Economics, like politics: 31 flavors of permanent unreality

Published online 4 May 2015.

Summary: Yesterday we read the “OPOL report,” which argued we have a “bullshit political system.”  Today, with reference to a piece by Raul Ilargi Meijer in today’s Naked Capitalism, I’m going to suggest that a bullshit political system is appropriate to a bullshit world economy.  Everything might look nice on the surface, but this is so because the managers of that surface are kept very busy polishing it and making it look clean and shiny and, well, unreal.  If you look hard enough, however, you can see the scary reality (symbolized by Ilargi’s necrophiliac title) underneath.

Nothing I’ve read of recent really suggests a wake-up call as regards the present-day world economy like Raul Ilargi Meijer’s recent piece, “Sucking Spoilt Milk From A Bloated Dead Sow,” over at Naked Capitalism.  For the record, I’ve long reported here at that there was a bad end to the four decades of declining overall economic growth which one can see from a compilation of OECD statistics.  After doing this work, William K. Tabb tells us:

Real global growth averaged 4.9 percent a year during the Golden Age of national Keynesianism (1950–1973). It was 3.4 percent between 1974 and 1979; 3.3 percent in the 1980s; and only 2.3 percent in the 1990s, the decade with the slowest growth since World War II. The slowing of the real economy led investors to seek higher returns in financial speculation…. [I]increased liquidity and lower costs of borrowing encouraged in turn further expansion of finance. The coincident trends of growing inequality and insecurity…and the spreading power of rapid financialization do not suggest a smooth continued expansion path for a society based on increased debt and growing leverage.

Of course if you read the published statistics you can see that the claimed rate is 3.3%.  Question: how much of last year’s “growth” was fictional growth, created by the hypertrophy of the financial system without reference to any usable increase in the production of “goods & services ™”?  Nine years ago one could read Robert Brenner’s encyclopedic The Economics of Global Turbulence, in which after 300+ pages it is claimed:

The odds therefore favour a still further opening up of the already enormous chasm between the income and profits actually produced by the world economy and the paper claims generated by it…

Aren’t they just printing some money (see e.g. “fractional reserve banking”), handing it to corporations (see e.g. “subsidy”), and voila!  It’s on the books.  Congratulations GDP!Compare and contrast with Ilargi:

Or, in other words, present day western economies – and their former markets – are being artificially propped up by either making already poor people poorer today, making them poorer tomorrow, or both.

It’s about the same.  Having gone after GDP, though, Ilargi goes after employment statistics:

Publishing falling unemployment numbers while out-of-labor-force data rise (to a record 93 million working age Americans today) is an insult to everyone’s intelligence, not a sign of economic health.

OK so before you all write me to tell me of the glorious recovery that’s occurred in our great nation, let’s stop to look, briefly, at the employment-population ratio, the best measure we’ve got so far of the actual state of the jobs scene.  And if you think that there was some massive retirement party back in ’08-’09 that caused that big dip in the stats, here’s the employment-population ratio for the 25-54-aged population.  It looks better but it still isn’t close to where it was in ’05.  Meanwhile, here’s your out-of-labor-force data and your labor-force participation rate data.That whole scene will at any rate end as the Fed backs off of quantitative easing and raises interest rates.  Ilargi argues this too — but if you want to see where it starts, take a look at the store closings index.

Perhaps the economic problem can be solved by electing a lot of great-looking people to office.  But wait!  We’ve tried that and it hasn’t worked so far!   Keeanga-Yamahtta Taylor:

Today, we have more black elected officials in the United States than at any point in American history. Yet for the vast majority of black people, life has changed very little.

Taylor adds to an earlier observation of Lance Selfa’s:

Between 1964 and 1986, the number of Black elected US officials grew from 103 to 6,424.  But at the same time, conditions for the mass of the Black population — workers and the poor — grew increasingly desperate.  In fact, by the 1980s, a range of indices suggested that living conditions, job opportunities, and poverty levels for Black America were worse than the were before the civil rights movement. (from page 149 of Selfa’s book)

Glen Ford suggests a current context:

Black America has plummeted to such economic depths… that there is no possibility of ever reaching economic parity with whites absent a social revolution, the beginnings of which we may be witnessing in the growing mobilization against brutal police enforcement of the oppressive social order.

Supporting statistics can be found here.Now let’s go back to Ilargi’s assessment of hope and change ™:

Whatever is seen as recovery or expansion is a testament to the power of illusion and propaganda, not the power of the economy. If you choose to look at the world from a point of view that focuses only on recovery, you’re not going to understand what is happening, because there is no recovery anywhere in sight.

Yesterday OPOL told us:

Look, I don’t know what we’re supposed to do about our bullshit political system but it seems to me that it must start with facing up to the facts.

We need a bullshit political system, it seems, because we have a bullshit economy.Ilargi elaborates on what to do about the bullshit economy well:

We need to think about how we’re going to lay a foundation, as solid as we can, under our societies now, with the means we still possess to achieve that, knowing there will be times when those means will be increasingly less available. We’re not doing that, because we focus only on a world that does manage to attain a recovery.

The current crop of politicians is going to try to sell you on the notion that they can bring back the economy of 2005 if only they concentrate hard enough on their powers of levitation.  Meanwhile they all bicker with each other about which of the 31 flavors of permanent unreality you are supposed to believe, from “toppling the 1%” to claiming that we need guns in case we need to “shoot the government.”  “Facing up to the facts” means that this economy isn’t going to work, and that therefore we need to create a new one.  We’ve already been over why the system can’t last forever.  Now let’s think about it!

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