like to choose. The pic-
65%
useful, is abstract. Not ture for year-round, full-time workers is mixed. Last year,
60%
even a geek can visual- black
fully employed women took in 77% as much as men, little
ize it—it’s only a way 55% changed over the last decade. Their numbers, though off a
of comparing societ- 50% bit last year, are up sharply over the long run. In 1967, just
ies across time and 1972 1977 1982 1987 1992 1997 2002 2007 27% of all fully employed workers were women; last year,
space. More concretely, 43% were. But most of that gap closing was over by 1991,
graphed in the middle when the share first broke 40%. People who are distressed
of p. 3 are important parts of the income distribution in dollar terms. about the changing economic role of women are having a seriously
The poorest fifth—average 2010 income, $11,034—were slightly delayed reaction.
worse off than they were in 1973 after adjustment for inflation. The Black and Asian/Pacific households show more inequality than
middle fifth (average income: $49,309) is a little better off than in the national average; white and Hispanic, less.
1973. The income of the richest 5%, despite having flatlined over Poverty: up. The poverty rate rose to 15.1%, its highest level
the last decade, is up by 58%. since 1993—meaning that over 46 million Americans can’t meet this
Or, to put it more bluntly, in 1968, the richest 5% had incomes 16 minimal low bar. The share of the population that’s very poor—
times to poorest 20%. In 2010, it was 26 times. with incomes less than half the poverty line—set a record, at 6.7%—
And the Census measures understate how much better the rich twice the levels of the mid-70s.
have done. There are several reasons for this. One is that the rich As the graph at the top of p.5 shows, poverty today dispropor-
aren’t reached by Census surveys (and if they were, they wouldn’t tionately hits the young; over-65s, once the poorest age group, are
answer.) Another is that the Census treats all 90%
today the least poor
incomes over $1 million as if they were $1 mil- women’s incomes as percent of men’s (though one-in-ten
lion—to protect confidentiality, they say. The 80% is not a small share).
Census figures are a good picture of what’s going year-round, At 27.4%, the black
70%
on with the bottom 95%, but not the top 5%. full-time workers poverty rate is almost
For a better look at the top, you need to analyze 60% three times the non-
tax returns (which aren’t perfect either, since the Hispanic white rate,
50%
rich are very good at evading taxes). That’s what all persons 9.9% (and the Asian–
the economists Thomas Piketty and Emmanuel 40% with income Pacific Islander rate of
Saez do, and their results are compared to the 10.0%); the Hispanic
Census figures at the bottom p. 3. Not only are 30% rate is 26.6%.
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
their rich, richer—they’ve done even better than How much would
the Census 5%, mostly because the legendary 1% it take to bring all the
have done so well. And the thinner you slice it at the top, the better officially poor up to the poverty line? Surprisingly little: about 1%
they’ve done. Between 1982 and 2008, real incomes of the bottom of GDP, or not quite 10% of the Census Bureau’s estimate of the
90% were up 13%; of the next 5%, 40%; and the next 4%, 69%. That income of the richest 5%. It’s about half the increase in the military
takes us up to the top 1%, which gained 217%—but the top 0.01%, budget since 2000.
roughly 30,000 people whose incomes average over $9 million— Though there’s a decent quantity of mainstream obsessing about
were up 407%. how to reduce poverty—rarely, of course, to end it—these sorts of
Or, looked at another way, between 1982 and 2008, the bottom numbers barely figure. Instead, the problem is presented as a great
90% of the population took in about 23% of total income growth; challenge to social policy. But the solution to ending poverty is
the top 1% got 36%. Or, looked at yet another way, that richest pretty simple: you give poor people money, preferably taken from
30,000 have about the same amount of income as the poorest 30 rich people.
million. Alt.poverty. One could make a long list of criticisms of these
Demographic close-up. There are, of course, wide demo- official poverty measures, starting with its initial conception back
graphic disparities in income hidden behind these averages. The in the 1960s. The Johnson administration needed some hard num-
median black household has an income 38% lower than the median bers to plot its War on Poverty. They drew on some back-of-the-
non-Hispanic white household; the average Hispanic household, envelope work done by a Social Security Administration researcher
Number 134 5

