In September of 2008, John McCain's campaign adviser argued that the economy was in outstanding shape --- “on the brink not of recession, but of accelerating prosperity.” At the five-year anniversary of the economic crisis, this chart sums up the situation best:
Consumer demand is strong enough to sustain a weak recovery, but not strong enough to give workers any bargaining power. In the short run, the labor market is still slack. In the long run, the dominant trend of the previous two decades — skyrocketing inequality — is resuming.
Jonathan Chait at the New York Magazine:
The right has consumed itself with a lively internal argument about the direction of conservatism and the Republican Party — libertarian populism, conservative reform, and all that. But this discussion has ignored the front and center economic questions. Do conservatives still think cutting short-term deficits will increase rather than retard growth? Academic support for that position has almost entirely collapsed. I don’t even see many conservative intellectuals defending it in columns. And yet the Republican Party marches on, opposing any effort to lift short-term austerity policies that economists almost all believe are holding back the recovery. It’s as if the head of the austerity monster has been sliced off, but the body lurches forward regardless.
The Republicans have coalesced around a short-term vision:
- to repeal Obamacare without a replacement,
- maintain short-term austerity,
- weaken labor laws,
- loosen financial regulation,
- and defend every tax deduction enjoyed by the affluent.
The following is taken from a transcript of Joseph Stiglitz's remarks to the AFL-CIO convention in Los Angeles on September 8, 2013.
For too long, the hardworking and rule-abiding had seen their paychecks shrink or stay the same, while the rule-breakers raked in huge profits and wealth. It made our economy sick, and our politics sick too.
We have become the advanced country with the highest level of inequality. We use to pride ourselves --- we were the country in which everyone was middle class. Now that middle class is shrinking and suffering.
The central message is that inequality is not inevitable. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.
We created this inequality—chose it, really—with laws that weakened unions, that eroded our minimum wage to the lowest level, in real terms, since the 1950s, with laws that allowed CEO's to take a bigger slice of the corporate pie, bankruptcy laws that put Wall Street’s toxic innovations ahead of workers. We made it nearly impossible for student debt to be forgiven. We under-invested in education. We taxed gamblers in the stock market at lower rates than workers, and encouraged investment overseas rather than at home.
It is plain that the only true and sustainable prosperity is shared prosperity, an economy in which 95% of the growth goes to the top 1% can only be called that: sick. A hundred and sixty five years ago, Lincoln said, "A house divided against itself cannot stand." We have become a house divided against itself – divided between the 99% and the 1%, between the workers, and those who would exploit them. We have to reunite the house, but it won't happen on its own.
It will only happen if workers come together. If they organize. If they unite to fight for what they know is right, in each and every workplace, in each and every community, and in each and every state capital and in Washington. We have to restore not only democracy to Washington, but to the workplace.
The challenge facing you has seldom been greater. You are still a small fraction of America. But you are the largest group representing the vast majority of Americans who work hard and play by the rules.
You must get others to join you, to work with you, to organize with you, to fight with you. Together, we can grow our economy, strengthen our communities, restore the American dream, and re-establish our democracy --- a government not of the 1%, for the 1%, and by the 1%, but a government of all Americans, for all Americans, and by all Americans.
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