‘There Really Is No Recovery’

CounterSpin Interview

Economist Richard Wolff: “The American people have a better sense of what’s happening than the journalists. And that’s not a good sign for journalists.”

As the midterm congressional elections loomed, the Washington Post (10/3/14) wondered why Democrats weren’t benefitting from all the great economic news. The Wall Street Journal (9/2/14) ran a piece headlined “Upbeat Economic Reports Signal Sustained Improvement.”

These are just examples of the celebratory tone of economic reporting. So are the papers right, or do the people know something that journalists don’t? CounterSpin’s Steve Rendall talked with Richard Wolff, professor emeritus of economics at the University of Massachusetts at Amherst, currently teaching at the New School in New York City, and author of Democracy at Work: A Cure for Capitalism.

CounterSpin: That Washington Post piece that wondered why the Democrats weren’t showing better at polls explained, “the US economy is back on solid ground six years after the Great Recession, new data showed Friday.” What’s the story here as you see it?

Richard Wolff: I’m frankly surprised that the Washington Post can’t get better reporting than that. The reason the Democrats are not looking good in these midterm elections is precisely because the so-called “solid ground,” or the so-called recovery that we hear about, really has only affected the top 5–10 percent of the people, and a large portion of them are traditional Republican supporters.

Whereas the mass of lower- and middle-income folks basically have watched a “recovery” that bypassed the vast majority of the American people. A reasonable person wouldn’t call that a recovery, or at least would hedge it about with qualifying adjectives to talk honestly.

The median income of an American family—which means 50 percent earned more, 50 percent earned less—is about 9 percent lower today than before this crisis hit in 2007. That doesn’t mark a recovery.

In fact, the line downward is pretty straight down—a deterioration that has really affected the lives and daily existence of the vast majority of Americans. So there really is no recovery and there is no mystery why what you see in the press is not affecting how masses of people are looking at these elections.

For example, the unemployment decline—much of what is the core of these stories—has more to do with people leaving the labor force, giving up on looking for work, so they’re no longer counted as unemployed, rather than finding jobs.

And for the few that have found jobs, one statistic screams out its importance: Two-thirds of those who found jobs during this crisis found jobs paying significantly less than they were earning before the crisis, and having typically fewer benefits. So anyway you scratch it, this recovery is only that of a tiny minority at the top, and therefore should surprise no one if the mass of people are not happy.

CS: Are you seeing the same coverage that we’re seeing—lots of journalism celebrating the good economic news?

RW: Yes, and it’s really kind of sad—the kindest word I can think of at the moment—to see that, because journalists ought to know better. They ought to know that any attempt to understand something as complicated as the direction of a huge economy like ours cannot rely on one or two statistics.

At any given moment, there are statistics suggesting things are getting better, statistics that are suggesting things are getting worse. Any prudent and intelligent observer has to be able to weigh all of those things in order to draw a reasonable conclusion. I don’t think any reasonable observer would now suggest that the United States is in some sort of wonderful situation on the uptick.

This last week, there was a meeting of the IMF in Europe, and basically the tone was unbelievably downbeat and somber, that the prospects for the world economy—including the United States—are very, very frightening in terms of what’s happening over the last weeks: The gyrations of the US stock market were clearly linked to worries about the severity of the downturn in Europe, slowing in China, and so on.

So a balanced approach here—which I think most Americans grasp intuitively if not in the detail—shows that the American people have a better sense of what’s happening than the journalists. And that’s not a good sign for journalists.

CS: In the New York Times, I was able to find two pieces (9/13/14, 10/16/14) pointing out that many of the positive economic indicators don’t mean much for most Americans. This reminds me—just to take one example—of the “Chilean Miracle,” where elites cheered a Chilean economy that could show lots of growth, but it meant very little for most Chileans.

RW: Exactly. It was a kind of growth which if you looked at certain selected indices, looked wonderful on paper. But the minute you looked at other indices—particularly those that were brought forward by the average person, and by more balanced observers—you would’ve had a much more nuanced picture.

