Crunch

Why Do I Feel So Squeezed? (And Other Unsolved Economic Mysteries)

by Jared Bernstein

Crunch
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A Fun Case for Economic Justice

Ever wonder why, if things are going so well, you don’t feel better? You’re not alone. There are numerous disenfranchised workers who feel that our economic system has subtly shifted against them.

Take a look at the numbers. The inflation-adjusted weekly earnings of the typical worker were down 0.7 percent during the first six years of this decade even while the U.S. economy grew at a 15 percent clip. The share of the population that’s officially poor rose to 12.3 percent from 11.3 percent over the same period. And the share of income going to the top 1 percent of households in 2005 was, at 22 percent, higher than in any year since 1929.

“Something’s wrong, something fundamental,” asserts Jared Bernstein, a senior economist at the Economic Policy Institute, media commentator and author of Crunch. “The name of the problem is economic inequality, and it’s been on the rise for decades. It’s at the heart of the squeeze, and it’s a sign that something important is broken: the set of economic mechanisms and forces that used to broadly and fairly distribute the benefits of growth.”

Common-Sense Answers

Left unchecked, this malaise threatens to erode our trust in the government and the economy, undermine our participation in the political system and ultimately lead to mean-spiritedness that is as divisive as it is pessimistic. But not if Bernstein has his way.

Crunch does not read like the usual economics book. Instead, it offers an opportunity to hang out with an economist who doesn’t think, talk or act like one. In fact, Bernstein is to economic analysis what a grandparent is to child rearing — relaxed, folksy, likeable if not a little quirky.

In his simple and yet effective style, Bernstein provides common-sense answers to questions such as whether Social Security is going bust (he argues it is not), whether immigration is hurting native-born workers (it does) and how much presidents can affect the economy (quite a lot). He also addresses the cost of global warming (without sacrifices today there will be monumental losses tomorrow), what the GDP actually measures (dollar value of the economy, including all goods and services from cars to lattes) and what it leaves out (environmental degradation), why teachers are underpaid (because we undervalue their work) and why tax cuts for second homes should be axed (nobody gets two until everybody has one).

Bernstein keeps the conversation mercifully free from charts, graphs and statistics that encumber many similar works. By keeping his analysis humorous, light and fun, he is able to make his book endearingly simple in its profundity, while avoiding the density and obtuseness that often shroud such public policy debates.

Charmingly Self-Deprecating

In his charmingly self-deprecating manner, Bernstein dons his economics hat (“place the propeller beanie atop head, give the prop a spin or two”) to demystify the often hyperbolic and politically charged discourse over economic policy. Economics, he explains, is simply how we organize our society to provide goods and services that we want and need. Yet, along the way, Bernstein argues persuasively, that definition has been hijacked by the economic, political and cultural elite to explain why we can’t organize society in a way that most of us think is fair, equitable and efficient.

Not willing to cede the intellectual high-ground to the influential, Bernstein offers his own progressive road map to a better organized society that provides the things we want and need while improving living conditions for everybody, not just those at the top of the income scale. With a slightly quixotic tilt, he writes that the central goals of our national economic policy should be to reconnect all people, regardless of their income level, to share in the economic prosperity.

“As graduates of Crunch University, you are encouraged to have no patience with those who impatiently and dismissively explain that the invisible hand directing optimal outcomes must not be nudged one way or the other,” Bernstein opines. “You must dissent loudly when Wall Street applauds a rising unemployment rate or some economist points out that rich people need tax cuts while poor people need

benefit cuts.”