Economist Larry Summers calls it “secular stagnation,” with ‘secular’ defined as ‘long-term.’ Others simply suggest that the U.S. and global economies are in a new normal, marked by low economic output and declining real wages. The International Monetary Fund lowered its estimate of GDP here and abroad. The Fund urges action. From the New York Times:
At a news conference at the start of its semiannual meeting, an event that attracts financiers, policy makers and central bankers from around the globe, the fund’s top economists highlighted a shift in the global economy in which many major nations are failing to keep up with what is still a relatively modest recovery in the United States.
In an interview on Friday, Christine Lagarde, the managing director of the fund, said global growth risked being stuck in a rut for a long time. “If nothing gets done in a bold way, there is a risk of a new mediocre” level of growth for the global economy, she said.
The trend in the U.S. is as clear as it is disturbing:
But it’s even worse in the Euro area:
While the economy is doing well by a privileged few, it’s doing nada for the Rest of Us, who have seen our jobs and wages fall, fall, and fall some more.
What should be done?
Liberals, a once-endearing term, would have the federal government take advantage of low interest rates and idle poor to spend on capital projects, including schools and transportation. That’s certainly Paul Krugman’s prescription.
Conservatives, though I have no idea what one is these days, would seem to advocate—wait for it—lower taxes and certainly reduced government spending. Austerity all around. Unless you’re rich, of course. In which case you have so much money you literally have no idea what to do with it.
The tragedy in all this is that the people will suffer and even more so should Republicans capture control of the Senate. They are either oblivious to the needs and wants of the many or believe that your suffering is a small sacrifice to pay in support of the overarching goal of providing aid and comfort to the wealthy.
The mystery, as always, is why any one of the Rest of Us would put them in office and keep them there.