Monday, December 20, 2010

Denying Our Eyes About the New Normal

Do we have an economy built on lies, wealth transfer, and gross misallocation of resources?

David Stockman is too smart and too financial-savvy for the Wall Street ilk to fool. As he says in his most recently released interview with Peter Gorenstein, most of the job “gains” (so loudly trumpeted by Wall Street analysts) come from temporary or entry level jobs. But without true growth in the "base of the economy...where the high paying jobs exist," the economy will continue to struggle with "very, very slow growth."

"We've got a real income distribution problem in this economy," argues Stockman, "and it's getting worse, not better."

We can’t seem to face the truth—or the pain. 60% of the public say they are in favor of the tax cuts made and of the recent political deal made. They either have little clue or are in selfish denial about financial solvency. Now the engines of economics and history move another notch of the wheel clock forward to force us to face an agony we lacked the courage, the sacrifice, the vision, the focus to avoid. America’s fixation with thinking itself so special will explode in our faces if we keep putting off the hard work. That is nearly inevitable.

People will express outrage on talk tv and radio at the burden put on the future (and/or children and grandchildren), yet in the very next sentence express equal outrage that taxes are not cut across the board (including for billionaires).

You can’t have it both ways people.

If we continue on this path of doom, it will take us down, one disaster after another. We have too many other system-threatening problems to be behaving this foolishly.

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