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Views on the News

Views on the News*

August 23, 2014

                            

Half of America still thinks the Great Recession never ended, even though the U.S. economy continues to grow and add jobs.  Median family incomes are 3% lower today than five years ago, new jobs pay a fifth less than those lost during the downturn, and the share of adults with a job remains well below pre-recession levels.  For most workers, the Not-So-Great Recovery has been a bust.  If history is any guide, we're overdue for another recession.  The average length of a post-WWII upturn after a downturn is 58 months.  The current recovery, which began in July 2009, has been plugging along for 62 months.  Because this recovery has been so weak, even a mild downturn, like the one after the internet stock bubble popped, could conceivably push the jobless rate back over 8%.  The good news is that recoveries don't have a built-in expiration date.  Just because upturns tend to last less than five years doesn't mean this one will.  So even if we don't officially fall back into a recession anytime soon, it might keep feeling like we never climbed out.

(“Is the U.S. economic recession almost over already?” by James Pethokoudis dated August 18, 2014 published by The Week at http://theweek.com/article/index/266456/is-the-us-economic-recovery-almost-over-mdash-already )

For five years, the United States economy has been expanding at a steady clip, the stock market soaring, the headlines filled with talk of recovery, yet public opinion polling shows most Americans still think the economy is pretty miserable.  Middle-class American families’ income is lower now, when adjusted for inflation, than when the recovery began half a decade ago.  The purchasing power of the typical American family is 3.1% lower now than it was five years ago.  No wonder people are unhappy about the economy!  The benefits of rising levels of economic activity have simply not accrued to middle-income wage earners.  Other measures of Americans’ income that rely on averages paint a sunnier picture, but averages like that can be distorted by strong income gains among the wealthiest, so looking at the median income can give a better sense of economic conditions faced by the majority of Americans.  The steepest declines with median income off 10.4% in the last five years, is in families with three or more children.  It is large families that are seeing incomes fall off most sharply.  Income didn’t start to turn around until the summer of 2011.  The problem is that income dropped so sharply during the first two years that even though we started to rebound in the summer of 2011, by the time we get to the present, we’re still not where we were when the recovery started.  So for a sense of when incomes are starting to accelerate for ordinary Americans, and thus when the official recovery feels like a broadly shared recovery, keep an eye on the middle class data.

(“Why the Middle Class Isn’t Buying Talk About Economic Good Times” by Neil Irwin dated August 20, 2014 published by The New York Times at http://www.realclearpolitics.com/2014/08/21/why_middle_class_isn039t_buying_talk_of_good_times_339462.html )

 

Many leading economists are throwing up their arms in frustration and assuring us that 2% growth is really the best we can do, and unfortunately, Americans seem to be buying into this dreary assessment.  A new Wall Street Journal poll finds that three out of four Americans think the next generation will be worse off than this generation.  Obama’s former chief economist Larry Summers named this “secular stagnation” that slows growth in “labor supply, capital investment, and productivity” which has become the new normal “holding down growth.”  Secular stagnation” is a cover up for mistaken economic policies that began in the Bush years and intensified during the Obama administration.  It would be hard to conceive of a worse set of policy prescriptions than the ones Larry Summers and his Keynesian collaborators have conjured up.  We’ve had bailouts, massive spending-stimulus plans, tax increases on “the rich,” ObamaCare, rudderless monetary policy that has collapsed the dollar, the Dodd-Frank bill, anti-carbon policies, and a vast expansion of the welfare state.  These measures have flat-lined the economy.  The blame falls on the White House and the Fed, and the discredited Keynesian model that government spending, debt, and cheap money are the way to restore growth.  Ideas have consequences, and bad ideas have bad consequences.  We have paid people not to work by raising eligibility and time limits for various benefit plans, substantially raised marginal tax penalties when people move from welfare to work, disincentivizing employers from hiring more workers, raised taxes on investment, passed new regulations to strangle our energy industry, unionized even when workers don’t want it, continued corporate-welfare cronyism, and refused to fix a corporate tax system that sends jobs abroad.  Now we wonder why the economy won’t shift into a higher gear.  Sadly enough, this is all happening when the potential for growth, productivity, and wealth are at an all-time high.  Thanks to the underperformance of this recovery, we are $2 trillion and nearly 10 million workers below potential output and employment. We could recapture this almost immediately with the right policies.  The digital age and technological revolution have made hyper-growth more, not less, achievable.  We learned in the 1960s and 1980s how fast the economy can rbound when policy mistakes are reversed.  That’s the real case for optimism.  The secular-stagnation argument is just an excuse for liberal policy failures. Keynesianism should now be recognized as snake oil, and Republicans now have a big opening to convince America that they can certainly do better!

