A New Harvard Study Shows
Serious Economic Problems
Although many Americans
have long suspected it, until recently, hard evidence of the progress of the
U.S. economy being not as rosy as the administration of President Obama has trumpeted
was scant. However, a new study by Obama’s alma mater, Harvard University,
shows in nine charts that the myth of the post-2008 “Obama recovery” is just
that — a myth.
According to the study,
the economy continues to show a “lack of economic strategy, especially at the
federal level” as well as a “political system that was once the envy of many
nations” but which now has “become our greatest liability.”
The study concludes that
the country’s economic performance roughly peaked in the 1990s and even prior
to 2008, investment, job growth, productivity growth and economic growth were
all falling.
A closer look at the
study’s data shows the figures for workforce participation peaked in 1997 and
since then have declined to 1982 levels, where they remain currently. It’s true
that since the 1980s and 1990s, more women are participating in today’s
workforce, but if you remove women from the equation, the drop off in
participation is even more severe.
The number of non-farm
jobs being created today is roughly one-quarter of what it was in 2000 and
actually stayed negative for about a year six years ago. Trends show this
figure has plateaued for about the last two years and is not improving.
Despite spiking in the
years between 2000 and 2005, productivity growth has decreased trend-wise and
is very close to zero at the present time, its lowest level since the beginning
of the 1980s. The Obama administration has projected that anyone making less
than $20 per hour currently stands an 83 percent chance of losing their job to
automation in the future.
Since the late 1990s,
per-capita income for the country has declined steadily. Between 1999 and 2014,
the only geographic areas of the U.S. that have experienced real income growth
have been areas where new oil and gas production (usually related to fracking)
has expanded.
Since 1999, real incomes
have stagnated across virtually all levels, except at the extreme top end.
Although median household income technically gained slightly in 2015, it
remains well shy of its peak 17 years ago, adjusted for inflation.
The Harvard study also
showed that limited job prospects have affected lower-skilled and lower-income
Americans disproportionately, leading to far greater income inequality;
ironically, it’s those people at the bottom of the income scale who Obama often
claims he cares about the most. But in fact, the poorest 15 percent of the
population are even poorer than they were in 1989, according to the latest
numbers released by the Census Bureau.
Not only have all of these
figures declined, but Americans’ optimism in the future has also been
shattered. The percentage of people who “trust the federal government always or
most of the time” has declined from a high of 78 percent in 1964 to under 20
percent today.
Amongst Harvard alumni,
pessimism about the U.S. economy was prevalent. Half of all business leaders
surveyed said they expected American competitiveness to decline while only 30
percent foresaw improvement.
The study blamed most of
the bad news on the federal government’s lack of a comprehensive economic
strategy, as opposed to accommodative policies set by the Federal Reserve and
other bodies. Specifically, the study called the country’s current political
system “broken,” and said it is “no longer delivering good results for the
average American.”
It went on to say that
“Americans no longer trust their political leaders, and political polarization
has increased dramatically… Independents now account for 42% of Americans, a
greater percentage than that of either major party… Numerous indicators point
to failure to compromise and deliver practical solutions to the nation’s
problems. Political polarization has especially made it harder to build
consensus on sensible economic policies that address key U.S. weaknesses.”
Under Obama, government
entitlement spending on Obamacare, children’s health, Medicaid, Medicare and
Social Security has soared while investment in infrastructure has continued to
fall. The two dollar amounts switched places in the early 1970s when each
comprised about 25 percent of the government’s total expenditure.
Entitlement spending
currently is at almost 50 percent and projected to rise to nearly 55 percent by
2021. Public infrastructure spending has fallen below 15 percent and is
expected to fall to 10 percent by 2021. The study specifically blamed Obama’s
major policy initiatives, including Obamacare, higher taxes and greater
government regulation, for these multiple failures.
A four-quadrant chart
showing initiatives that were “weak and deteriorating” included health care,
the nation’s political system, the national tax code, the country’s logistics
infrastructure and the K-12 educational system.
One political candidate
who’s well aware of these numbers is GOP presidential nominee Donald Trump.
“Don’t believe those phony numbers when you hear 4.9 and 5 percent
unemployment,” Trump said earlier this year. “The number’s probably 28, 29 . .
. in fact, I even heard recently 42 percent.”
Even The New York Times
was forced to acknowledge that Trump was probably right, according to data from
the Bureau of Labor Statistics; the number of underemployed, unemployed and
those who have given up seeking work totals more than 40 percent of all
Americans. Future Obama (and possibly Clinton) initiatives such as the
Transpacific Trade Partnership (TPP) free-trade agreement will make those
numbers even worse.
Nicholas Eberstadt, author
of the book “Men Without Work: America’s Invisible Crisis,” says no end is in
sight. “It’s astonishing to me that this 7-million man army of prime-age
[unemployed] guys has been allowed to be invisible,” Eberstadt says. “I don’t
think decision-makers, pundits, prognosticators or people in power know anyone
in the bottom half. They don’t really know what’s going on in their lives.”
As a recent New York Post
article noted, there is a real danger of a “new, permanent underclass” being
created in the country. According to Ryan Avent, author of “The Wealth of
Humans: Work, Power and Status in the Twenty-First Century,” the outlook isn’t
good.
“The longer picture’s
pretty grim,” he admitted. “It’s not a case of, ‘Stuff we’ve tried in the past
is going to work.’ Technology and globalization have changed the world that
workers are facing . . . Is this whole segment of the population going to go
off in this direction and become isolated?”
Avent believes the key to
Trump’s appeal is that he understands this group. “[Trump] flouts the norms of
Washington and New York — he says, ‘Conventional wisdom is bulls**t and we’re
not gonna play by those rules anymore. For a lot of people who’ve been treading
water for 15, 20 years — that Trump’s willing to address their concerns is a
positive.”
Regards, Ethan Warrick,
Editor Wealth Authority
http://www.wealthauthority.com/articles/a-new-harvard-study-shows-serious-economic-problems/
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