Monday, February 04, 2008

A different take on the economy

Interesting article in the Sunday Post Outlook section titled: The Boom Was a Bust For Ordinary People

I think it raises some very interesting points on how the boom in the economy these last few years has not reached a great many people. From the story:

we’ve had brisk growth for the past few years, as the president has tirelessly reminded us, only without those promised increases in personal income, at least not for the poor and the middle class. According to a study just released by the Economic Policy Institute, real wages actually fell last year. Growth, some of the economists are conceding in perplexity, has been “decoupled” from widely shared prosperity.

Growth is not the only economic indicator that has let us down. In the past five years, America’s briskly rising productivity has been the envy of much of the world. But again, there’s been no corresponding increase in most people’s wages. It’s not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently.

The current economic problem, downturn, recession or whatever you like to call it started in the subprime market. If the Federal Reserve or the government had been a little more concerned or aware of the practices of some of these loans, action might have been taken to prevent this problem. It seems action was only taken when the large bank and investment firms were suddenly brought into the picture that the powers that be took notice.

The interest freeze on the subprime market is a help. But what happens after five years if people are still unable to pay their mortgages? Will be right back where we started or will the government do something to really and truly help this people get out of this mess?

1 comment:

Arthur Schenck said...

Ah, yes, well we know why this all happened. The Bush-Cheney regime would've taken no notice while fat profits were being made off the backs of ordinary working people, and only took any action at all when those profits were threatened. It's also no mystery why ordinary people haven't benefited from rising productivity--all the benefits have been siphoned off to satisfy shareholders' ever-increasing demands for higher returns.

Economists never consider greed in their equations, nor the willingness of an administration that seeks to encourage and reward it. The mystery to me is why the media lets Bush-Cheney get away with blaming the people who took out sub-prime mortgages when the fault clearly lies with the greedy and unscrupulous money-lenders who hoodwinked them into it. I wonder what economists say about that?