Crunch

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

Jared Bernstein (Author)

Publication date: 04/21/2008

Crunch
Jared Bernstein provides clear, jargon-free answers to economic questions asked by working Americans.Is Social Security really going bust, and what does that mean to me? If I hire an immigrant, am I hurting a native-born worker? Why does the stock market go up when employment declines? Should I give that homeless guy a buck? What's a “living wage”? How much can presidents really affect economic outcomes? What does the Federal Reserve Bank really do? And when the pundits say the economy's doing so well, why do I still feel so squeezed?

If you'd like some straight answers, premier economist Jared Bernstein is here to help. In
Crunch he responds to dozens of questions he has fielded from working Americans, questions that directly relate to the bottom-line, dollars-and-cents concerns of real people. Chances are if there's a stumper you've always wanted to ask an economist, it's solved in this book.

Bernstein is fed up with “Darth Vaders with PhDs” who use their supposed expertise to intimidate average citizens and turn economics into a tool for the rich and powerful. In the pages of
Crunch, Bernstein lays bare the dark secret of economics: it's not an objective scientific discipline. It's a set of decisions about the best way to organize our society to produce and distribute resources and opportunities. And we all can, and must, participate in these decisions. “America is a democracy,” he writes. “And in a democracy all of us, not just the elites and their scholarly shock troops, get to weigh in on biggies like this.”

Our economy will be only as fair as we can make it. In this lively and irreverent tour through everyday economic mysteries, Bernstein helps us decode economic ”analysis,” navigate through murky ethical quandaries, and make sound economic decisions that reflect our deepest aspirations for ourselves, our families, and our country.

Is Social Security really going bust, and what does that mean to me? If I hire an immigrant, am I hurting a native-born worker? Why does the stock market go up when employment declines? Should I give that homeless guy a buck? What’s a “living wage”? How much can presidents really affect economic outcomes? What does the Federal Reserve Bank really do? And even when some pundits say the economy’s sound, why do I still feel so squeezed?

If you’d like some straight answers, premier economist Jared Bernstein is here to help. In Crunch he responds to dozens of questions he has fielded from working Americans, questions that directly relate to the bottom-line, dollars-and-cents concerns of real people. Chances are if there’s a stumper you’ve always wanted to ask an economist, it’s solved in this book.

Bernstein is fed up with “Darth Vaders with PhDs” who use their supposed expertise to intimidate average citizens and turn economics into a tool for the rich and powerful. In the pages of Crunch, Bernstein lays bare the dark secret of economics: it’s not an objective scientific discipline. It’s a set of decisions about the best way to organize our society to produce and distribute resources and opportunities. And we all can, and must, participate in these decisions. “America is a democracy,” he writes. “And in a democracy all of us, not just the elites and their scholarly shock troops, get to weigh in on biggies like this.”

To not weigh in, Bernstein insists, is a profoundly political act, one with damaging consequences. Our economy will be only as fair as we can make it. In this lively and irreverent tour through everyday economic mysteries, Bernstein helps us decode economic “analysis,” navigate through murky ethical quandaries, and make sound economicdecisions that reflect our deepest aspirations for ourselves, our families, and our country.

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Overview

Jared Bernstein provides clear, jargon-free answers to economic questions asked by working Americans.Is Social Security really going bust, and what does that mean to me? If I hire an immigrant, am I hurting a native-born worker? Why does the stock market go up when employment declines? Should I give that homeless guy a buck? What's a “living wage”? How much can presidents really affect economic outcomes? What does the Federal Reserve Bank really do? And when the pundits say the economy's doing so well, why do I still feel so squeezed?

If you'd like some straight answers, premier economist Jared Bernstein is here to help. In
Crunch he responds to dozens of questions he has fielded from working Americans, questions that directly relate to the bottom-line, dollars-and-cents concerns of real people. Chances are if there's a stumper you've always wanted to ask an economist, it's solved in this book.

Bernstein is fed up with “Darth Vaders with PhDs” who use their supposed expertise to intimidate average citizens and turn economics into a tool for the rich and powerful. In the pages of
Crunch, Bernstein lays bare the dark secret of economics: it's not an objective scientific discipline. It's a set of decisions about the best way to organize our society to produce and distribute resources and opportunities. And we all can, and must, participate in these decisions. “America is a democracy,” he writes. “And in a democracy all of us, not just the elites and their scholarly shock troops, get to weigh in on biggies like this.”

Our economy will be only as fair as we can make it. In this lively and irreverent tour through everyday economic mysteries, Bernstein helps us decode economic ”analysis,” navigate through murky ethical quandaries, and make sound economic decisions that reflect our deepest aspirations for ourselves, our families, and our country.

Is Social Security really going bust, and what does that mean to me? If I hire an immigrant, am I hurting a native-born worker? Why does the stock market go up when employment declines? Should I give that homeless guy a buck? What’s a “living wage”? How much can presidents really affect economic outcomes? What does the Federal Reserve Bank really do? And even when some pundits say the economy’s sound, why do I still feel so squeezed?

