No, “Obamasclerosis” wasnt a real problem for the economy [feedly]

No, "Obamasclerosis" wasnt a real problem for the economy
http://larrysummers.com/2018/02/28/no-obamasclerosis-wasnt-a-real-problem-for-the-economy/

The Wall Street Journal's Greg Ip, reviewing the Trump administration's first Council of Economic Advisers report, finds credible its claims that President Barack Obama's policies, particularly in his second term, materially slowed economic growth, even though Ip acknowledges that the CEA's assertions regarding magnitudes are likely exaggerated.

The CEA's thesis is that a wave of tax and regulatory policies reduced both workers' incentives to work and businesses' incentives to invest, leading to slower economic growth than would otherwise have been achievable.

I am sympathetic to arguments of this type, having often observed that "business confidence is the cheapest form of stimulus." And I would be the last to argue that every regulatory intervention of the late Obama years was salutary. I would also note that much of what the Obama administration proposed (for example, more infrastructure spending and responsible tax reform) would have triggered even greater economic growth but never came to pass, largely due to congressional roadblocks. There was certainly more that could have been done.

But at least three broad features of the economic landscape make the CEA's view an unlikely explanation for disappointing economic growth.

First, the dominant reason for slow growth has been what economists label slow "total factor productivity" (TFP) growth. That is, the problem has not primarily been a shortage of capital and labor inputs into production, but rather slow growth in output, given inputs. After growing at about 1 ¾ percent per year between 1996 and 2004, the TFP growth rate has dropped by half since 2005.

While TFP has fallen off rapidly, there is no basis for supposing that levels of labor input or capital are less than one would expect given the magnitude of the Great Financial Crisis. In fact, labor force participation rates in 2016 lined up closely with Federal Reserve researchers' 2006 predictions. This suggests the lack of importance of the various factors adduced by the CEA's report.

Second, perhaps the biggest surprise of the last few years has been the remarkably low rate of inflation even as the unemployment rate has reached 4 percent. Year after year, consensus and Federal Reserve Board forecasts of inflation have fallen short of predictions. If, as the CEA believes, our slow economic growth is a result of too little supply of labor and capital, one would expect surprisingly high, rather than surprisingly low, inflation as demand growth collided with constricted supply. This is the opposite of what we observe. On the other hand, the secular stagnation hypothesis that emphasizes issues on the demand side would predict exactly the combination of sluggish growth, low inflation and low capital costs that we observe.

Third, the essential idea behind the CEA's thesis is that capital has been greatly burdened in recent years by onerous regulation, high taxes and a lack of availability of labor. This idea is belied by the behavior of the stock market and of corporate profits. Over the course of Obama's second term, corporate profits increased by nearly 20 percent, and the S&P 500 grew by more than 50 percent. This hardly suggests a period of excessively increasing burdens on capital.

The observation that share buybacks appear to be the largest use of the proceeds from the Trump tax cuts points in the same direction. Costs of capital have not been responsible for holding back investment in the United States in recent years.

If the "Obamasclerosis" theory does not fit the facts of slow growth in recent years, what are its likely causes? This will remain a matter for active research. But my guess is that key elements include hysteresis effects from the financial crisis and associated recession, reduced application of innovation in the economy in recent years, and possibly the adverse effects of rising monopoly power and diminishing competition in a range of markets.

 -- via my feedly newsfeed

Should-Read : Ben Thompson : The End of Windows : "The story of Windows’ decline is relatively straightforward... ...a ... [feedly]

Should-Read : Ben Thompson : The End of Windows : "The story of Windows' decline is relatively straightforward... ...a ...
http://www.bradford-delong.com/2018/04/should-read-ben-thompson-the-end-of-windowshttpsstratecherycom2018the-end-of-windowsutm_sourcememberful.html

Should-Read: Ben Thompson: The End of Windows: "The story of Windows' decline is relatively straightforward...

