And this week I stumbled onto this little ditty at Salon.com about the "role of government" in the current economic crisis, and how the Republicans have "lied" about that role since Reagan.
The writer of that article (in her own words) "quotes Robert reich in a major way", so here's the big stuff before I give you my assessment:
The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours.Now, yes: consumer debt is a serious problem for said consumers, and it was exceedingly stupid for people to go into debt for stuff like TVs and iPods to the tune on average of their annual income -- but people weren't buying groceries with credit cards becuase they didn;t make enough money.
When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent.
First, let's talk about what "real median household income" (RMHI) is. The US Cesus Bureau defines it like this:
That's from the first footnote of the document "P60-233", "Income, Poverty, and Health Insurance Coverage in the United States: 2006", published by the US Census Bureau. So the real median income is adjusted for inflation, so there's no hankey-pankey with what a dollar can buy, OK?
And given that definition of "real median household income", here's the graph of said indicator:
Taken from the same P60-233 document, fwiw. Now, you may complain about your inability to make fine distinctions, but here's a set of reference lines to help you make sense of the status of real median income:
The vertical red line is 1975. The horizintal red line is RMHI in 1975 -- you know: pre-Jimmy Carter. The net is that RMHI has never been lower in the last 33 years than it was in 1975, so RMHI has not yet "stalled" vs. 1975.
In fact, if we call the RMHI in 1975 $39,000, RMHI in 2006 was $48,200 -- 23.5% up from 1975. So in real terms, US Households make 24% more money than they did in 1975, and to press a political point, Salon.com is willing to fraudulently claim that is a decrease.
That's intellectually criminal.