Why the Economy Is in a Perma-Crisis

What Happens When an Economy Doesn’t Have a Point Anymore?

Image Credit

Everybody’s baffled. Is the economy…good…or bad? If it’s good — like pundits keep on saying — why doesn’t it feel like it? If it’s bad…why do economists and pundits keep on saying it’s great? Is this is a recession? Almost one? It’s enough to make you want to pull your hair out. Don’t worry, I’m going to clear up all your confusion.

Here’s a secret. My fellow economists aren’t doing their jobs very well. The pundits that parrot them? Well, that’s barely a job at all.

What’s really happening to the economy is dead simple. It goes like this. Your real income’s falling. It’s falling pretty fast, in fact — on average, in the region of 5%, which is what we arrive at when we subtract inflation from wage growth.

So: point one. It might not be a recession in technical terms. But it is for you. Your share of the pie is shrinking. That’s true for everyone who’s basically not super rich right about now.

That’s why it feels bad. Now let’s come to why it looks good — to people like my fellow economists who are doing a poor job of interpreting all this well.

Meanwhile, there’s a tepid amount of growth growth — 1%. That’s well within the margin of error. But it’s enough to say that “this isn’t a recession!!” At least if you want to be, well, a bad economist. Because, like I said, it’s within the margin of error, and so a better, more cautious interpretation, would go, “growth is more or less stagnant, and that’s not a good thing. This level of growth can easily be revised down in a few months, when we have more accurate data, to say, yes, we were in a recession.” So: it’s an eminently poor job of analysis to say that a growth rate within the margin of error isn’t an anything. It’s like a doctor seeing inconclusive results, and telling you, confidently, you don’t have cancer.

Does that clear things up a little?

There’s another reason that economists and pundits keep on saying that the economy’s great — but it doesn’t feel like it. They keep seeing another kind of growth, which is “job growth.” Again, though, that doesn’t matter much to the average person. All these new jobs are largely concentrated in “low-wage service industries.” They’re far from being stable careers which offer upward mobility. So while it looks good on paper to say that more people are employed, in reality, that’s another poor job of interpretation. Is it really desirable for us economists to say that people should have any kind of employment? Even if it’s the kind that ends up costing them chances, because now they’re trapped in dead-end jobs? Should we celebrate the economy “growing” those kinds of jobs at all?

Let me summarize those three points. The economy is barely growing. Your share of the pie, in real terms, is shrinking. That’s because what growth the economy does offer is either skimmed off the top by the ultra-rich, or jobs that barely pay the bills “growing” at the expense of stable careers. This is low, low quality growth, and let me give you a quick example before we move on to the big picture.

Hollywood writers are on strike, because their real incomes have fallen by around 25% over the last decade. Meanwhile, Netflix’s CEOs took home $50 million each…last year…for running the company into the ground. Think about how perverse that is. In what universe should anyone earn $50 mil for much of anything — much less literally tanking a company? This is a metaphor for our economy: ultra-rich become giga-rich by skimming off the gains, leaving everyone else getting poorer, fast, and they do it, worse, by not creating much of real value in the first place, maybe even, LOL, destroying billions in value, like Netflix’s CEOs did.

So…why is all this happening? You see, my field, economics? It has three big problems. It refuses to acknowledge realities like the above, instead dialing in a superficial level of analyzing the data. But that, two, leaves it unable to even ask why such problems have emerged. And three, that makes it impossible for it to offer any solutions, because, of course, it’s defined the problems away. It’s a hot mess, economics. So let me try to teach you why all this is happening.

Our economy doesn’t have a point anymore.

This is why it’s in a state, now, of perma-crisis. Perma-crisis means exactly the above: everyone’s life keeps on getting worse, and that leads to sociopolitical destabilization, which is what falling living standards do — but pundits and economists keep on saying, like weird bots, that Everything’s!!! Great!!