30 December, 2011

How bad is it?

Porter Stansbury, already noted for his gloomy predictions about the American economy, finds "the numbers tell us America is in decline... if not outright collapse."  His analysis starts with an estimate of real per capita GDP/time, based on a market-basket of currencies and/or gold.  Even this has pitfalls.  But, anyway, he uses a commodity index (the CRB) until 1975, and after the US is off the gold standard he switches to gold, and the chart looks like this:

I don't know that this is the best way to estimate what is going on, but clearly something is.  And this misses what may be the greatest problem of all: that per capita GDP tells us nothing about the distribution of wealth.  Things got better, it seems, in the years from Reagan to George W. Bush--but how much of that was consolidated in the hands of a few?  Even ignoring that, however, after 2001 things look bad for almost everyone.

Why bring this up here?  Because economic failure promotes desperation, and crime, and a police state mentality.

Stansbury connects the decline to an ethic of entitlement, coupled with vast (and unpunished) corruption at the top.  Henry Paulson and Tim Geitner should be behind bars for lying to Congress and providing more accurate insider information to old associates.  Congress doesn't do anything about it (perhaps because the Congress as a whole has an ever-widening gap with their consitutents, based in part on their exemption from insider-trading laws).

He also wants to claim that there's a direct correspondence to the Great Society programs, either by design (to buy off troublesome groups) or error (the basic errors of large-scale government planning systems).  That's debateable, but what isn't in doubt are the numbers--and the spiral of poverty and crime and incarceration they represent.  Some data points, again from Stansbury:

According to the NAACP, Texas taxpayers spent $175 million in 2009 to imprison residents from a small part of Houston – only 10 zip codes out of 75. Thus, people from neighborhoods that are home to only about 10% of the city's population account for more than 33% of the state's entire $500 million annual prison spending. These neighborhoods are overwhelmingly poor and African American. 
In Pennsylvania, taxpayers will spend $290 million in 2009 to imprison residents from just 11 of Philadelphia's neighborhoods, representing about 25% of the city population. On this relatively small urban area, the state will spend roughly half its $500 million prison budget. These neighborhoods are overwhelmingly poor and African American. 
In New York, taxpayers will spend $539 million to imprison residents from only 24 of New York City's 200 different neighborhoods. Only 16% of the city's population lives in these areas, but they will account for nearly half of the state's $1.1 billion prison budget. These neighborhoods are overwhelmingly poor and African American.

This is not about race, or at least not only about race.  In Detroit, where twenty-seven percent of African-American males graduate from high school, only nineteen percent of white males do so.  In practical terms, in an economy that's increasingly technical and global, these people have little or no chance.

My dad used to be a principal in the schools of St. Louis.  Eventually, he ended up in charge of the school for incarcerated minors.  I'm not sure what's worse: that he found that to be one of his safer assignments, or the fact that some of his students would commit crimes to get off the streets and return to the relative safely of his school.

Today, this country has more than seven million people in prison or on parole, more that any other industrialized state.  The prison population has grown from less than half a million people to more than 2.5 million today--and the building and running of prisons has become a profitable growth industry.  What does that say about us?

Stansbury identifies villians: democrats, republicans, government employee unions, big business.  I don't agree with all of his analysis.  But it's worth a look at the start of what is likely to be a very, very difficult year.

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