named Mollie Orshansky, who, working with the 1950s notion Many connoisseurs define a poverty income as one less than half
that the average family spent a third of its income on food, took the national median. That comports with people’s perceptions—
the Agriculture Department’s minimal food budget and multiplied people judge their welfare against their fellow citizens and not
it by three some abstract inflation-adjusted line set before most of
to come up 40 poverty rates by age, 1959–2010 them were born. Working with 2009 data, Renwick esti-
with a pov- 35 mated that were the U.S. poverty line drawn at half the
erty line. 30 median income (adjusted for household size, of course),
Although 65+ the 2009 poverty rate would have been 19.5%, more than
25
under 18
Orshan- 20 a third higher than the actual 14.3% rate.
sky never 15 The Census Bureau has also been experimenting
intended that 10 with what they call a “supplemental poverty measure”
this approach 5 18–64 (SPM), which takes many things other than raw cash
be adopted 0 incomes into account. For example, they add noncash
as national 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 benefits like the earned income tax credit, food stamps,
policy, LBJ’s heating assistance, and public housing to income. And
people they take away taxes, child support payments, and the
adopted it anyway, and the initial thresholds have simply been unavoidable costs of working, like commuting and child care. And
adjusted for inflation ever since, with no regard to rising average they define the poverty line using necessary expenditures not just
incomes or changing patterns of work and family life. And the on food, but clothing and shelter as well. For 2010, poverty by this
measure of income used is essentially pretax cash income, leaving standard afflicted 16.0% of the population, not the official 15.2%.
out public assistance (on the positive side) and taxes, and other That SPM line is around $25,000. But life can be very tough in
unavoidable expenses (on the negative). the neighborhood just above that line. As the nearby graph shows,
Over the last few years, the Census Bureau there’s not much dif-
has been publishing experimental rethinks of the 60% poverty rates by race, 1960–2010 ference between the
poverty estimates that address these concerns. 50% conventional and
First, a simple one. supplemental pov-
40%
There are big geographical disparities in the erty rates. Under the
cost of living. Housing is far more expensive in 30% black supplemental stan-
San Jose than San Antonio. In a recent paper, 20%
Hispanic dard, the ranks of
all
Census researcher Trudi Renwick came up with the very poor (those
geographically adjusted state-level poverty rates. 10% white with incomes less
Adjusting for housing costs doesn’t have much 0% than half the poverty
effect on national poverty rates, but it changes 1960 1970 1980 1990 2000 2010 line) shrink, thanks
the regional picture substantially. Mississippi’s to noncash benefits
poverty rate would go from the official 23.2% in 2009 to 17.6%—but not now included in the standard income measure, and swell the
California’s from 15.5% to 23.0%, and New York’s would go from ranks of the moderately poor. The SPM would raise the 2010 pov-
13.1% to 17.9%. erty rate by almost a point. But where the new line really matters
More profoundly, the whole concept needs a rethink. The offi- among what are often called the near-poor, people with incomes
cial U.S. poverty line less than twice the poverty line. These are the people
is what’s known in the share of population for whom the costs of child care, medical expenses, and
trade as an absolute by ratio of income Social Security taxes really matter. Under the official stan-
measure, meaning to poverty line, 2010 dard, the near-poor are almost 19% of the population;
that it measures want under the SPM, they’re 32%. The ranks of the struggling—
using a fixed line 400%+ 17.3 those with incomes less than twice the poverty line—are
that’s just adjusted for 35.8
34% under the official measure, but 48% under the SPM.
inflation: a poverty In other words, nearly half the U.S. population is, by
income today would 34.8 semi-official measure, barely getting by.
conceptually be the Health insurance: worse. The number without
200–399%
same as one 40 years 30.2 health insurance for the full year rose by nearly a million
ago, despite a dou- to just under 50 million, or 16.3% of the population. Take
bling of real per capita 31.8 near-poor out the over-65 population, almost all of which is covered
GDP (which, amaz- 18.8 100–199% by Medicare, and it’s 18.4% uninsured—or nearly one in
ingly, translated into five.
a mere 13% increase
8.4
6.8
50–99%
<50%
10.7
5.4 } poor These figures cover people who were uninsured for
in median household the entire year. Earlier Census work found the number
income—the fat cats official supplemental without insurance for at least part of the year about 22%
are pocketing a lot of higher than those without for the entire year. That sug-
the GDP). cont. on p. 7
6 Left Business Observer