...a classic case of disruption:

• The Internet dramatically reduced application lock-in
• PCs became "good enough", elongating the upgrade cycle
• Smartphones first addressed needs the PC couldn't, then over time started taking over >* PC functionality directly

What is more interesting, though, is the story of Windows' decline in Redmond.... A mere five years ago, when, in the context of another reorganization, former-CEO Steve Ballmer wrote a memo insisting that Windows was the future:

In the critical choice today of digital ecosystems, Microsoft has an unmatched advantage in work and productivity experiences, and has a unique ability to drive unified services for everything from tasks and documents to entertainment, games and communications. I am convinced that by deploying our smart-cloud assets across a range of devices, we can make Windows devices once again the devices to own. Other companies provide strong experiences, but in their own way they are each fragmented and limited. Microsoft is best positioned to take advantage of the power of one, and bring it to our over 1 billion users....

That memo prompted me to write a post entitled Services, Not Devices that argued that Ballmer's strategic priorities were exactly backwards: Microsoft's services should be businesses in their own right, not Windows' differentiators. Ballmer, though, followed-through on.... buying Nokia... dysfunction... allowed to spend billions on a deal that allegedly played a large role in his ouster. That dysfunction was The Curse of Culture:

Culture is not something that begets success, rather, it is a product of it.... The espoused beliefs and values of their founder(s)... lead to real sustained success... slip from the conscious to the unconscious.... The founder no longer needs to espouse his or her beliefs and values to the 10,000th employee; every single person already in the company will do just that, in every decision they make, big or small. As with most such things, culture is one of a company's most powerful assets right until it isn't: the same underlying assumptions that permit an organization to scale massively constrain the ability of that same organization to change direction. More distressingly, culture prevents organizations from even knowing they need to do so....

The story of how Microsoft came to accept the reality of Windows' decline is more interesting than the fact of Windows' decline; this is how CEO Satya Nadella convinced the company to accept the obvious....

 -- via my feedly newsfeed

New York State’s Federal Tax Dodge Is a Big Middle Finger to Republicans [feedly]

New York State's Federal Tax Dodge Is a Big Middle Finger to Republicans
http://cepr.net/publications/op-eds-columns/new-york-state-s-federal-tax-dodge-is-a-big-middle-finger-to-republicans

Dean Baker
The American Prospect, April 2, 2018

See article on original site

On the last day of March, New York's legislature approved a budget package that included two provisions designed to get around a punitive clause in the congressional Republicans' new Tax Cuts and Jobs Act (TCJA).

The TCJA included a limit of $10,000 on deductions for state and local taxes (SALT). While this could be justified as an effort at fairness, since higher-income taxpayers are more likely to take the SALT deduction and are much more likely to pay SALT taxes in excess of $10,000, this was first and foremost an effort to penalize relatively liberal states like New York. These states have higher taxes for the simple reason that they provide better public services than low-tax states like Arkansas and Mississippi.

This shows up both in the form of collective consumption in areas like education and infrastructure, but even more importantly in social safety net spending. According to the Center for Budget and Policy Priorities, the monthly grant for a family of three under the Temporary Assistance for Needy Families (TANF) program in New York was $789 in 2017. In Arkansas, it was $204 and in Mississippi, it was $170. While TANF is a relatively small share of total spending, this does illustrate the different priorities these states place on ensuring that its residents have a decent standard of living.

The limitation of the SALT deduction was explicitly designed to make it more difficult for liberal states to continue to maintain their current level of spending. Under the former system, where SALT taxes were fully deductible and high-income taxpayers faced a tax rate of 39.6 percent, the federal government was effectively picking up 40 cents of every dollar of any additional tax burden that states placed on high-income households.

Under the new tax code, since virtually all of these households will be over the $10,000 cap already, any additional tax burden from state and local governments will fall 100 percent on high-income households. This virtually guarantees much stronger political opposition to any tax increases and quite possibly new efforts to roll back tax rates on higher-income households.

There is also the issue that at some point, higher taxes will cause high-income people to leave a high-tax state, or at least to appear to leave a state, for tax purposes (i.e., to lie about their residence). Research differs on the extent to which this may already be occurring, but there is no doubt that the limit on the SALT deduction brings states closer to this point.

This issue is especially important in a context where the federal government is unlikely to push any progressive initiatives in the near future. If we are going to see any advancements in areas like free college and affordable health care or child care, it will be at the state level. And this is likely to require more taxes.

The fix designed by New York Governor Andrew Cuomo and approved by the legislature includes two routes for working around the SALT limit. One is to create state-run charities to support public education and health care. People can donate to these charities and get the normal charitable deduction on their federal tax forms, which was left in place in the Republican tax bill. The state would then credit individuals for these contributions at a rate of 95 cents on the dollar against their state income tax liability. This should leave high-income households largely unaffected by the limit of the SALT deduction.