I mean, we now know, for example, that the boom we want to recreate—that is, the ’80s, the ’90s and the first few years of this century—was so completely dependent on an unsustainable level of consumer debt that it really becomes bizarre to talk about a recovery, if you mean going back to where we were, because where we were was on a train heading into a stone wall, and that’s hardly what we want to recreate now.

CS: With so many Americans losing ground, it would seem reasonable to have a discussion of whether capitalism at this stage can any longer sustain the American Dream for most of us. Why do you think media often seem so reluctant to have that conversation?

RW: I think the answer is our history. After World War II, the business community and the wealthy kind of reached a conclusion: that they had been outmaneuvered by the mass of trade unionism, the CIO, by the Socialist and Communist parties, who had together worked with the president at the time, FDR, to produce Social Security, unemployment compensation, the first minimum wage and a federal jobs program that employed 15 million people.

And all of that was paid for either by taxes on corporations and the rich, or by pretty mandatory borrowing of their wealth from them. And they really decided to undo and to prevent that kind of thing from happening again.

And they understood, correctly, that Roosevelt wouldn’t have done it had he not been pressured from below: by that alliance of the CIO—the greatest union organizing drive in American history—plus the two Socialist parties and the Communist Party, who worked very closely together. And so there was a decision to go after that coalition.

The first target was its weakest link: the Communist Party. These folks were portrayed as agents of a foreign power and demonized. When that was done, the Socialists were equated with the Communists, and the same was done to them. And we’ve watched for the last 50 years a step-by-step decimation of the union movement.

And so we are now at a point where we’ve inherited 50 years in which questioning capitalism, instead of being understood as a sign of a healthy debate about our economic system—one that exposes its flaws and weaknesses alongside of its strengths and achievements—we couldn’t do that, because talking about the problems of capitalism was basically demonized as a kind of disloyalty.

And I think, unfortunately, even though the Cold War is long behind us, its legacy is the failure of leading academics and journalists to throw into question the system, which given its performance now—this terrible crisis, the second in 75 years—is something that’s long overdue, to have an honest discussion about whether we can’t do better, and what the strengths and weaknesses are.

And in that context, I was struck that the latest Nobel Prize was given to two French economists whose entire life work is showing how market economies can run into trouble, produce undesirable outcomes, inefficiencies, waste of resources, instead of the usual cheerleading that capitalism is the best thing since sliced bread. [The prize was won by Jean Tirole, who said his late collaborator, Jean-Jacques Laffont, deserved to share it with him–ed.]

I think we’re beginning to see a sea change, where what we should’ve been doing for 50 years is once again on the agenda, namely to question our economic system, just like we question our educational system, our medical insurance system and all the other systems that make up a modern society.

CS: So in looking at the way the corporate press covers this, to take a phrase out of America’s radical past, would you say these are the bosses’ papers?

RW: Absolutely. They are the papers of the bosses, and those who have for so long lived in a country where it was taboo to ask serious questions about capitalism, where it was damaging to your career prospects to do that. We have a newspaper corps that instinctively shies away from asking those questions, even when the mass of people’s views and the statistical evidence—or at least the bulk of it—suggest that anything less than that is simply not facing up to the severity of this situation.

I think that taboo has to be broken. We live in a country that shows, through its dealing with gay marriage and a hundred other issues, that we are capable of breaking taboos. Well, we should certainly break the taboo on asking systemic questions about an economic system that is simply not delivering the goods to the mass of people, which, after all, was its defense and was its self-congratulation for the last 200 years.

If I could add—there’s a kind of psychological cruelty going on in the media. If you keep telling people who are not in fact experiencing a recovery, because it isn’t there for the mass of people, if you keep telling them there is a recovery, then what you have is a high likelihood that the individuals who are not finding themselves in an improved situation, who are not recovering, will feel that  they as individuals are somehow unable to participate in the recovery, which they’re told is all around them.

And that risks them turning in on themselves, coming to the conclusion that they are failures, that they are inadequate, that there’s something wrong with them. And that only worsens the fact that they are, in fact, the victims of this situation, and not its perpetrators. And the media ought to do a better job of honestly portraying the very mixed picture of what’s going on, because it’s cruel to tell people that they are the exception when, in fact, the rule you present as such isn’t the case.