Popular Economics Weekly
Janet Yellen’s Fed meets again this midweek to decide whether to raise short term rates. It probably won’t happen, because they can’t decide if the US economy is ‘half-full’—i.e., still growing enough to boost inflation—or ‘half empty’, which means the economy is barely growing.
A terrific New York Times conversation between two extraordinary women, Senator Elizabeth Warren and Tracee Ellis Ross, actress and daughter of Diana Ross, brought out what is at stake in this election between the Haves and Have-nots, and best describes the current political debate.
“Go listen to those guys on the floor of the Senate talking about people who are losing their homes,” said Senator Warren, “describing them like you’d talk about furniture that should be tossed out. It’s a “they” that’s so far away.”Yet The Federal Reserve has said most recently household net worth rose to $89.06 trillion in the second quarter, a rise of $1.07 trillion, or 1.2 percent to a record level as a percentage of Gross Domestic Product. The gains were almost equally split between the $452 billion rise in equities and the $474 billion advance in the value of real estate. So even middle-class homeowners are benefiting from the current recovery.
“But it’s not just in politics, it’s everywhere,” said Ms. Ross. “This “otherness” that’s all of a sudden part of our culture. People grabbing to what’s theirs out of fear it might be taken away.”
The fear mongers, such as Donald Trump, would have us believe the economic pie is fixed, a zero-sum game, in Senator Warren’s words, in which the wealthiest hoard their wealth in order to spend it on themselves, for themselves. (But) “That was not America. We were building an America that said, “If we educate all our kids, we”ll actually make more (of everything),” says Warren.
New data showing middle-class household incomes growing at the fastest rate since the recession seemed to confirm that a recovery that’s remained slow and uneven is finally touching the lives of ordinary, especially middle-class Americans. So there is more of the ‘pie’ being created, not the zero-sum that Trumpeteers would have us believe.
It is also why so many seem to believe Trump’s blame-game, which wants to “blame the immigrants, blame women, blame people who have different religious beliefs than you, blame people who aren’t the same color as you,” says Warren. “Because if everyone turns on each other—then the same old system that keeps billionaires on top stays right where it is.”
In fact, this explains the almost eternal struggle between the Haves and Have-nots, as well. Capitalism, the system that Adam Smith described best in his 1776 book, The Wealth of Nations, created today’s wealth by ‘paying it forward,’ by investing part of the profits in future growth.
And that is the real game of those Haves that support Trump and all his ugliness. They want to propagate the “same-old system”, the system that must build walls to make American great again.
Harlan Green © 2016
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