MONEY
federal funds & money supply growth
5 25%
10-year Treasury bonds [%]
4 20% M1
10-year 15%
3
note
2 10%

1 5% M2
federal funds
0 0%
Feb Apr Jun Aug Oct Dec Feb Feb Apr Jun Aug Oct Dec Feb
2011 2012 2011 2012

The Fed continues to promise low interest rates well into 2014, and so far the bond market believes them. The Treasury pays a lower interest rate on long-term
bonds than it did when S&P downgraded the U.S. Yields on inflation-protected bonds are now actually below 0, yes, negative! When Lehman Bros. collapsed in
September 2008, they were almost 2%. And the value of the U.S. dollar is off less than 5% since Lehman’s demise. U.S. decline is taking a long time to kick in.

In the half-eon since this page last
appeared, the U.S. economy has occasion-
ally given the appearance of finding firmer
footing. In December, employers added
203,000 jobs, and then beat that by adding
243,000 in January. That was the best two-
month performance since last spring—and
before that, the previous spring, that of
2010. Before that, you’d have to go back to
2006 to find job gains that strong.
Having begun on that upbeat note, time
to bring on the caveats. That two-month
gain, though mighty by recent standards,
is merely average (in percentage terms)
since the monthly employment stats began
in 1939—and about 20% below average
if you exclude recessions (which is fair,
since we’re not officially in one). And note
that the previous episodes of strength hap-
pened in the spring. For the last couple
of years, we’ve seen strength early in the
year that dissipated over the summer.
Whether that’s a technical quirk, a mere
coincidence, or something fundamental,
we don’t know, but it does counsel against
irrational exuberance.
Back to the upbeat for a moment. One
of the few encouraging things about this
recovery so far—this recovery that doesn’t
really feel all that different from reces-
sion—is that manufacturing is having
its best run since 1994. Since the post-
recession low in January 2010, the factory
sector has added 404,000 jobs. That’s less
than a fifth of the 2.3 million jobs we lost
in the recession and its immediate after-
math—but it’s a far better performance
than the 2001–2007 expansion, when
manufacturing employment fell by 2.1 mil-
lion. Manufacturing has been shrinking as
a share of total employment since at least
1939—but the 2001–2007 expansion was
the first one in which employment levels
fell steadily in absolute terms. We added
831,000 manufacturing jobs between 1992
and 1998, though the sector began shrink-
ing about three years ahead of the broader
economy. But even 831,000
110
wasn’t enough to keep the sec-
100
tor’s share of total employment
90
from falling (from over 15% to
80
14%). Now it’s holding steady at
70
9%, which by modern standards
60
is a remarkable achievement.
What’s encouraging about
this strength in this sector isn’t its appeal
to some romantic masculinist view of
the horny-handed sons of toil. Nor is it
because manufacturing is particularly
high-wage anymore—average hourly
wages in services are actually a little higher 2008—a bit more than half the U.S. decline
(and have been since 2008), though the
service workweek is typically shorter
(yielding a weekly wage that’s about 20%
below manufacturing). It’s that manufac-
turing production encourages a lot of other
activity—like the provision of raw materi-
als and the need for ancillary services—a
concept that economists call the multiplier
effect. Manufacturing has about the high-
est multiplier of any industry sector: a
dollar spent in manufacturing generates
$1.34 in additional economic activity—
compared with just $0.53 for retail and
$0.63 for finance, to pick two nonrandom
postindustrial icons. And, though this is
admittedly harder to quantify than multi-
pliers, a revival of manufacturing might do
something to reverse the atrophy of our
national skills.
Old World stagnates. The part of
Europe that’s not burning is stagnating,
that is. GDP for both the 17 euro countries
and for the 27 members of the EU fell at a
1.2% annual rate in the fourth quarter of
2011, compared with an increase of 2.8% in
the U.S. (a half-decent number by histori-
cal standards) For the year, the eurozone
was up 0.7%, and the
US dollar indexes broader EU, 0.9%—well
below the 1.5% in the U.S.
broad
(a mediocre number).
Europe is getting nothing
major 1973=100 for its obeisance to virtue,
meaning austerity.
Spain and Italy, tipped
by many as the Greeces of the future,
reported mildly negative numbers for the
fourth quarter. But Greece continues to
implode, with a cumulative GDP decline of
about 15% since things began to fall apart in
between 1929 and 1933, but three times the
U.S. loss between 2007 and 2009. Fourth
quarter numbers for Ireland aren’t available,
but that country is down 10% so far.
But even the hardass countries at
the core of the eurozone, the ones jam-
ming “adjustment” down Greek and Irish
throats, aren’t doing well. Germany was
down 0.8% for the quarter; the Nether-
lands, down 2.8%. Britain, outside the euro
but happily embracing austerity all on its
own, was down a German 0.8%. Oh, and
Japan, which has been imposing austerity
on itself for close to two decades, is still in
the dumps, with real GDP below where it
was four years ago.
Thanks to political paralysis, the U.S.
has been able to avoid the austerity trap.
No doubt the lame duck Congress will try
to change that in December, so we’ll just
have to Occupy Congress. o
Number 134 7

