Monday, September 16. 2013
A front page article in the Wichita Eagle this morning is titled "Summers out of running for Fed chairman." I wasn't able to find the article on the Eagle's website, but it is by Kevin G. Hall (McClatchy Washington Bureau), and here's a link. Above the headline, the article pointed out that "women's groups, others opposed nomination." Indeed, aside from some of Summers' fellow economists -- if I recall correctly, Brad DeLong is the one I'm most likely to credit -- the only person who seems to have favored Summers was Barack Obama. This has always struck me as a bit odd: if you read Ron Suskind's book on Obama's economic team, Confidence Men: Wall Street, Washington, and the Education of a President, only Tim Geithner -- who flat-out obstructed Obama decisions against the big banks -- comes off worse than Summers, who comes off as a self-appointed bottleneck making sure that Obama never got advice he didn't pre-approve. Given that things didn't work out so great, you'd think the president would hold some lingering resentment of the stifling adviser, but evidently not. The article quotes Obama:
Say that again, "the kind of progress we are seeing today." As it happens, I just posted a chart at the top of yesterday's Weekend Roundup that shows "What's Up, What's Down" since July 2007, when the economy started to go south. What's up? S&P 500 +8, corporate profits +42%, financial profits +59%. What's down? Employment/population ratio 6.7%. I also cited a piece by Mike Konczal on how the richest 1% of Americans took home a larger share of the nation's income than in any year since 1928. (Key quote there: "the top 1 percent have enjoyed 95 percent of all income growth from 2009 to 2012.") I also cited Jeff Madrick's piece where he argues that unemployment isn't just a bit high, but has metastasized into an entire "jobless generation."
So when Obama talks about "the kind of progress we are seeing today" he must be seeing things than I am not and not seeing things that I am. In the decade before the collapse financial profits had grown to 40% of all corporate profits, something that was only possible due to the predatory behavior of banks. Obama and Summers not only didn't stem that tide. They've increase financial profits even further. Higher corporate profits feed off three main factors: financialization (corporations playing finance games), increasing monopoly rents, and squeezing the labor market. None of those are things that make the economy stronger, let alone things that lead to higher living standards for more people. Yet under Obama and Summers those trends have become even worse. Worse still, under Obama and Summers those trends are counted as "progress."
Hall's article goes on to quote Sen. Bernie Sanders:
Within the narrow confines of what Fed chairmen can do, I don't consider Summers a horrible choice -- he would, for instance, have been better than Ben Bernanke in 2009. (I've long felt that Obama's failure to appoint his own Fed chair was one of the worst mistakes of his presidency.) But there's little in his past to suggest that he wouldn't immediately become a captured regulator of the largest (and most corrupt) banks in America, and there are alternatives that don't carry his brand of arrogance and corruption. (And, by the way, Donald Kohn -- another Obama favorite -- isn't one of them.) But Summers is a relatively known commodity. What's more disturbing here is that Obama's own view of the economy seems to be so narrowly subservient to the bankers' view -- and so far disconnected from what's actually happened to workers in America.
By the way, had a power blackout during last night's storms, and that delayed (and forced a hastil conclusion to) yesterday's Weekend Update post. Also backed up Jazz Prospecting, which will come out late tonight or early tomorrow, unless we have another blackout. Sorry for the delays, but I also wanted to sneak this morsel in.
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