(“Secular Stagnation is a Cover-up” by Larry Kudlow dated August 15, 2014 published by The Daily Caller at http://dailycaller.com/2014/08/15/secular-stagnation-is-a-cover-up/  )

In America and elsewhere around the world, Greens continue to war against any energy other than the useless “renewable” kind, wind and solar, that is more costly and next to useless.  Only coal, oil, natural gas, and nuclear keeps the modern and developing world functioning and growing.  The most publicized aspect is Obama’s “War on Coal and, thanks to the Environmental Protection Agency, it has been successful; responsible for shutting down several hundred coal-fired plants by issuing costly regulations based on the utterly false claim that carbon dioxide emissions must be reduced to save the Earth from “global warming.”  The EPA is the government’s ultimate enemy of energy, though the Department of the Interior and other elements of the government participate in limiting access to our vast energy reserves and energy use nationwide.  The Earth has been cooling for seventeen years at this point, but the Greens call this apause,” and that pause is going to last for many more years and could even become a new ice age.  President Obama is delivering on his promise to send electricity prices skyrocketing, which will result in Americans paying $200 more each year for their electricity.  America could become energy independent given its vast reserves of energy sources.  The federal government owns 957 billion short tons of coal in the lower 48 States, of which about 550 billion short tons, about 57%, are available in the Powder River Basin.  It is estimated to be worth $22.5 trillion to the U.S. economy, but it “remains unrealized due to government barriers on coal production.”  Including Alaska, the U.S. has enough coal to last 9,000 years at today’s consumption rates!  In 2013 the IER estimated the worth of the government’s oil and coal technically recoverable resources to the economy to be $128 trillion, about eight times our national debt at the time.  In the 1970s and 1980s, the Greens held off attacking the nuclear industry because it does not produce “greenhouse gas” emissions.  Events such as the 1979 partial meltdown at Three Mile Island and the 1986 Chernobyl disaster raised understandable fears.  The Greens began opposing nuclear energy claiming that radiation would kill millions if there is a meltdown, but this simply is not true.  Today there are only four new nuclear power plants under construction and all one hundred existing plants may be retired starting in the mid-2030s.  The Greens’ attack on coal is based on claims that air quality must be protected, but today’s air quality has been steadily improving for years and new technologies have reduced emissions without the need to impose impossible regulatory standards.  The new EPA standards, so we better hope that the November midterm elections put enough new candidates into Congress to reject those standards or the cost of living in America, the capacity to produce electricity, the construction and expansion of our manufacturing sector will all worsen.

(“Greens are the Enemies of Energy” by Alan Caruba dated August 17, 2014 published by Canada Free Press at http://canadafreepress.com/index.php/article/65356 )

