Poor President Biden. He is, as the New York Times put it yesterday, “contending with an uncomfortable disconnect”: an economy that grew faster last year, the first year of his presidency, than at any time in 38 years — but “voters are downright pessimistic about economic conditions and their own financial prospects.”
But it’s only a “disconnect” if your perspective is that of the mainstream media, owned by Big Business, or you’re a bourgeois economist or capitalist politician. Workers and the oppressed know what’s really up.
Inflation Souring the Story
“We are finally building an American economy for the 21st century,” Biden said in a statement yesterday. He touted “the fastest economic growth in nearly four decades, along with the greatest year of job growth in American history.” And reflecting continuing U.S. fears over China, he added, “And, for the first time in 20 years, our economy grew faster than China’s.”
Biden couldn’t wait to take a victory lap for what he called “my first year” after the government released final GDP data for the fourth quarter of 2021. After all, his Build Back Better legislation tanked, voting right bills haven’t passed, and voters and politicians alike are beginning to wonder just exactly what his administration has accomplished.
But even the Times was forced to acknowledge that inflation has pretty much squashed that victory. “A big chunk” of the economy’s recovery from its pandemic hit “evaporates when you factor in recent price gains. In fact, growth is still falling short of its pre-pandemic trend after it’s adjusted for inflation.”
This is where what Main Street knows first dampens Biden’s celebration. Sure, wages have been rising at the fastest pace in decades, generally, but numbers mean nothing when reality bites. And the two big bites reality’s taking? One is that the wage rise has done hardly anything to make up for the long, long period during which wages have failed to keep up with “regular” inflation. The other is that with our current rapidly rising inflation, the “higher” wages are completely lost to higher prices for just about everything. As the Times put it, “Many are finding that today’s bigger paycheck doesn’t go as far as last year’s smaller one.”
And as for jobs, it’s true that the rate of unemployment has dropped quite a bit faster than most economists thought it would, but “millions remain on its sidelines as childcare issues and coronavirus fears persist.”
So, Joe, who exactly is benefiting from this economy? Why aren’t working-class voters joining your celebration? It turns out “pocketbook issues really are important,” one economist told the Times. Duh.
Poor Biden just can’t seem to “capitalize politically” on the supposedly good news.
Whose “Growth”? Their Growth!
Capitalist economists love “growth.” They tout that increases in real GDP — that is, increases in the value of national output, income, and expenditure — benefit us all with higher living standards, higher real incomes, and the ability of our society to devote more to public services and paying for things like healthcare and childcare and education, or protecting the environment. And best of all, it’s supposed to lead to declines in poverty.
Who among our readers thinks this is where the growth announced yesterday is going?
In 2018, some very distinguished economists released a study that found that from 1980 until that year, almost none of the gains from economic growth accrued to the bottom half of the U.S. population. That eliminates even the pretense of poverty reduction. In fact, the following year, Nobel Prize-winning economist Joseph Stiglitz wrote, “Some 90 percent [of Americans] have seen their incomes stagnate or decline in the past 30 years.”
Nothing has changed since. And as for investments in public services or climate mitigation, well, we all know how that’s gone.
The “rising tide lifts all boats” argument of GDP growth is a steaming pile of crap. The rich own the beaches and the ocean, and if they let us swim it’s only so they make sure we drown.
A Short-Lived Celebration for Biden
Biden’s celebration isn’t going to last long, regardless of whether he gets anyone to join in. Those growth numbers he’s touting don’t factor in most of the inflationary period we’ve entered, and they don’t account for the effects that the Omicron variant of the coronavirus are having on the economy. Two days before the numbers were released, the International Monetary Fund cut its own global economic growth forecast due to weaker outlooks for China and the United States. What it had predicted would be global growth of 4.9 percent for 2022 is now forecast at 4.4 percent, with another slowdown to 3.8 percent in 2023. That’s a lot of growth the wealthy won’t be getting compared to 5.9 percent global growth last year.
The rest of us will bear the brunt.
The IMF’s estimate for U.S. growth was cut because of inflation and Omicron, to be sure, but not exclusively. Its economists cited less fiscal spending than expected with the failure of Biden’s “Build Back Better” legislation, along with the plans of the Federal Reserve to halt its injections of money into the economy and raise interest rates. Higher interest rates hurt workers, too, not just big corporate borrowers. On top of inflation, it will make it more difficult to buy what we need with our hard-earned money.
Biden has no choice but to watch his celebration wither. And in the end, the only celebration that matters for the working class is if we succeed — through our own self-organization and by taking to the streets — to enforce on the capitalists that they pay for the crisis they’ve created. It is the bosses and the corporations who must pay, not the workers and the oppressed. We must put up a fight against the rich getting richer while we are forced to tighten our belts, while our families struggle, and we are compelled to work longer hours just to avoid sinking deeper into the abyss capitalism has created for us.