The other route replaces a portion of the state income tax with an employer-side payroll tax. This will be voluntary on the part of employers, but workers at firms who take part in this arrangement will face a lower state income tax. The logic of this move is that economists expect that pay will fall by roughly the same amount as any employer-side payroll tax. This means that if a worker gets paid $200,000 a year and the employer starts paying a 5 percent payroll tax, their wage will fall to $190,000. The benefit to the worker in this arrangement is that they only pay federal taxes on the $190,000 in their paycheck, not $200,000. This switch effectively preserves the full deductibility of the state income tax, at least insofar as employers chose to go the employer-side payroll tax route.

For political reasons, Cuomo made the payroll tax an option for employers. However, it is likely that employers with many higher-earning employees (the option is only available for earnings above $40,000 a year) will go this route, since their workers will want to take advantage of the ability to save money on their federal taxes.

This is just a first step in fighting back against the Republican tax plan, but a really big first step. New York's actions cannot be ignored. Other high-tax states, like California and New Jersey, are considering similar measures. While there have been serious legal questions raised about the charitable deduction route, there is little question that the employer-side payroll tax is an entirely legal work-around. For many decades, states have imposed employer-side payroll taxes for unemployment insurance and workers' compensation, so this is hardly an innovation.

If liberal states end up adopting these federal tax law hacks, it will lead to the ironic situation where the only people who lose the ability to deduct SALT are higher-income people living in Republican states. That would be a great outcome from this tax battle.

 -- via my feedly newsfeed

Kudlow Says Trump's China Tariffs Are Just Proposals Right Now [feedly]

Yout can't make a deal with this guy!!!

Kudlow Says Trump's China Tariffs Are Just Proposals Right Now
https://www.bloomberg.com/news/articles/2018-04-04/kudlow-says-china-tariffs-just-proposals-amid-trade-war-fears

 -- via my feedly newsfeed

Paul Krugman (NYTimes) Trade Wars, Stranded Assets, and the Stock Market (Wonkish)

Trade Wars, Stranded Assets, and the Stock Market (Wonkish)

Paul Krugman

As I write this, China's announcement of a new round of tit-for-tat tariffs has stoked fears of trade war and sent stock futures plunging. If this morning's futures hold, the S&P 500 will be about 10.5 percent off its January peak, around 6 percent off its level when Gary Cohn, the last of the Trump "globalists," was pushed out.

My question is, why such a large fall?

One good answer is, that's a stupid question. The three rules you need to bear in mind when discussing the stock market are (1) the stock market is not the economy (2) the stock market is not the economy (3) the stock market is not the economy. And stocks move for all sorts of reasons, or no visible reason at all. As Paul Samuelson famously quipped, the market has forecast nine of the last five recessions.

Another answer is that the trade war is a signal: Trump, Navarro et al are showing that they really are as unhinged and irresponsible as they seem, and markets are taking notice. Imagine how these people would handle a financial crisis.

Still, I think it's worth noting that even if we are headed for a full-scale trade war, conventional estimates of the costs of such a war don't come anywhere near to 10 percent of GDP, or even 6 percent. In fact, it's one of the dirty little secrets of international economics that standard estimates of the cost of protectionism, while not trivial, aren't usually earthshaking either.Yet there is a reason why stock prices might overshoot the overall economic costs of a trade war. For a trade war that "deglobalized" the U.S. economy would require a big reallocation of resources, including capital. Yet you go to trade war with the capital you have, not the capital you're eventually going to want – and stocks are claims on the capital we have now, not the capital we'll need if America goes all in on Trumponomics. Or to put it another way, a trade war would produce a lot of stranded assets.First, about the costs of trade war. This is the wonkish part, so feel free to skim and don't worry if it seems incomprehensible, as long as you're willing to accept the bottom line for the sake of argument.

