Reframing the Debate: NOT THAT MOST AMERICANS HAVE BEEN LIVING BEYOND OUR MEANS, BUT OUR MEANS HAVEN’T KEPT UP BECAUSE OF WIDENING INEQUALITY

ChaosEven as the economy slowly recovers from worst downturn since Great Depression, government-haters and deficit-hawks are sticking to their same story: Americans have lived beyond their means and must now learn to live within them. The reality is quite different: The means of most Americans haven’t kept up with what the economy could and should provide. The economy is twice as large as it was three decades ago, and yet the typical American is earning about the same, adjusted for inflation. All the gains have been going to the top. The notion that we can’t afford to invest in the education of our young, or rebuild our crumbling infrastructure, continue to provide Social Security and Medicare, Medicaid, or expand health insurance is absurd. If the median wage had kept up with the overall economy, it would be over $90.000 today, and tax revenues would be more than adequate to cover all our needs. If the wealthy were paying the same marginal tax rate they were paying up to 1981, tax revenues would be far more. Get it? The problem isn’t that most Americans have been living too well. Problem is we haven’t been living nearly as well as our growing economy should have allowed us to live. Widening inequality is the culprit. If President Obama is looking for a central theme for his second term, this is it. (source: Robert Reich – 30/05/2013)

Link: http://robertreich.org/

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Consultor Internacional

3 Responses to Reframing the Debate: NOT THAT MOST AMERICANS HAVE BEEN LIVING BEYOND OUR MEANS, BUT OUR MEANS HAVEN’T KEPT UP BECAUSE OF WIDENING INEQUALITY

  1. TO its custodians and admirers, the European Union is the only force standing between its member states and the age-old perils of chauvinism, nationalism and war. That was the pointed message that the Nobel Committee sent last year, when it awarded the union a Peace Prize for its role in “the advancement of peace and reconciliation, democracy and human rights.” And it is the message hammered home relentlessly by the Continent’s politicians, who believe their citizens face a stark choice, in the words of Chancellor Angela Merkel of Germany, between continued integration and a return to “centuries of hatred and blood spill.” But right now, the E.U. project isn’t advancing democracy, liberalism and human rights. Instead, it is subjecting its weaker member states to an extraordinary test of their resilience, and conducting an increasingly perverse experiment in seeing how much stress liberal norms can bear. That stress takes the form of mass unemployment unseen in the history of modern Europe, and mass youth unemployment that is worse still. In the Continent’s sick-man economies, the jobless rate for those under 25 now staggers the imagination: over 40 percent in Italy, over 50 percent in Spain, and over 60 percent in Greece. For these countries, the euro zone is now essentially an economic prison, with Germany as the jailer and the common currency as the bars. No matter what happens, they face a future of stagnation — as aging societies with expensive welfare states whose young people will sit idle for years, unable to find work, build capital or start families. The question is whether they will face ideological upheaval as well. So far, the striking thing about the aftermath of the 2008 financial crisis, both in Europe and the United States, is how successfully the center has held. Power has passed back and forth between left and right, but truly radical movements have found little traction, and political violence has been mercifully rare. In a sense, Francis Fukuyama’s post-cold-war declaration of the “end of history” — by which he meant the disappearance of credible alternatives to liberal democracy and mixed-economy capitalism — has held up pretty well in the last five years. Amid the worst economic disaster since the Great Depression, illiberal societies like Egypt and Syria have faced political crises, but the developed world has not. There has been no mass turn to fascism, no revival of Marxist economics, no coup d’états in Madrid or jackboots in Rome. But you have to wonder whether the center can hold permanently, if unemployment remains so extraordinarily high. How must liberal democracy and mixed-economy capitalism look to young people in the south of Europe right now? How stable is a political and ideological settlement that requires the rising generation to go without jobs, homes and children because the European project supposedly depends on it? And for that matter, how well is the Continent’s difficult integration of Muslim immigrants likely to proceed in a world where neither natives nor immigrants can find work? (…..)

    http://www.nytimes.com/2013/06/02/opinion/sunday/douthat-prisoners-of-the-euro.html

  2. Professor Uziel Nogueira says: Mr. Douthat dixit “But right now, the E.U. project isn’t advancing democracy, liberalism and human rights. Instead, it is subjecting its weaker member states to an extraordinary test of their resilience, and conducting an increasingly perverse experiment in seeing how much stress liberal norms can bear.” Mr. Douthat statement leads readers to conclude the E.U is undergoing some perverse man made economic engineering experiment that could destroy democracy. This is incorrect and misleading in two points. First, structural adjustment is only taking place in 17 countries of the eurozone, not in the entire integration zone composed of 27 countries. Second, macroeconomic adjustment in the eurozone — reducing unsustainable fiscal deficits and debt — is not a sort of political experiment engineered by Germany.


    It is determined by financial markets asking for higher interest rates to roll debt. Contrary to FED’s authority, the ECB is prohibited from printing euros to buy government debt.

    The European integration project, based on liberal democracy, is irreversible. There is no viable alternative model to it. The question is how far countries like Portugal, Spain and Greece can go on with fiscal restraint and structural adjustment in order to keep the euro as their currency. In my opinion, those countries have a long way to go before sustainable growth, job creation and prosperity can be restored. Is time to pay for a false sense of wealth and prosperity of the past.

    http://www.nytimes.com/2013/06/02/opinion/sunday/douthat-prisoners-of-the-euro.html

  3. (…..) SPIEGEL: If we take democracy seriously, we ought to say: the sovereign decides. And the sovereign is the parliament. Merkel: Because I want the Commission president to be given a coordinating function over the policies of the national governments, I think it’s essential that the national heads of state and government have a voice in his or her appointment. SPIEGEL: But that’s precisely where the democracy deficit in the EU lies. Citizens are supposed to do their part and participate in the European elections, but in the end the parliament doesn’t even have the power to decide whom to appoint to head the Commission. Merkel: You greatly underestimate the European Parliament. It has considerable power, as we are now witnessing in the debate over the EU’s financial framework for the coming years. A proposal by the Council is needed, but so is the parliament’s approval. At some point, it might make sense to give the parliament the authority to introduce bills, but right now I don’t think it’s a good idea for us to spend our time on theoretical discussions about what the European structures will look like in 10 or 15 years. The citizens of Europe and me face far more pressing issues. These include which products and services we intend to produce as our contribution to world growth, how we want to earn our money in the future, how we can simplify the process of starting a company, thereby generating jobs, and how we can ensure that all countries — as was in fact agreed upon 10 years ago — will finally spend 3 percent of their gross domestic product on research, and much more.


    Once we have answered these questions, we will also learn how the EU institutions work most effectively.

    SPIEGEL: But the frustration over a non-transparent EU is also affecting you. A party like the new euro-skeptic Alternative for Germany (AfD) wouldn’t exist if people were satisfied with the EU. Merkel: There are many parties in Germany, founded for the most varied of reasons and with a wide range of goals. The Pirate Party is an example we’ve witnessed in this legislative period, and the Green Party is one we’ve seen in the past. SPIEGEL: That sounds as if you were taking the AfD very seriously. Merkel: I devote my efforts to making the right decisions for our country, and it’s been my experienced that this is what convinces people (…..)

    http://www.spiegel.de/international/europe/spiegel-interview-with-angela-merkel-on-euro-crisis-and-arms-exports-a-903401-2.html

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