Daniel Gross's piece is really, really depressing. It confirms my wife's feeling that the economy, at least as far as ordinary people are concerned, has been spinning its wheels for a long time. Gross is asserting that America's "lost decade" isn't the next ten years, but the decade that began with January 1, 2000, and will end in six weeks. He gives lots of examples of economic and market indicators that are, today, at the same levels they were at in 2000.
I think it's worth reading, even if it isn't exactly cheerful. I also think that it may, just may, reveal a deeper problem. There's a tendency to measure performance by the measures you have, the ones that are convenient to collect. Sometimes that leads you to overestimate the importance of easily-determined indicators, and to ignore problems that don't show in the metrics you're using. A lot of companies have gotten into trouble trying to manipulate the markets to elevate their stock prices. The Bush administration got into trouble trying to elevate the home ownership numbers.
From Gross's piece, I'd have to say that such efforts to game the markets were not only misguided, but futile. We're back to square one.
Glenn A Knight
In my study
Monday, November 16, 2009
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2 comments:
The New Normal?
> Daniel Gross's piece is really,
> really depressing. It confirms
> my wife's feeling that the
> economy, at least as far as
> ordinary people are concerned,
> has been spinning its wheels
> for a long time.
Depressing indeed. However, it's a very useful analysis of the underpinnings of what I've heard described as the "new normal." The new normal is a malign combination of a jobless recovery and a widening of the gap between the haves and the have-nots that has always, to a greater or lesser degree, characterized the American economy.
In the new normal, however, the gap will be between those with education and skills and those without them. While this gap has always existed, it will worsen. That's because as the economy recovers the jobs it produces will be reserved for skilled workers; the unskilled won't be rehired, simply because business has learned to do without them.
There's another aspect to this problem: When people-- particularly the young-- look for jobs, they generally indicate their desirability with educational credentials. This is an issue because the cost of a college degree is exploding. Tuition is increasing nationally at a rate of well over 7% per year, at a time when the general inflation rate has been about 1%. Last week, near riots broke out when California announced that tuition at the elite state universities will increase 23% next year.
The upshot is that as the economy recovers, it won't be as it previously was. It will be good for the educated haves, but not good at all for the have-nots. And for those have-nots, it may never be good again. This, of course, will have dramatic economic consequences. But the social consequences may ultimately be worse.
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