The war currently raging in Iraq and Syria is a single conflict, pitting a number of clearly identifiable alliances against one another.   The Islamic State organization now dominates a contiguous land area stretching from Mosul in western Iraq all the way to the Syrian-Turkish border.  This murderous gathering of jihadi fighters is in the process of swallowing up what is left of the Syrian insurgency in the north of that country.  The IS has also now manifested itself in Lebanon.  In the fighting in Arsal, hundreds of fighters of the movement demonstrated that despite the efforts of Assad and Hizballah, IS is still able to cross the Syria-Lebanon border at will and in force.  So one of the combatant sides is a barbaric jihadi alliance of great military potency, at least in the landscape of Iraq-Syria-Lebanon, where most of the military forces are second rate.  Facing this Sunni jihadi force is a largely Shia Islamist alliance, led by the Islamic Republic of Iran.  This alliance consists of Iran itself, the ruling Dawa party in Iraq, the Assad regime in Syria, and Hizballah and its allies in Lebanon.  These two alliances are at war with one another, but both are anti-western.  Both desire the destruction of Israel.  Both are hostile to Christians, though the Shia alliance sees Christians as second-class citizens, while the Sunni jihadis take an openly murderous attitude toward them.  In addition to these two blocs, there is a Kurdish interest, defending two distinct versions of Kurdish autonomous rule in northern Iraq and northern Syria.  In Iraq, the Kurdish Regional Government presides over the best-governed and most peaceful part of the country.  To the south, two strong states with strong armies stand ready to defend against any incursions by either IS or the pro-Iranians.  These are Jordan and Israel.  To the north, the U.S. and the west ought to invest immediately in military aid for both Kurdish autonomous elements which, properly equipped, can contain the jihadi menace.  The two major sides should be allowed to fight it out.  The U.S. and its allies want to avoid the bigger picture, and to engage in halfhearted humanitarian efforts only when media attention makes this absolutely unavoidable.  The strong, anti-jihadi and moderate forces in the region must continue to find their way to one another, because only thus will the containment of both varieties of political Islam be achieved.

(“The War in Iraq and Syria: Who Are the Players?” by Jonathan Spyer dated August 16, 2014 published by PJ Media at http://pjmedia.com/blog/war-in-iraq-syria/ )

 

Obama somehow believes that he is not responsible for the Iraq pullout, but his own words confirm his leadership role.  He now claims he regretted withdrawing all U.S. troops from the country during his first term.  Obama conveniently forgets that he bragged of fulfilling his “promise” to end “America’s war in Iraq”; or his subsequent election campaign, in which he tirelessly proclaimed that the tide of war is receding.”  His disclaimer raised eyebrows among the numerous senior officials who have said, both on and off the record, that Obama resisted leaving behind a stay-on force, slashed its size far below that proposed by military commanders and expressed relief when a legal snag provided him a pretext to pull the plug on Iraq altogether.  Even as he has been forced to reverse his Iraq decision, the President appears stubbornly determined to reject the conclusion that has become conventional wisdom outside the White House: that his retreat in Iraq and passivity in Syria did much to create the ugly monster the United States now faces in the Islamic State, an organization that is more powerful, more vicious and more ambitious than al-Qaeda prior to Sept, 11, 2001.  Ironically, the approach Obama has now embraced for Iraq has the same logic that failed for Bush.  It seeks to minimize the use of U.S. forces while pushing Iraqis to overcome their in­trac­table political problems and field an army capable of defeating the Islamic State.  The resurgence of the extremist forces is less the result of Iraqi political dysfunction than the civil war in Syria, where the West’s failure to back moderate forces allowed the concentration of militants that birthed the Islamic State.  This is not to argue that Obama should dispatch hundreds of thousands of U.S. ground troops to the region.  The point is that a doctrine whose first priority is avoiding U.S. engagement is bound to fail.  The goal must be offensive: to defeat those forces that are destroying Iraq and Syria, from the Islamic State to the homicidal regime of Bashar al- Assad, and that can be accomplished only with U.S. military and political leadership, and would require Obama to admit  he was wrong – which will never happen!

(“To fix foreign policy mistakes, President Obama must first admit them” by Jackson Diehl dated August 14, 2014 published by The Washington Post at http://www.washingtonpost.com/opinions/jackson-diehl-to-fix-foreign-policy-mistakes-president-obama-must-first-admit-them/2014/08/14/79352ea2-2304-11e4-86ca-6f03cbd15c1a_story.html )

 

* There is so much published each week that unless you search for it, you will miss important breaking news.  I try to package the best of this information into my “Views on the News” each Saturday morning.  Updates have been made this week to the following issue sections:

·  Abortion at http://www.returntocommonsensesite.com/Culture/abortion.php

·  Homeland Security at http://www.returntocommonsensesite.com/dp/homelandsecurity.php

·  Terrorism at http://www.returntocommonsensesite.com/fp/terrorism.php

 

David Coughlin

Hawthorne, NY

www.ReturnToCommonSensesite.com