The costs of protectionism, according to conventional economic theory, are not that tariffs caused the Great Depression, or anything like that. They come, instead, from moving your economy away from things you're relatively good at to things you aren't. American workers could sew clothes together, instead of importing apparel from Bangladesh; in fact, we'd surely produce more pajamas per person-hour than the Bangladeshis do. But our productivity advantage is much bigger in other things, so there's an efficiency gain – for both economies – in having us concentrate on the things we do best.   And a trade war, by imposing artificial costs such as tariffs on international trade, undoes that productive specialization, making everyone less efficient.  We can, with some heroic assumptions, put numbers to the kind of costs involved. Strictly speaking, we should do this using "general equilibrium" – modeling the economy as a whole. But another dirty little secret of international economics – much littler than the previous one – is that you get pretty close with "partial equilibrium" – just treating the market for imports as if it were the market for a single product that's a small part of the economy.



In the figure, the downward-sloping line is the demand for imports as a function of their price, measured relative to the price of domestic goods. Under free trade, we import anything that costs less to produce abroad than at home. If we impose a tariff, we end up not importing stuff unless the price of the import is sufficiently low that it's cheaper even including the tariff. The marginal good we import, then, is actually much cheaper than a domestic product, and the marginal good we don't import costs the economy a lot – specifically, the tariff that we would have paid if we did import it.

Image

Figure 1

If you imagine raising the tariff step by step, then, at each step we are imposing costs on the economy equal to the extra cost of the domestic product that replaces an import. The total costs of the tariff are represented by the area of the triangle: the reduction in imports caused by the tariff, multiplied by (roughly) half the tariff rate.

(Somebody is going to ask, what about exports? They're implicitly included in this estimate. Trust me.)

So, what would a trade war do? Suppose the US were to impose a 30 percent tariff across the board, with other countries retaliating in kind so that there's no improvement in the U.S. terms of trade (more technical stuff I don't want to get into.) How much would this reduce trade? It depends on the elasticity of import demand; a reasonable number seems to be around 4. This would mean a fall in imports from 15 percent of GDP to around 5 percent – a 10-point reduction. And that in turn means a reduction in US real income of around 1.5 percent.

Obviously this is just an illustrative calculation; I've tried to use reasonable-ish numbers, but you don't want to make too much of it. What it does suggest, however, is that even a trade war that drastically rolled back globalization wouldn't impose costs on the economy comparable to the kinds of movement we've seen in stock prices.

But the costs to the economy as a whole might not be a good indicator of the costs to existing corporate assets.

Since about 1990 corporate America has bet heavily on hyperglobalization – on the continuance of an open-market regime that has encouraged complex value chains that sprawl across borders. The notebook on which I'm writing this was designed in California, but probably assembled in China, with many of the components coming from South Korea and Japan. Apple could produce it entirely in North America, and probably would in the face of 30 percent tariffs. But the factories it would take to do that don't (yet) exist.ADVERTISEMENT

Meanwhile, the factories that do exist were built to serve globalized production – and many of them would be marginalized, maybe even made worthless, by tariffs that broke up those global value chains. That is, they would become stranded assets. Call it the anti-China shock.

Of course, it wouldn't just be factories left stranded by a trade war. A lot of people would be stranded too. The point of the famous "China shock" paper by Autor et al wasn't that rapid trade growth made America as a whole poorer, it was that rapid changes in the location of production displaced a significant number of workers, creating personal hardship and hurting their communities. The irony is that an anti-China shock would do exactly the same thing. And I, at least, care more about the impact on workers than the impact on capital.

Still, my original question was why stocks are dropping so much more than the likely costs of trade war to the economy. And one answer, I'd suggest, is disruption – which business leaders love to celebrate in their rhetoric, but hate when it happens to them. 

--

John Case
Harpers Ferry, WV

The Winners and Losers Radio Show

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EPI: What to Watch on Jobs Day: Multiple measures indicate the presence of labor market slack [feedly]

...wonky, but interesting look at the role of wage growth as an additional indicator of labor market strength not fully reflected in  the official unemployment survey numbers, and reflective of evolving growth or contraction of the overall labor force.

...also interesting data on "new employee from outside the labor market" behavior

What to Watch on Jobs Day: Multiple measures indicate the presence of labor market slack
https://www.epi.org/blog/what-to-watch-on-jobs-day-multiple-measures-indicate-the-presence-of-labor-market-slack/

I've written a lot about wages in recent months. In March, I detailed trends in wages through 2017 in a report, with specific emphasis on growing inequality both across the wage distribution and between black and white workers. My "What to Watch on Jobs Day" blog post last month, as well as my statement on jobs day, tried to put wage growth in perspective by comparing multiple measures of wage growth and showing how many of them fell short of levels that would be needed to confidently declare the economy at full employment. On Friday's Jobs Day, I will look at wage growth once again, as well as other measures of labor market slack which indicate that the economy has yet to unambiguously reach full employment.

