Originally published at The Benfell Blog. Please leave any comments there.
The story of the end of the recession has become the story of how a president, merely six weeks before midterm elections that are nearly unanimously expected to be disastrous for his party, has finally had to listen, sort of.
Though the stock market rose sharply, economists reacted harshly to the announcement by the National Bureau of Economic Research. But the announcement itself is actually pretty hard to argue with: by the statistical criteria the NBER uses, the recession did indeed end. So all of that fuss is really about how we mark off recessions.
The real fuss appeared when Obama showed up for a town hall meeting—that he even deigned to meet the public seems remarkable given how tone-deaf this White House has been to a rising crescendo of voices—where Velma Hart delivered a very quotable, and widely quoted, wake-up call to a president who has disparaged the very voters he needs, including the moderates he supposedly triangulates towards.
Hart said,
I am a chief financial officer for a veterans service organisation, AmVets, here in Washington. I’m also a mother, I’m a wife, I’m an American veteran, and I’m one of your middle-class Americans. And quite frankly, I’m exhausted. I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for – and deeply disappointed with where we are right now.
I have been told that I voted for a man who said he was going to change things in a meaningful way for the middle class. I’m one of those people, and I’m waiting, sir. I’m waiting. I don’t feel it yet. And I thought, while it wouldn’t be in great measure, I would feel it in some small measure.
I have two children in private school. And the financial recession has taken an enormous toll on my family. My husband and I joked for years that we thought we were well beyond the hot dogs and beans era of our lives. But quite frankly, it’s starting to knock on our door and ring true that that might be where we’re headed again.
And quite frankly, Mr President, I need you to answer this honestly, is this my new reality?
But Obama ultimately stuck to his line, saying in Philadelphia, “This is not some academic exercise. Don’t compare us to the Almighty; compare us to the alternative.” As if one could honestly say he has distinguished himself from that alternative.
It was left for Jesse Jackson—and we know we’re in trouble when he has to say it—to pronounce that “What [Obama] hears in the staff meeting and what he heard in the town hall are two different things.”
The hard truth is that the answer to Hart’s question is that hard times are her—and our—”new reality.” As Robert Reich explains,
The problem is consumers, who are 70 percent of the economy. They can’t and won’t buy enough to turn the economy around. Most don’t qualify for more credit given how much they already owe (or have already defaulted on).
Without consumers, businesses have no reason to borrow more. Except to speculate by buying back their own stock and doing mergers and acquisitions, which is exactly what they’re doing.
Ultimately, even if fiscal and monetary policy weren’t deadlocked, we’d still face the same conundrum. Say the White House and Ben Bernanke got everything they wanted to boost the economy. At some point these boosts would have to end. The economy would have to be able to run on its own.
But it can’t run on its own because consumers have reached the end of their ropes.
After three decades of flat wages during which almost all the gains of growth have gone to the very top, the middle class no longer has the buying power to keep the economy going. It can’t send more spouses into paid work, can’t work more hours, can’t borrow any more. All the coping mechanisms are exhausted.
In short, multinational corporations have already extracted pretty much all the wealth from consumers—notice yet again how we never call them citizens—they can get and are hanging around only to try to collect what they think they’re still owed. What Reich still doesn’t get to is what I wrote back in June:
Reich says, “We have to get to the core problem: a middle class that doesn’t have the dough to buy the goods and services the economy is capable of producing.” But any who have viewed Adam Curtis’s “The Century of the Self” (parts 1, 2, 3, and 4) series (broadcast on BBC channel 4 in 2002) know that our social evolution into a consumer society is the consequence of a conscious decision by elites who, according to Curtis, justified it as a means of taming what they feared in the deeper natures of mass populations. It was a self-serving choice that also relieved economic elites’ fears of a shortage of demand for their overproduction.
So an historic understanding of our present woes is that this is not a problem of underconsumption but of overproduction and of an economic system that relies upon consumption of that overproduction.
But as the policymaking rift from reality has progressed, it becomes clear that something has to give, even if the elite are so wrapped up in their own self-righteousness that they fail to realize their necks could quite literally be on the line. Velma Hart spoke for tens of millions of people. As loathsome as they may be, the Tea Partiers speak for tens of millions more. And according to my arithmetic with Bureau of Labor Statistics figures, there are at least twenty million often-marginalized people who should have jobs but don’t and many more subsisting on less than a living wage, whose denial of a basic human right, the right to be able to earn a decent living, means the elite don’t even consider them human.
One thing’s for sure: there’s a critical mass in all those tens of millions of people. I don’t know how it coalesces or what happens or even when it happens. But the longer it takes, the more likely it will be violent.