Monday, August 28, 2006

A Couple Items of Interest (at least to me)

First, the New York Times has an interesting article about wages and productivity.  Essentially the article cites U.S. government data to show that real wages are failing to keep up with the increased productivity that the US labor force is producing.  In other, simpler terms, were all doing more but getting paid less.  Meanwhile, corporate profits are rising, and the wage index (wages + the value of benefits like health care) is falling, yet another sign, according to the article, that the economy isn’t a strong as many, including the President would like you to believe.  

Now, I don’t necessarily agree or disagree with what I perceived to be “in-between the lines” of the article.  Namely, that the economy is horrific, corporate America is gouging the worker and were all screwed as the cost of living increases while wages fall, but I do think there is some merit to the raw data presented.  More importantly, and more interesting to me is that it confirms something that I’ve often argued both in the main blog and in the comments.  You can’t judge the US economy, or any economy for that matter, by one specific set of data points.  In other words, if I look only at “economic growth,” whatever that means, I get one picture of the economy.  In this case, it’s a particularly positive one, which is why the Administration continues to rely on it so much when discussing the economy.  On the other hand, the data in the NY Times piece has some disturbing elements to it, ones that should disturb many people about the sustainability of these so-called “good times.”  

Which story to believe you ask?  Both I say.  The economy is a complicated, dare I say evolving system that can change at a moments notice.  Inflation, economic growth, stock prices, bond values, futures markets, wages, unemployment, housing purchases/sales, consumer confidence, consumer spending, and savings rates: all of these economic indicators/factors, if considered in isolation, will give you a slightly different perspective on the relative state of the US economy.  That’s my problem with much of the economic commentary that goes around the media these days.  If, let’s say, GDP is up to 4% this quarter, that will be news story; accompanied, of course, by the Administration cheerleading, as it probably should, and a whole bunch of predictions about the political ramifications of a robust economy.  That’s all well and good, but it’s only one small part of the story, and in reality means nothing without careful consideration and analysis of the other factors as well.  

The only thing that bothers me more about economic reporting is the credit/blame that the President gets for the success/failure of an economy.  This, as I’ve noted before, is bogus on both accounts.  Presidents are not responsible for the state of the economy period, end of story.  Clinton is no more responsible for the growth in the 90’s than Bush is for the growth now.  Clinton no more caused the recession in the early 00’s as Bush did when he took office.  No amount of administration spin can change that fact, the sooner we stop thinking that they can, the better off we all will be.  This, however, is another post in its entirety.  

My second note of interest comes from this post by Ilya Somin at the Volokh Conspiracy about “pork barrel” spending and the proposed Corburn-Obama sunshine provision that is currently stalled by anonymous hold in the U.S. Senate.  Essentially the Corburn-Obama bill would mandate the creation of a public database for all government contracts and federal grants, so that people could see exactly how their tax dollars are being spent.  The idea here is that sunshine will stop, or at least curtail, the rampant “pork barrel” spending projects passed as riders by Members of Congress (i.e., the “bridge to nowhere”).  The theory being that if people could actually see what was going on they would be more pro active and either write their elected officials or “vote the bums out of office.”  A nice theory; and I don’t oppose the proposed law, but to think that it is in any way a panacea, is at best naïve and, in my opinion, fundamentally misunderstands the way Congress works.    

This is at best a band-aid on a very open and very bleeding wound.  It may stop some bleeding, but like all bad wounds, much more invasive measures (stitches to continue the metaphor) are required.  In this case, what is necessary are fundamental rule changes to the way the Appropriations process works.  I won’t get into too many details, but provisions like this remind me of the Unfunded Mandates Reform Act of 1995, part of, I think, the “Contract with America,” which was designed to prevent Congress from imposing mandates with extreme costs on the state and local governments.  Great in theory until you realize that the provision contained a waiver by which Congress could simply vote, by majority in the Senate, and by Rule in the House, to ignore the Act’s requirements and impose the mandates anyway.  Such the same is likely to happen to the Corburn-Obama reporting requirement.  Smart and savvy Appropriation’s staffers will simply draft their pork provisions either to avoid scrutiny by using benign labels that don’t raise red flags, or they will simply include language waiving the requirement that the spending be reported.  Either way, you have a nice provision that ultimately won’t amount to a hill of beans with respect to curbing abusive spending by members of Congress who need to be reelected every couple of years.  

There are answers to this problem, but they mostly involve detailed reforms of the PROCESS not the end results to be sustainable.  Changes like that take time and insider influence, neither of which anyone appears to be willing to stomach.  Until they are, band-aids like this one are all we have left to feel like Congress is actually trying to fix the many problems they’ve created.


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