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NYT Journalists - Born Without Brains?

Thursday, April 06, 2006
I refuse to watch Brazen Hussy's shows about kids born without brains because they're horrible and creepy. But then I look at the NYT and realize I am reading an article written by one!

In yesterday's NYT article, David Leonhardt wrote the following:

By any reasonable standard, the last few years have been bad ones for most people's paychecks. The average hourly wage of rank-and-file workers — a group that makes up 80 percent of the work force — is slightly lower than it was four years ago, once inflation is taken into account. That's right: Most Americans have taken a pay cut since 2002.

But you would never know it by looking at the headline numbers on economic growth. From the standpoint of the broad national economy — the value of the good and services the country produces — the last few years have been stellar. Despite two wars, soaring oil prices and business scandals, the economy has been growing more than 3 percent a year.

Henry Ford would have no idea what to make of this.

While I admire Mr. Leonhardt's ability to overcome his handicap, I can't help but notice how weak his reasoning capacity remains. All that has happened is that the link between productivity and wage increases have been severed. Economic growth has been driven by consumer debt - those very same consumers who haven't been getting raises. When they can no longer get credit, the economy stops dead in its tracks. The 20% of the population that has seen rises in their income aren't sufficient to keep up aggregate demand, because of the declining marginal propensity to consume.

Henry Ford continues to be right - if the working class is living in poverty, long-term economic growth is impossible.

In other news:

Nathan Newman has a good post on the Mass health care plan at TPM Cafe

Republicans demonstrate that they are hostile to democracy both at home and abroad

And Democrats consider throwing away a campaign issue.

Just your regular Thursday morning.
Posted by Arbitrista @ 8:44 PM
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