income etc. (cont. from p. 5) misc. (cont. from p. 8)

gests that 20% were uninsured for at least insurance declined from 67% to 55%. Health
some time in 2010—and 23% of the under- indicators for people on Medicaid are about
65’s, or nearly one in four. halfway between those covered by private
A quick glance at the graph shows that insurance or Medicare and the uninsured—
the under-18s have done reasonably well, not great, but better than nothing. Non-
with less than 10% uninsured in 2010, a elderly grownups, however, aren’t doing
as well. Medicaid
has offset less than
share of population without
35% health insurance by age half the decline in
employer-based
30%
insurance for both
25% the 18–34 and
18–34 35–64 cohorts. Less
20%
35–64 than two-thirds of
15% the older group,
10% and just half of the
under 18 younger group,
5%
65 and over are covered by
0% employer-based
1988 1993 1998 2003 2008 insurance. The
The vertical dotted line marks a break in the series because Great Recession
of technical changes to the survey. Numbers before 1999 accelerated the
aren’t directly comparable to those after. The trends on decline in private
either side of the breakpoint, however, are still valid. insurance coverage,
but the downtrend
slight decline from earlier years. The major has been in place since around the turn of
reason is Medicaid, which went from cov- the century.
ering 21% of the age group in 2000 to 35% And the Census data says nothing about
in 2010. Over the same period, the share quality of coverage. Many people who’d
covered by their parents’ employer-based thought they had good insurance discover
otherwise when they get seriously sick.
Chart details, facing page: Fed funds, 10-year note, So there you have it. In 2010, Americans
and money supply: Fed data. The fed funds rate is the inter- were poorer, more polarized, and more vul-
est rate banks charge each other for overnight loans; it is
the most sensitive indicator of Fed policy. The 10-year note nerable to medical catastrophe than at just
is the average interest rate for Treasury securities maturing about any time in modern history. And it’s
in ten years. Dollar indexes are two of the Fed’s indexes of
the dollar’s value;”broad” is composed of 26 currencies, not likely that things have improved. o
and the “major,” of seven. Data through 8/19/11.
nected the discourse seems from reality.
Everyone moans about college becom-
ing unaffordable, though almost no one
would ever think of calling for free school-
ing K–PhD. And everyone wants to “fix”
the public schools, by making it easier to
fire teachers and increasing the number
of charter schools. Data hounds respond
to these calls by correctly pointing out
that there’s no evidence that any of these
approaches actually works.
But what if the elites don’t care about
the data because their main interest is in
cutting costs? If the BLS projections are
right, the future U.S. economy will feature
a sliver of overseers served by an army of
well-behaved drones. What better way to
produce those drones than in militarized
schools staffed by cheap, inexperienced
teachers?
Criticizing the early-1970s trend
towards opening up the colleges, former
Nixon and Reagan education advisor
Roger Freeman said: “We are in danger of
producing an educated proletariat. That’s
dynamite! We have to be selective on who
we allow to go through higher education.”
Sure enough, free tuition soon ended at
the University of California and the City
University of New York.
With as grim a labor market as the offi-
cial projections say is awaiting us, the last
thing we’d want is a population with criti-
cal minds and high expectations. In this
light, current education policy makes grue-
somely perfect sense. o