If you’d like some straight answers, premier economist Jared Bernstein is here to help. In Crunch he responds to dozens of questions he has fielded from working Americans, questions that directly relate to the bottom-line, dollars-and-cents concerns of real people. Chances are if there’s a stumper you’ve always wanted to ask an economist, it’s solved in this book.

Bernstein is fed up with “Darth Vaders with PhDs” who use their supposed expertise to intimidate average citizens and turn economics into a tool for the rich and powerful. In the pages of Crunch, Bernstein lays bare the dark secret of economics: it’s not an objective scientific discipline. It’s a set of decisions about the best way to organize our society to produce and distribute resources and opportunities. And we all can, and must, participate in these decisions. “America is a democracy,” he writes. “And in a democracy all of us, not just the elites and their scholarly shock troops, get to weigh in on biggies like this.”

To not weigh in, Bernstein insists, is a profoundly political act, one with damaging consequences. Our economy will be only as fair as we can make it. In this lively and irreverent tour through everyday economic mysteries, Bernstein helps us decode economic “analysis,” navigate through murky ethical quandaries, and make sound economicdecisions that reflect our deepest aspirations for ourselves, our families, and our country.

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Meet the Author


Visit Author Page - Jared Bernstein

Jared Bernstein is the Chief Economist and Economic Policy Advisor to Vice President-elect Joe Biden. He is an expert in the areas of federal, state and international economic policies, specifically the middle-class squeeze, income inequality and mobility, trends in employment and earnings, low-wage labor markets, poverty, and international comparisons. Bernstein has been an economist at the Economic Policy Institute since 1992 and is a renowned author of several books and academic treatises on the economy and the middle class. From 1995-1996, he served as Deputy Chief Economist for the Department of Labor under Labor Secretary Robert Reich. Bernstein is on the Congressional Budget Office's advisory committee and has been a contributor to the financial news station CNBC. He has also taught at Howard University, Columbia University and New York University. He holds a Bachelors Degree in Fine Arts from the Manhattan School of Music; a Masters Degree in Social Work from the Hunter School of Social Work; a Masters Degree in Philosophy and Ph.D. in Social Welfare from Columbia University. You can keep up with Jared by following is blog, On The Economy

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Table of Contents

Preface
Introduction: So What Is Economics, Anyway?
Chapter 1--The Big Squeeze
If the Economy's Doing So Well, Why Do I Feel So Squeezed?
Econ-Noir
All Is Not As It Appears: Measuring Economic Outcomes
Whatever Happened to the Cleavers?
The Health Care Squeeze
The Medical Industrial Complex
Health Care Reform
Poverty Amid Plenty: The Whats
Poverty Amid Plenty: The Whys
Brother, Can You Spare a Dime?
The ABCs of Worker Pay
What's So Bad About Inequality?
All Education, All the Time
Chapter 2--Don't Know Much About GDP
Gross Domestic Product
Unemployment: Wall Street vs. Main Street
Underemployment
Making Better Doughnuts
Inflation
What's a Recession?
Blowing Bubbles
The Night of the Living Wage (and Other Scary Stories)
Your Textbook Got It Wrong
Chapter 3--Political Economy 202
Social Insecurity
Economists in Chief
The Fed
The Budget Deficit (Part 1)
The Budget Deficit (Part 2, in Which a Nobelist Agrees with Me)
The Economy and the Military
Guns or Butter
A New WPA?
“Please Remain on the Line”
Chapter 4--The World Ain't Flat As All That
What's Right and Wrong About Globalization?
Outsourcing
The Conscience of a Shopper
World Trade
Globalization and Greed
How the Capitalists Killed Capitalism
Undocumented Workers
The Not-So-Great Immigration Debate
What's So Bad About a Labor Shortage?
The Mighty Dollar
Can Economists Save the Planet?
Chapter 5--The Reconnection Agenda
Easing the Squeeze
Health Care
Immigration
Education
Globalization
What's Left?
Conclusion: The Lesson of the Rink
Notes
Acknowledgments
About the Author

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Excerpt

Introduction: So What Is Economics, Anyway?

So a doctor tells this unfortunate woman that she has but six months to live. “Isn't there anything I can do?” she pleads. “Marry an economist,” the doctor replies. “It won't cure the illness, but it will make the six months seem like five years.”

We might as well start with the basics, and I promise this won't take anywhere near six months.

I recently completed my toughest speaking gig of the year: I taught an economics lesson to my first-grader's class. The goal was to teach them the fundamental concepts of needs versus wants, goods versus services, and scarcity. These distinctions are critical, because a good working definition of economics is the following:

The economy is the way we organize our society to best provide the goods and services that we need and want. Economics studies the best ways to do this.

They quickly got the needs/wants distinction, but they raised some fascinating questions. They got that housing is a need. But someone then asked, “What about a mansion?” (Just to be sure, I asked them if they knew what a mansion was. “A big house with lots of cobwebs,” they said.) They discussed that and determined that a mansion is a “want,” not a need. Smart kids, I thought.

