James Carville's celebrated political epiphany was an effective rallying cry to motivate his troops in a campaign. But his strategic insight, "It's the economy, Stupid," just doesn't get at the deeper problems today. These issues really come down to: It's our society, Stupid.
We know how to counter wrong-headed economic thinking, and how to clean up an economic train wreck, after things have gone badly off-track. Those things we learned long ago in the Great Depression. Yet today we are again having to overcome the myth-making money and power of plutocratic propaganda, in order to break its hold on the prejudiced minds of far too many, and to move on to a better day.
I like the direct approach. "What is the compelling evidence that the vision of a competitive, efficient economy allocating resources to the right uses is actually a good description of the world we live in?"
That rhetorical question comes from Princeton University Professor and Noble Economics Laureate, Paul Krugman. He posed it in a piece debunking the nonsense of conservative arguments proclaiming the purity and consistent reliability of unregulated free market performance. In fact, there is no more empirical evidence to support the core claims of conservative right wing unregulated market performance than there is to prove supernatural miracles, or the so-called Texas Miracle (see earlier post, The Miracle Worker). All the evidence points the other way.
As Krugman notes, markets fail. We are in the middle, or should I say at the bottom, of a gigantic example of such a failure. We are suffering cruel and massive long-term unemployment. The very definition of long-term unemployment has had to be lengthened to adequately address the need for compensation benefits. Likewise, short-term unemployment now contemplates being unemployed for a greater period of time.
An unremarked consequence of this change, however, is that it tends to disguise the true severity of the circumstances of the unemployed today, and the very nature of the problem itself. Since statistical measurement of long-term unemployment began, and up until 2008, the rate of short-term unemployment always fell as the long-term rate grew. That relationship changed with the free market financial collapse, which precipitated the current catastrophic climate of hopelessness and despair for the average working person. Today, both measurements increase together, which means that short-term unemployment is not merely a reflection of so-called frictional or labor market turn-over, but a symptom of something far more ominous.
It is not that workers are no longer needed in order for the economy to produce up to its capacity. The non-partisan CBO (Congressional Budget Office) acknowledges that GDP (Gross Domestic Product) is running at a level of output 1 trillion dollars annually below what it could be without any problem. That represents a lot of jobs, now lost until who knows when.
Business has no incentive to invest with so many out of work. Debt burdened consumers, scared they too will soon be among the jobless, are in no rush to buy. Hence, there is no demand for increased production. So, companies shed workers like unwanted weight, and manage to make as much profit or more by doing even less than ever before.
But it is an article of faith among the conservative right wing that unregulated markets always produce the best outcomes for the most people. Government intervention only makes things worse. This is a religion of sorts, and a social pathology. It allows the self-righteous well off and the credulous less well off both to think themselves very moral, while ignoring the plight of the desperate.