Wage growth is a really important measure of labor market strength, and while slow wage growth is not just an indication that the economy remains below full employment, by definition slow wage growth means there continues to be some slack in the labor market. Slow wage growth tells us that employers continue to hold the cards, and don't have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren't actively looking for one. But, you say, the unemployment rate is 4.1 percent. Where are these workers waiting in the wings? The focus of this blog post and what I'll be looking at on Friday (along with wages) are the other measures that similarly indicate there remains a non-trivial amount of slack in the labor market. I'll argue that we can actually see this "waiting in the wings" in the data in other measurable ways, aside from weak wage growth.

Last week, my colleague Josh Bivens highlighted one underappreciated measure of labor market flows:  the share of the newly employed that come from out of the labor force. One might be tempted to believe that the labor force represents a rather static and cleanly-defined group of people: those who have a job or those who don't but want one and are actively looking for one. If that were the case, then the total labor force wouldn't fluctuate so much and only the unemployment rate would move up and down at different points in the business cycle. But, the labor force itself ebbs and flows, even relative to the working-age population.

In February, the prime-age labor force participation rate hit a recovery high of 82.2 percent. I'm focusing here on the prime-age population, those 25-54 years old, to remove any structural changes in the labor force due to, for instance, retiring baby boomers. The labor force participation rate for prime-age workers bottomed out in the aftermath of the Great Recession at 80.6 percent, and remains significantly below its 2007 peak of 83.4 percent or its series high of 84.6 percent in 1999. The weak recovery and expansion from 2000-2007 found participation in the labor force lower when this business cycle ended than when it began, and the rate still has a ways to go to recover from the Great Recession, let alone get back to the level it reached in 1999. So, as the economy recovers, not only does the unemployment rate fall, but the participation rate increases.

One way to examine this (and here's where Josh's snapshot from last week comes in) is to examine labor market flows from one month to the next. Because the household survey tracks people for multiple months, we can know what workers this month were doing last month. If they weren't working in the previous month, they are either looking for work (counted as the unemployed) or not (counted as out of the labor force). The figure below tells a pretty compelling story. A large and growing share of newly employed workers were out of the labor force in the previous month.

Figure A

In the two years when the unemployment rate averaged 4.1 percent (1999 and 2000), the flow rate from out of the labor force into employment was only 66 percent. That is, 66 of the newly employed came from out of the labor force. In February 2018, that same flow rate was much higher at 72 percent. This suggests that today's unemployment rate may be understating overall labor market slack. On Friday, I will look at this measurement and other metrics of labor market strength to make a complete assessment of today's economy. Each measure, including the unemployment rate, provide part of the picture, but only the whole story can be told using a variety of measures, including ones that look at other dimensions of the labor force, including differences for various demographic groups such as by race and education.

While I'm borrowing Josh's great graphics, I also want to reprint this really useful display of multiple measures of macroeconomic performance from Josh's report last week where he makes recommendations for creating jobs and economic security. The figure below shows just how far we are from really testing the extend of full employment in the economy today. Price inflation remains below target levels, wage growth remains weak, and the prime-age employment to population ratio still has far to run to return to levels seen in a stronger economy. These measures all tell the same story: the U.S. economy is still below full employment.

Figure B

 -- via my feedly newsfeed

The Rag Blog: Harry Targ : Remembering the Great Society

A good and important piece by  Harry Targ..



It also puts the LOSS of the Roosevelt social contract beginning with Nixon and taking over with Reagan in sharp perspective.  The Roosevelt contract goes under a number of names in economic literature -- 'shared prosperity', '50 cent social democracy' ( as opposed to a whole dollar) ,etc. Based on Harry's excellent summary of benefits and protective legislation favoring workers and the poor from 1932-68, it especially begs the question: Why was the Roosevelt contract lost? Johnson was its last Presidential exponent. Neither Carter, nor Clinton, nor even Obama -- though the steps toward universal health care were in that tradition, ever fully embraced it afterwards.



