The Economic Legacy No One is Talking About

Compliments are in order for New York Times financial columnist (and CNBC host) Andrew Ross Sorkin for an in-depth and thoughtful economic piece in the Times’ Sunday Magazine:

President Obama Weighs His Economic Legacy

Note, however, that this is on the Wall of Shame, rather than Fame. That’s because of a fatal flaw in the assumptions underlying what is otherwise a great piece of reporting. It’s clear throughout that both Sorkin and President Obama are stuck in the 20th century. Those were heady times, when the world was our oyster. It seemed we could grow forever; we’d not yet stretched our economic rubber band so far past limits to growth that it would clearly break, or snap back with such ferocity as to be extraordinarily painful.

But here we are in 2016. Obama and Sorkin should know better. They should understand by now that yesterday’s metrics for success and progress are irrelevant, now that we are well into overshoot. Still, it’s a good read, and I found a few things worthy of pointing out.

Let’s start at the end, in which the U.S. President is quoted as saying:

“If we can’t puncture some of the mythology around austerity, politics or tax cuts or the mythology that’s been built up around the Reagan revolution, where somehow people genuinely think that he slashed government and slashed the deficit and that the recovery was because of all these massive tax cuts, as opposed to a shift in interest-rate policy — if we can’t describe that effectively, then we’re doomed to keep on making more and more mistakes.”

Yes, indeed, we need to puncture some mythology. But President Obama has the wrong myths in his sights. The mythology we need to deflate is the mythology of progress and prosperity from growth. As Sorkin recounts a long and thoughtful conversation with President Obama, it is abundantly clear that both the writer and the President buy into the myths that economic growth is possible, that it is essential to solve society’s problems, and that it doesn’t create bigger problems than it solves. Thus economic growth is a noble pursuit.

It’s easy to go along with them on this ride. Who could argue against their assessment that we are better off today than we were in the depths of the great recession?

“The private sector has added jobs for 73 consecutive months — some 14.4 million new jobs in all — the longest period of sustained job growth on record. Unemployment, which peaked at 10 percent the year Obama took office, the highest it had been since 1983, under Ronald Reagan, is now 5 percent, lower than when Reagan left office. The budget deficit has fallen by roughly $1 trillion during his two terms.”

Of course we want gainful employment for those who need jobs. And that’s great news about the deficit. But that paragraph ends with:

“And overall U.S. economic growth has significantly outpaced that of every other advanced nation.”

There is no explanation of that; it’s simply assumed we all agree – economic growth is an unalloyed good. And it may be that we cannot put a growing number of people to work without increasing GDP (quite a dilemma, with an obvious solution – fewer people). Most of the things the White House was trying to fix when Obama inherited an economic disaster did get better as the economy grew. Unmentioned, however, are a few things that get worse: greenhouse gas emissions, species extinction, fresh water toxification and exhaustion, fertile soil depletion, fisheries collapse, and depletion of a number of other natural resources.

One other thing gets worse as our economy grows: it’s ability to effectively meet all our needs. Sorkin and Obama acknowledge the problem:

“…the public anger about the economy is not without empirical basis. A large swath of the nation has dropped out of the labor force completely, and the reality for the average American family is that its household income is $4,000 less than it was when Bill Clinton left office. Economic inequality, meanwhile, has only grown worse, with the top 1 percent of American households taking in more than half of the recent gains in income growth. ‘Millions and millions and millions and millions of people look at that pretty picture of America he painted and they cannot find themselves in it to save their lives,’ Clinton himself said of Obama’s economy in March, while on the campaign trail for his wife. ‘People are upset, frankly; they’re anxiety-ridden, they’re disoriented, because they don’t see themselves in that picture.”

They don’t, however, seem to recognize its root cause. Why isn’t this economic “recovery” feeling good for everyone? Because the planet is buckling under the weight of this huge economy. Because humankind’s global footprint (economy and population) has surpassed optimal size, the costs of further growth are greater than the benefits. Today, in an overdeveloped world, growth sucks. But Obama and Sorkin haven’t quite figured that out. The President told Sorkin:

“Anybody who says we are not absolutely better off today than we were just seven years ago, they’re not leveling with you. They’re not telling the truth.”

Seven years ago harsh economic realities were forcing us to go on a diet. Our overconsumption had been nipped in the bud. Births of new consumers were down. It wasn’t pretty, but there was a brief pause in the ever-increasing pace of destruction of our life-support system. Bottom-line, of course, is it’s impossible to keep improving the quality of lives as long as we keep adding more lives. It’s an unsustainable situation.

Chasing economic growth distracts us from exploring sustainable solutions to the problems of unemployment, hunger, and inequity, not to mention the environmental crises growth exacerbates.

It’s a great piece, worth reading, but these guys are still stuck in the trees, unable to see the forest. I look forward to the day smart people like Sorkin and Obama see and acknowledge the new realty that we cannot grow our way out of today’s problems.

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