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Country 134
 MISCELLANY
Educate! Educate! The standard bour- annual earnings in 2010. (It’s important to three-quarters of the new jobs will require
geois prescription for our long-term eco- use medians—the figure at the middle of no more than short-term on-the-job train-
nomic woes is more education. Stagnant the list—because simple averages would ing, and more than four-fifths will require
mass incomes and mind-boggling polar- be distorted upward by the handful of no relevant prior experience. These are
ization? More college! Leaving aside the high-paying occupations on the list.) The almost the exact proportions of 2010. In
facts that half the population can’t afford median annual earnings of the 30 was 18% other words, barring catastrophic and/or
to go to college, and that if everyone went, below the national median. revolutionary changes, the future will look
any alleged advantage to having a degree Looking at the full projections, and not a lot like today, with a small elite leaving
would be reduced—would the better jobs just the top 30, you get a similar picture. the rest of the population behind.
be there? Not if the latest A skeptic might
official prognostications the 30 fastest-growing occupations, 2010–2020 say, yeah, these
are right. (those requiring an associate’s degree or more in bold) are projections,
Every few years, the and crystal balls
Bureau of Labor Statis- registered nurses • retail salespersons • home health aides • personal care aides • office clerks, are notably foggy.
general • combined food preparation and serving workers, including fast food • customer service
tics (BLS) releases its So how do the
representatives • heavy and tractor-trailer truck drivers • laborers and freight, stock, and material
projections for occupa- movers, hand • postsecondary teachers • nursing aides, orderlies, and attendants • childcare 2000-vintage pro-
tional growth over the workers • bookkeeping, accounting, and auditing clerks • cashiers • elementary school teachers, jections for 2010
next decade. Just out is except special education • receptionists and information clerks • janitors and cleaners, except look in retrospect?
the 2010–2020 edition. maids and housekeeping cleaners • landscaping and groundskeeping workers • sales representa- On first glance,
tives, wholesale and manufacturing, except technical and scientific products • construction laborers
(Yes, though released miserable. The
• medical secretaries • first-line supervisors of office and administrative support workers • carpen-
in early 2012, the base ters • waiters and waitresses • security guards • teacher assistants • accountants and auditors • BLS projected
year is 2010.) You can licensed practical and licensed vocational nurses • physicians and surgeons • medical assistants 15% growth in
get a flavor of the projec- total employment
tions by looking at the The average new job will require only between 2000 and
top 30 (ranked by number of new jobs) less than a year of education beyond high 2010; in fact, it was down 2%. But despite
listed in the box at the center of the page. school—little different from now. As a that headline miss, their projections for the
Several of the occupations—starting with result, the educational mix of the work- top occupations were quite accurate. The
#1, registered nurses, about whom one can force will barely change. In 2010, 20.0% of top ten from 2000 were projected to grow
never say enough good things—are satis- those employed had a bachelor’s or more; by 24%, 9 percentage points more than the
fying and well-compensated. But many are in 2020, 20.5% are projected to. The share average. They actually grew by 16%, which
spirit-crushing and should come with an of jobs requiring an advanced degree will turned out to be 18 points more than the
application for Food Stamps. grow from 4.5% to 4.7%. More than five average. Nine of the ten beat the average,
Some details. Only five (the ones shown times that share—25.9%, exactly the same and only one contracted. Regardless of the
in bold) require an associate’s degree or as 2010—of the next decade’s jobs will magnitudes, then, it’s likely that the BLS is
more—not what you’d expect from the require less than high school. Those doing more or less right about the mix.
propaganda. On average, they’ll require the math at home will notice that the less It’s funny how prominent education is
no more than a high school diploma. Only than high school share will continue to in our political discourse, but how uncon-
eleven paid above the national median exceed the bachelor’s-plus share. Almost cont. on p. 7
134

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