James Matles, a founder of the United Electrical Workers (UE) and the CIO, in his last address to the 1975  UE Convention  -- less than a month before he died at a campaign in southern California -- warned that the pace of billionaire and corporate wealth accumulation, if not arrested, would destroy the New Deal and everything good that came with it. But he placed the beginning of the curse at Taft-Hartley and the launch of the Cold War. And perhaps its fitting that the ruin of shared prosperity, and Johnson's frankly heroic legacy on domestic social policy, came to pass because of the crimes of the Vietnam war, and the untended toxins it let loose in the American soil and soul. At the moment, those poisons appear to have put "the more perfect union" beyond reach. hopes are focused merely (!!) on stopping the train wreck underway.



Is the Roosevelt contract beyond reach? Bernie's campaign is a test, since his is the only national campaign in recent memory that is making a direct case for it. He called it "socialism", and used Denmark as his most frequent reference as to what  'socialism' means. Denmark is the most trade and global oriented of the social democracies, primarily because global trade is such a large proportion of their GDP, and institutions adapted to its rapid and dynamic nature by focusing social policies on PAYING THE LOSERS in structural changes.



But there is seldom much 'going back' in history.  Is there a mixed economy, social democratic balance of public and private goals that can be found in this globalized world, where commodities and their circulation via markets, still rule as the dominant means of securing and improving life; an  environment where we all, as Marx observed, receive instruction in the ultimate historical benefits of capitalism.  " All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind".



Social democrats have seldom been great at internationalism, and thus not infrequently find themselves on the defensive and weakened with respect to globalization, and occasionally become suckers for fascist fakery. The battle against fascism itself, the most reactionary form of billionaire rule-- and quite relevant now -- is an example. In the West it was not led by communists, socialists, social democrats, or even liberals. But by Churchill -- an ardent UK imperialist his entire political career who -- in order to recruit Roosevelt to the fight against Hitler, and to save Britain -- consented to the loss of huge colonial possessions. (He knew Roosevelt would not commit force to protect colonial possessions). But internationalist social democracy -- communism -- also evolved with very striking nationalist flavors. Dogmatic conceptions of economic and political change -- authored not actually by Marx or Engels, or even Vladimir Lenin, but by succeeding "Marxists", also fostered, until post-Mao China, very idealistic notions of the material conditions necessary to rid or reduce the organization of society by commodity relations. Those notions, amidst very backward conditions where experience or practice of 'democracy' was unknown,  doomed early Communist states ability to lead mixed economies, and undoubtedly contributed greatly to the collapse of the USSR.



I ask the questions because I do not know the answers, and answers are needed.



My suspicion is is that structural changes in wealth and economic organization (imagine Marx, or even Keynes, writing about an economy where mfg employment was under 15% of wage and salary labor!!) wrought by globalization, technology, and the scales of wealth accumulation ---- have left us with NO national solutions that can achieve stability AND direction. That's important, because international perspectives require the most profound appreciation of diverse political, natural, economic and cultural forces to even survive, not to mention prevail in a direction our successors can deem progress.



This feels a little like a conversation in Job's house before the visit from  the whirlwind.



This time, hopefully, someone less credulous than Job will write the story.









The Rag Blog: Harry Targ : Remembering the Great Society



Remembering the Great Society:
Addressing poverty and hunger in America

By Harry Targ / The Rag Blog / September 28, 2011

On Monday, September 26, the Reverend Jesse Jackson visited Ohio University, located at the northern edge of Appalachia. President Lyndon Johnson had introduced his vision of a “Great Society” in 1964 at this site and Jackson was returning 47 years later to call for the establishment of a White House commission to address poverty and hunger in America.

Jackson pointed out that Athens County, Ohio, where he spoke, represented “ground zero” as to poverty in America today. Thirty-two percent of county residents live in poverty.

The fact that increased poverty is a national problem was underscored in a September 13 press release from the United States Census Bureau. The Census Bureau reported that 46.2 million people lived below the poverty line in 2010, the highest number in 52 years. In 2010, 15.1 percent of Americans lived in poverty, the highest percent since 1993. The poverty line for a family of four was $22,314. 

