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September 26, 2018

The Burden of the American Worker: Paychecks vs. The "Booming" Economy


Happy Destiny


There’s great elation flowing from the various economic bureaus down through President Trump. They bring us good tidings. If you haven’t heard, here in the USA, we live, work, and play in the dazzle and delight of an economy in which GDP growth exceeds the unemployment rate.
The last time we drank of elation this cool and sweet was in the pre-iPhone stone ages. Back when George Dubya was President. And when Lehman Brothers was still one of the titans of Wall Street.
Indeed, getting back to this agreeable place has been a long, hard trudge along the road to happy destiny.  But step by step, day by day, a paradise lost has been returned to Eden. Thank you, Ben Bernanke.
By all official accounts, things have never been better.  GDP, according to the Bureau of Economic Analysis, is growing at an annual clip of 4.2 percent.  The unemployment rate, as reported by the Bureau of Labor Statistics, sits at just 3.9 percent.  But that’s not all…
Pot stocks have become the new bitcoin.  The Dow Jones Industrial Average, after a six month hiatus, is marking new all-time record highs.  And, most importantly, the Dodgers are tops in their division going into the final week of the regular season.  What’s not to like?



Potting it – marijuana stock Tilray rises to a price/sales ratio of 846 intraday. Such moves have  become a regular occurrence in bubble-land.

Discrepancies

The panoramic vantage from the present summit is both extraordinary and astonishing.  Here, standing at the heights of a quasi-centrally planned economy, we see distortions and discrepancies. There are pie charts and bar graphs displaying contrived and downright fabricated economic data. The garbage outputs are very much at odds with the reality of the situation.
The results are bizarre evidence of the determination of the central planners to depict a world that’s unfolding in accordance with an intelligent plan. A supposed reality where not only does your neighbor get rich… but you do too. Truly, it’s a laugh and a half, the whole thing.
For starters, the growth is being extracted from the future via massive infusions of corporate, consumer, and government debt. To dismiss this, is to stretch the truth considerably. To understand that GDP is, in effect, a measurement of the rate at which we’re all going broke, makes the spectacle of a 4.2 percent rate of GDP growth an absolute howler.
On top of that, the 3.9 percent unemployment rate is downright ludicrous, if one is in the mood for statistics without any common decency. What good is a 3.9 percent unemployment rate when the labor participation rate is at a 40 year low?If the unemployment rate is really at a record low, why are wages stagnating?
These discrepancies help explain the outlandish circumstances all but the crème de la crème of the wealth spectrum find themselves in. It is nothing less than a charade. What to make of it?

The Burden of the American Worker

The general burden of the American worker is the daily task of squaring the difference between the booming economy reported by the government bureaus and the dreary economy reported in their biweekly paychecks.
There is sound reason to believe that this task, this burden of the American worker, has been reduced to some sort of practical joke.  An exhausting game of chase the wild goose.
How is it that the economy’s been growing for nearly a decade straight, but  workers have on average seen no meaningful increase in their income?  Have workers really been sprinting in place this entire time?  How did they end up in this ridiculous situation?
Some workers have permanently vacated the official statistics. They are not considered to be unemployed, but they are certainly not working. There is a whole host of reasons for this which aggregate statistics cannot tell us anything about, but it is a good bet that e.g. the vast skills mismatches that have emerged in the labor market can be largely blamed on the previous boom inter alia spurring malinvestment in human capital. [PT]  
The fact is, for the American worker, America’s brand of a centrally planned economy doesn’t pay. The dual impediments of fake money and regulatory madness apply exactions which cannot be overcome. There are claims to the fruits of one’s labors long before they have been earned.
The economy, in other words, has been rigged.  The value that workers produce flows to Washington and Wall Street, where it is siphoned off and misallocated to a cadre of officials, cronies, and big bankers. What is left is spent to merely keep the lights on, the car running, and food upon the table.
Should a lowly wage earner expect or deserve any more? Certainly, they deserve the rewards and dignity of hard work, saving money, and paying their way. But what do we know?  We still cut our own grass with a push mower, drink our coffee black, and pay our utility bills with hand written checks.
Courtesy of MN Gordon, Acting-Man (More from Acting-Man here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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