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The Post Tells Us the Economy Is SO Complicated

This story can be seen as an exemplary piece of blowing smoke reporting.

The Post is really angry that people are talking about the rich getting everything at the expense of everyone else. It demands in the headline of an article, “stop with the fiction of a binary economy.”

Actually, nothing in the article really gives us much reason to question the reality of the binary economy that many economists have written about. For example, it tells readers:

“The jobless rate in the center of the United States from North Dakota to Texas is less than 5 percent and has been well below the national rate for five years.”

Yes, and this means what? Wages are rising in North Dakota, with a labor force of 470,000 (just over 0.3 percent of the national labor force), but not much in Texas. Furthermore, the country had a 4.0 percent unemployment rate as a year-round average in 2000. This meant that many states were around 3.0 percent.

Then we get this bizarre discussion:

“But the top two income quintiles saw annual gains of a percent to a percent and a half until 2008.

“That isn’t what it was in the 20th century, but we tend to forget that the 20th century also saw much higher inflation. And we forgot that just as income growth has slowed, the costs of many basic goods and services also dropped. In 1950, food represented 32 percent of a family’s budget, according to federal statistics; today, it accounts for less than 15 percent. Energy use has seen similar declines, along with clothing and basic necessities. Health care costs more, but that in part is because we are living longer. Education eats up more costs, but many more people are going to college.”

Yes, upper middle class families did see modest income growth in the years after 1980. Some of this was due to higher wages, but the biggest factor was more people working, specifically the large number of women who were entering the labor force and putting in more hours. People expect to have something to show for additional work.

Of course all these numbers are adjusted for inflation, so it is not clear what point is being made by “but we tend to forget that the 20th century saw much higher inflation.” Maybe the Post’s business reporters are happy with lower real wage increases (nominal wage increases minus the inflation rate), but I don’t think many other people fall into that category. In other words, most folks would prefer a 5 percent pay raise with 3.0 percent inflation over a 2 percent pay hike with 1 percent inflation. Guess things operate differently at the Post.

Anyhow, this story can be seen as an exemplary piece of blowing smoke reporting. It seems intended to create confusion.

The print headline is truly instructive on this one. It tells readers;

“We can’t fix the economy as long as we oversimplify.”

Nope, that is 180 degrees wrong. We can’t fix the economy until more people are clear that the rich have rigged the rules to give themselves all the money. Then a political reaction may turn the tide. Obviously the Post doesn’t want to see that sort of political reaction, hence the effort at obfuscation.

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