The New York Times (September 14, 2011) quoted Professor Lawrence Katz, economist, who said that “this is truly a lost decade. We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”

In a press release, the Census Bureau identified some additional data which reflects the economic status of large numbers of Americans:

• The number of Americans below the poverty line in 2010 increased by 900,000 over 2009.
• Proportions of Black and Hispanic citizens living in poverty increased from 2009 to 2010. Black poverty rose to 27 percent from 25 percent; Hispanic poverty 26 percent from 25 percent.
• 48 million Americans, 18 to 64 years of age, did not work at all in 2010, up from 45 million in 2009.
• Median income declines were greatest among the young, ages 15 to 24, who experienced a 9 percent decline between 2009 and 2010.
• Childhood poverty rates rose from 20.7 percent in 2009 to 22 percent in 2010.

Timothy Smeeding, Director, Institute for Research and Poverty at the University of Wisconsin, was quoted in the New York Times article: “We’re risking a new underclass. Young, less-educated adults, mainly men, can’t support their children and form stable families because they are jobless.”

Arloc Sherman, from the Center on Budget and Policy Priorities, reminded readers that the level of poverty was higher and median income was lower in 2007 than 2001.

In this economic context, it was surprising that the calls by Reverend Jackson for a new Great Society largely were ignored by the liberal blogosphere as well as most of the mainstream media.

One impressive exception was an interview on Up with Chris Hayes, MSNBC, on Sunday, September 25. On this program, Jackson pointed out that if it had not been for President Johnson’s disastrous Vietnam War policy he would have been recognized as one of the transformational presidents in American history.

The Leadership Conference on Civil and Human Rights has pointed out in an interesting essay entitled “Race, Class and Economic Justice” that the Johnson programs, the “Great Society,” and its “War on Poverty,” were grounded in the civil rights struggle for jobs and justice. When LBJ’s program got mired in the escalating war in Vietnam, Dr. Martin Luther King launched the “Poor People’s Campaign.”

Both the Great Society and the Poor People’s Campaign need to be revisited as young people, workers, men and women of all races and classes, mobilize along Wall Street and in virtually every city and town in America to demand economic and social justice. And as the Reverend Jackson reminded students and citizens of Athens County on September 13, LBJ’s program was a comprehensive one linking government and community groups. Among its major achievements the following need to be celebrated:

• The Food Stamp Act (1964) provided low income families with access to adequate food.
• The Economic Opportunity Act (1964) created the Job Corps, VISTA, and other community-based programs.
• The Tax Reduction Act (1964) cut income tax rates for low-income families.
• The Civil Rights Act (1964) outlawed discrimination in housing, employment, and public accommodations.
• The Wilderness Preservation Act (1964) protected over 9 million acres of national forests from developers.
• The Elementary and Secondary School Act (1965) provided federal aid to schools with low-income students, including the establishment of the Head Start program.
• Amendments to the Social Security Act (1965) established Medicare for retirees and Medicaid for low-income health care recipients.
• The Voting Rights Act (1965) ended racial discrimination in voting.
• The Water Quality Act (1965) required states to clean up polluted rivers and lakes.
• The Omnibus Housing Act (1965) provided for low income housing.
• 
  
• The Higher Education Act (1965) created scholarships for college students.


• The School Lunch and Child Nutrition Act (1968) was expanded to provide food to low-income children in schools and day care facilities.

Between 1964 and 1968 the United States Congress passed 226 of 252 bills into law. Federal funds transferred to the poor increased from $9.9 billion in 1960 to $30 billion in 1968. One million workers received job training from these programs and 2 million children experienced pre-school Head Start programs by 1968.

Progressives should revisit this history and tell the story of the successes and failures of the 1960s vision and programs and work for the fulfillment of the dream articulated by Dr. King and LBJ. Both visions presupposed the connection between government, communities, and activists.

And, it should be made clear that the Great Society floundered, not because of errors in the vision or programs, or because of “government bureaucrats,” or because the “free market” could serve human needs better, but because of a disastrous imperial war that sapped the support for vibrant and needed domestic programs.

Slogans about Money for Jobs and Justice, Not for War, constitute the lessons for today. The Reverend Jesse Jackson should be supported in his efforts to revive the vision of the Great Society.

[Harry Targ is a professor of political science at Purdue University who lives in West Lafayette, Indiana. He blogs at Diary of a Heartland Radical -- and that's also the name of his new book which can be found at Lulu.com. Read more of Harry Targ's articles on The Rag Blog.]