For the sixth straight year, the early-months happy talk about real economic recovery having finally begun has yielded to the reality that statist liberal economic policies have saddled us indefinitely with slow economic growth and low interest rates and other investment returns.
And now we can add: plus increasing income inequality.
Beginning in 2010, after the Great Recession, the Democrats, liberals and progressives and their mainstream-media amen corner have annually trumpeted economic green shoots heralding at long last a robust recovery. This year they were particularly on about falling unemployment and Federal Reserve Board interest-rate plans.
In March the Fed backed off its bullish outlook, and the interest rate increases they’re holding for a real recovery may be delayed quite a while. Then March payroll growth showed a precipitous drop from previous months, and figures for the prior two months were also revised significantly downward. So, jobs data finally joined gauges of consumer spending, capital investment and manufacturing output indicating continued slow growth during a post-recession period that should see a boom.
A few days ago, first quarter economic growth clocked in barely above zero.
As in the past five years, the libs promptly claimed the slowdown is temporary and not indicative of the real underlying strength of the economy. This time, the growing strength of the dollar against other currencies, which dampens export sales, was added to the standard excuses about the weather and economic weakness around the world. Now they also claim that oil price cuts that oil and gasoline price cuts that should have been a stimulus are really a drag.
And they ignore the fact that a big reason for the last year’s fall in unemployment rates is that so many people have dropped out of the job markets that labor-force participation is down to its lowest level since 1978.
President Barack Obama and other statists, progressives and liberals keep claiming that they, unlike limited-government conservatives, care about the middle class, working folks and the poor. And mainstream media dutifully treat liberal policies as the solutions to the problems that they falsely blame on market failures.
But it is statist policies that have caused the indefinite slowdown that harms the poor, working and middle classes, and holds a grim future for our children. This includes all-time record government spending, taxing and debt levels, plus a regulatory state running amok – all being the culmination of a blowout in recent years on top of increasing burdens from all these factors for over half a century.
Further, middle- and lower-class incomes have stalled while those of upper-income folks have risen rapidly. In fact, 95 percent of the income gains during President Obama’s first term went to the richest one percent of the population, while incomes declined for the bottom 93 percent.
Since this happened on Obama’s watch, the libs claim the inequality really isn’t that bad if we consider the changing age structure of the population in recent decades. But that claim also applied during the George W. Bush administration, and they didn’t raise it then.
The point is that statist policies, whether promoted by Obama or Bush, let the cronyists (who are more statist than capitalist) milk the political allocation of resources to their benefit, while shorting folks who depend on market competition and economic growth. Limited government and market competition benefit the rest of us, not the one-percenters.
So, thank your liberal friends also for reduced incomes and returns due to slow growth. And for increased inequality, continuing unemployment, especially with their minimum-wage increases, and record-high poverty and food-stamp usage rates.
Meanwhile, China, Vietnam and India have moved to greater market freedom and less government control, reaping increased growth and human wellbeing. But Obama courts the Castro brothers, whose extreme left-wing statism has devastated Cuba.
Ron Knecht is an economist and Nevada State Controller.