A tale of two economies
Did you ever think you’d see footage of so many Americans forced to resort to food lines in order to feed their families? Have we fallen that far in the wake of the pandemic and the widening economic spread between the haves and have-nots?
The answer is “yes,” and it’s going to take a peaceful but radical nationwide revolution to close the gap between rich and poor, and to rebuild the nation’s middle class. Our social safety nets are being tested as never before.
By the way, Boulder County residents probably don’t see the need here because we’re part of the nation’s flourishing economy, not trapped in its failing economy. But it’s only a matter of time before the latter comes marching into our county.
Loretta Mester, president/chief executive officer of the Federal Reserve Bank of Cleveland, said: “It’s almost like a tale of two economies, where you have a lot of the economy where activity is picking up, except for the areas of travel, leisure, and hospitality, where there seems to be no rebound. In fact, it’s getting worse.”
First, the perception is that Wall Street, not Main Street, reflects the health of the overall economy. But that hides the fact the national debt is more than $27 trillion. That’s $81,813 per person in the U.S.
The Congressional Budget Office has said it may take up to 10 years for the economy to return to normal. That’s too long to wait if you’re in the failing economy category.
Our political dysfunction is much worse than during the 2008-2009 Great Recession. Back then, everybody was in it together; Republicans and Democrats didn’t debate about whether or not the emergency was real.
Today, there’s little consensus about how to improve people’s lot.
Flourishing side of the economy
Between March and August, billionaires accumulated more than $637 billion. Amazon CEO Jeff Bezos’ wealth rose by $48 billion, Microsoft CEO Steve Ballmer’s by $15.7 billion, and Tesla’s Elon Musk’s by $17.2 billion.
The pandemic has shown us that Big Tech (Google, Facebook, Amazon, and Microsoft) is the only thing propping us up in the past few months.
On Aug. 19, Apple’s market value skyrocketed to more than $2 trillion, making it the world’s most valuable company. The stock prices of the tech giants have risen more than 65 percent since the market bottomed out in March.
U.S. homebuilders are more confident than ever about the housing market because of supply needs and low interest rates.
The Eagle County Regional Airport, which serves Vail and Beaver Creek, set a monthly record for private jet landings in July.
Failing side of the economy
The U.S. economy was laden with record levels of debt even before the pandemic. Student loan debt is more than $3.5 trillion and overall credit card debt is more than $2 trillion. Auto loans closed are at least $1.5 trillion, and many have defaulted.
Before the pandemic, the net worth of the bottom 20 percent of wage earners was under $5,000 and the bottom 50 percent was under $50,000.
There were more than 13.5 million Americans out of work at the end of August and an unemployment rate of 7.9 percent at the end of September. More than half of lower-income households have suffered major job losses.
Those in the failing economy generally are blue-collar workers who lack college degrees. The other big class of people affected are those who were employed at restaurants, hotels, salons, gyms, and retail stores. Many of those businesses closed permanently.
How to rebuild the economy
Hopefully, Congress’ latest stimulus package will properly fund and target the middle class at least as much as it does the upper class, businesses, and special interests.
Inject plenty of money — perhaps trillions — into educating people of all ages to find jobs in new fields, such as renewable energy.
Make the tax code more favorable to the middle class.
Seek alternative ways to pay back student loans, which are condemning recent grads to living in their parents’ basements.
Raise the minimum wage to a more sustainable level; $15 is ridiculously low.
Establish a federal savings account for every newborn child.
Provide more pre-k opportunities for 4-year-olds.
Push the Federal Reserve and the U.S Treasury to establish policies to minimize Black and Latino unemployment.
Extend federal labor protections to domestic workers.
Provide housing vouchers to all eligible families.
Expand programs to end homelessness, especially for veterans and the mentally challenged.
Otherwise, the failing economy is going to bring the flourishing economy to its knees.
The pandemic has exposed an economy that keeps poor people on the margins, while enriching only a few.
Jim Martin is a past statewide member of the University of Colorado Board of Regents who has lived in Boulder since 1961, was a small business owner for 40 years, an adjunct law professor, and a public trustee. You can reach him via email at jimmartinesq@gmail.com.