Many in the media are saying how unusual it is for our economy to be so sluggish for so long, after we have officially emerged from a recession. In a sense, they are right. But, in another sense, they are profoundly wrong.
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
Some very sharp downturns in the American economy, such as in the early 1920s, were followed quickly by bouncing back to normal levels or beyond. The government did nothing — and it worked.
Overall U.S. unemployment is 9.1 percent. For white adults, it's 8 percent, and for white teens, 23 percent. Black adult unemployment stands at 17 percent, and for black teens, it's 40 percent, more than 50 percent in some cities, for example, Washington.
Chapter 3 of Race and Economics, my most recent book, starts out, "Some might find it puzzling that during times of gross racial discrimination, black unemployment was lower and blacks were more active in the labor force than they are today." Up until the late 1950s, the labor force participation rate of black teens and adults was equal to or greater than their white counterparts. In fact, in 1910, 71 percent of black males older than 9 were employed, compared with 51 percent for whites. As early as 1890, the duration of unemployment among blacks was shorter than it was among whites, whereas today unemployment is both higher and longer-lasting among blacks than among whites.
How might one explain yesteryear's lower black unemployment and greater labor force participation?
President Obama’s constant refrain about the government’s unprecedented levels of red ink points to “millionaires and billionaires” as the problem, not the massive amounts of waste, fraud, and inefficiency in government operations. Remember when a million per mile seemed like a crazy price for a new road? Now it’s a billion per mile for a transportation project and the politicians are just fine with it, even if the project is totally unnecessary, even if we’re already broke.
To make it allegedly easier for people in San Francisco to get in and out of Chinatown in a hurry, a new 1.7 mile subway line is in the works.
The original projected cost was $647 million. Now it’s $1.6 billion, and growing.
Though Hurricane Irene — later downgraded to a tropical storm — did not cause anywhere the level of devastation initially predicted, it still made a major impact on the East Coast. At least 24 are known dead, thousands are without power, and some areas along the east coast are still under water. Estimates of the damages are in the billions of dollars.
The state of Vermont has been declared a federal disaster area, with many small towns experiencing historic flooding. According to Fox News, “Hundreds of Vermonters were told to leave their homes after Irene dumped several inches of rain on the landlocked state.” Governor Peter Shumlin called it the worst flooding the state has ever seen. As well, he added, there is “extraordinary infrastructure damage” across the state. One video shows a small bridge over Williams River — which had stood since 1870 — swept away by rushing floodwaters.
Every road in the state of Vermont, with the exception of two major highways, was closed at some point over the weekend as a result of the storms.
Punch and Judy Show continues — this time in South Africa.
Speaking to reporters at a breakfast sponsored by the Christian Science Monitor, AFL-CIO President Richard Trumka made it clear that his union is backing off from supporting President Obama and the Democrats in the 2012 elections and is instead going to funnel union funds into attempts to influence state outcomes.
We’re going to use a lot of our money to build structures that work for working people. You’re going to see us give less money to build structures for others, and more of our money will be used to build our own structure….
Let’s assume we spent $100 in the last election. The day after Election Day, we were no stronger than we were the day before. If we had spent that [$100] on creating a structure for working people that would be there year round, then we would be stronger.
Since there has been so much talk among Tea Partiers of returning to the good old, pre-trillion-dollar days of Ronald Reagan’s administration, I thought it would be a good idea to go back to that inspiring time to see what has been happening to the growth of the federal government and how the Great Communicator sought to deal with that problem.
In 1960, Uncle Sam, (better known these days as Uncle Sap), spent $76.5 billion to run the federal government. In 1970, a mere ten years later, that figure almost tripled to $194.9 billion. And ten years later, in 1980, federal spending tripled again to $579 billion.
By then Congress had lost complete control over federal spending. It had enacted so many entitlement programs that the budget had become a locomotive going full-speed down-hill with no brakes. By the time Ronald Reagan became President, the spending momentum was so great that the most a fiscally conservative president could do immediately was to slow down the rate of growth just a little. Momentum is a powerful force, and even a fiscal conservative cannot stop a locomotive on a dime. And that is why Reagan’s 1983 budget reached a new high of $757 billion, with a projected deficit of $98.6 billion.
As the Northeastern portion of the United States prepares to be rocked by Hurricane Irene, analysts are already predicting the potential financial impact of the storm on the already struggling American economy. As Irene follows a path similar to that of Hurricane Bertha in 1995 and Hurricane Floyd in 1999, experts are comparing the potential damage and costs to those storms. Bertha cost $371 million worth of damage nationwide, while Floyd accumulated $4.5 billion. Some lawmakers contend, however, that regardless of the expected damage, Americans do not need the Federal Emergency Management Agency (FEMA).
GOP Presidential candidate Ron Paul, for example, contends that there should be no FEMA response to Hurricane Irene and that federal disaster relief is “bad economics, bad morality, and bad constitutional law.”
“There’s no magic about FEMA. They’re a great contribution to deficit financing and quite frankly they don’t have a penny in the bank. We should be coordinated but coordinated voluntarily with the states. A state can decide. We don’t need somebody in Washington,” he said.
Burdened with economic uncertainty, high unemployment, and a volatile investors’ market, young Americans are desperately seeking job security — while anxiously chasing the "American Dream." The economy simply isn’t what it was when they first entered the job market, or when they were finishing high school or working for their college degrees. The entire economic, financial, and social class system has changed. Indeed, the entire country has changed.
They’re not Generation X, or Generation Y. According to the Los Angeles Times, they’re "Generation Vexed" — a struggling generation of "young Americans [aged 20 to 29] who are downsizing expectations in the face of an economic future that is anything but certain." As a result, "Career plans are being altered, marriages put off and dreams shelved." Young Americans are trapped under a stagnant economic umbrella, and, lamentably, they are left with no foreseeable escape.
California Governor Jerry Brown proposed a new tax plan to the state legislature Thursday that would boost levies on large corporations located outside of California. Brown’s request to state lawmakers is to revert the sales tax structure back to the formula adopted before 2009, which would require multi-state corporations, which employ few California workers, to pay higher sales taxes for goods they sell within state boundaries.
These dollars would shift to California companies in the form of sales-tax exemptions, with the intent to nudge companies to manufacture products and hire people within the state.
Under the 2009 budget plan, out-of-state companies were allowed to choose between two tax formulas, which the Brown administration claims left California-based businesses at a competitive disadvantage. The new plan would calculate out-of-state companies’ tax liability solely on the portion of sales they earn in California, an approach called the "single-sales factor."