Anyway, all I'm saying is that anybody of any age can get this stuff. In fact, to not get it, to give up because it's too obscure, is, as I will show, a profoundly important political act, one with damaging consequences. The stakes are high, for ourselves and for those who come after us—too high to entrust to those whose agenda is to redistribute power and resources to themselves and their friends.

Am I really suggesting that evil people disguised as social scientists are out to rob us blind while we willingly sign on the dotted line because we don't get the math?

No, not at all, though many powerful political and corporate actors use economists and economic (il)logic to do just that.

It's just that there are countless ways to organize our society to “best provide the goods and services that we need and want.” In other advanced economies—in those of Europe, Canada, Scandinavia—they answer this question quite differently from the way we do. For example, they take access to health care services “out of the market,” based on the beliefs (a) that health care is a basic right in an advanced society, and (b) as discussed in some detail later, that there are special attributes of health care that make unregulated markets a particularly inefficient (read: wasteful) way to deliver and provide it. And you don't have to get on a plane to learn the lesson that there are different ways to organize the economy. In other periods within our own history, we organized things differently, too.

This question of how we organize the economy matters a lot. It determines how the benefits of growth are distributed. Even more important, it determines who gets the opportunity to realize their potential. If the best educational opportunities go to the haves, their position relative to the have-nots will become etched in stone, as economic mobility atrophies. If those in political power believe—and act on the belief—that labor standards, like minimum wages, overtime, or the right to collectively bargain, are harmful to economic growth, then the ability of some workers to bargain for their fair share of the growing economy will evaporate while that of others grows stronger. How we organize our economy determines how we structure our response to the challenges from environmental degradation, globalization, the lack of health coverage, and staggering wealth inequalities.

When answering the questions that follow, three unifying principles kept coming up. I'll come back to these often, as I found them to be useful navigational tools, providing the intellectual and moral guideposts needed to keep us moving in the right direction—toward an economy that works best for all.

BASIC PRINCIPLES OF CRUNCH-STYLE ECONOMICS

1. Economic outcomes are generally thought to be fair, in the sense that market forces dole out rewards to those who merit them. But that's not always the case. Power, whether it's based on political clout, wealth, class, race, or gender, is also a key determinant of who gets what.

2. Economic relationships often play out in surprising ways, contradicting both basic logic and textbook theory. The path to economic truth is paved with evidence, not assumptions.

3. Since economics is concerned with finite resources, economic decisions often invoke trade-offs: choosing one outcome over another. Though these trade-offs are usually thought of as the benign outcomes of rational discourse, it's not so: See #1.

As I hope these principles suggest to you, the goal of this book is not simply to help readers become better versed in economic discourse, though that's part of my goal. It's also to offer a new way to answer the question, how can we best organize our society to provide the things we want and need? America is a democracy, and in a democracy we all get to weigh in on biggies like this, not just the elites and their scholarly shock troops.

With that in mind, let's get to work.

Crunchpoint :* Economics is not an objective, scientific discipline. It is a set of decisions about how to produce and distribute resources and opportunities. Understanding and evaluating the logic and rationales for those decisions, while recognizing whom those decisions favor or exclude, is a big part of what this book is about. To proceed with these insights foremost in our minds is the only way I know to rechannel the power of economic analysis back to the service of those who need it most: the ones in the vise grip of the crunch.

* Each question and chapter in the book ends with a “crunchpoint,” an allegedly snappy summary of the discussion.

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Endorsements

“Jared Bernstein—the rare economist who writes lucid English—has a gift for making difficult topics easy to grasp without dumbing them down. Bernstein's latest superbly timed book, Crunch, is a must-read guide to the economy's current slide and its effect on us all."
Robert Kuttner, Founding Co-Editor, The American Prospect

“Jared Bernstein's new book is a must-read for everyone who cares about restoring economic fairness in an America with the greatest income inequality since the Great Depression.  Drawing on everyday examples,
Crunch is an accessible explanation of economic principles presented with equal parts of insight, humor, and stimulation.  In the process, Bernstein explains how we got to where we are, what to do to fix it, and why fighting for a fair society is so important”
—Senator John Edwards

“The sprightliest writer working in the dismal science since the heyday of John Kenneth Galbraith.”
—Harold Meyerson, Washington Post columnist

“Jared Bernstein has written a fun, user-friendly primer that tells you everything you need to know about the economy. I liked it, you'll like it, and if you read it you can stop feeling guilty that you forgot everything you learned in that freshman econ course.”
—Jonathan Chait, Senior Editor, The New Republic, and author of The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics

Crunch is a dangerous book.  Anyone who reads it will be armed with new ideas to start kicking back at the false economic theories that have ensnared this country.  The book is witty, irreverent, and easy to read, but don't let that fool you.  It's powerful.”
—Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard Law School and coauthor of All Your Worth: The Ultimate Lifetime Money Plan  

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