What Is This “Economy” I Hear So Much About?

Donald Trump delivering his first State of the Union address

Twenty years ago, I was an outspoken Republican who hated Bill Clinton. You name it, I hated it: his wag-the-dog military policies, his sententious preaching about ethical responsibilities, his well-documented womanizing. The man just got under my nails. My fellow Republicans and I had a stock response whenever he did something we considered horrible, we trotted out the same response: “But at least the economy’s doing good!” *eyeroll*

Imagine my surprise, two decades later, after my politics shifted, seeing Democrats trotting the same response to Donald Trump. He accepts credit for the lowest unemployment rate since, ahem, Bill Clinton, and the lowest Black male unemployment rate ever, and Dems roll their eyes. The economy apparently falls second to whatever moral and ethical issues we consider paramount. And by “We,” I mean whatever party doesn’t control the White House.

The economy provides a shield for whomever has power. The Clinton Administration saw unemployment dip below five percent for the first time in twenty years. The Trump Administration stands poised for the lowest unemployment rate since Lyndon Johnson. Everything is good, right? Yet my rent hasn’t been on time in over a year, I cannot afford to save for retirement or even dinner out, and Walmart remains America’s largest employer.

So what is this mythical “economy” I hear so much about?

Following Trump’s first State of the Union speech, the National Association of Manufacturers paid to push a Twitter hashtag, #YearWon, purporting that Trump’s first year marks some high of market analytics. Record High Manufacturing Output! the accompanying video touts. 16,000 New Manufacturing Jobs Each Month! The video doesn’t cite sources, because it isn’t fundamentally about facts; it’s about ginning support from the already convinced.

All economic reports swing according to two variables: what factors economists consider noteworthy, and what information economists have. Economist Lorenzo Fioramonti writes that standard GDP measures, which aggregate the very rich and highly productive together with the furloughed and poor, are always outdated, possibly by years. And John C. Médaille writes that calculating market inputs always involves what economists call “imperfect information.” Which is exactly what it sounds like.

The #YearWon push assumes high output and hiring equal improved conditions for workers. But neither number correlates with actual pay. Ramping up hiring, without a concomitant increase in wages, results in more poorly-paid peons. Without revenue and autonomy, simple hiring is basically serfdom. And productivity, measured with dollar signs, tells us only what corporations receive, not what they share with actual workers.

Bill Clinton delivering the 1996 State of the Union address

Low unemployment is desirable, obviously. More people working means more people participating in society’s most basic exchanges: buying food with the products of their labors. But simply calling people employed doesn’t mean they’re active in the economy. Most children with Saturday lawn-mowing businesses make enough money to count as, technically, employed. Adults need something more robust to participate in the economy. And the economy needs more from them.

Watching the #YearWon video, it implicitly assumes that increased manufacturing, measured in dollars, naturally caused increased hiring. Yet if America has increased manufacturing, it’s been mostly behind automation. When I worked in the factory, I observed how much of the manufacturing process is controlled by machines. Humans participate only when parts or processes are asymmetrical, requiring two eyes to make informed judgements. Which isn’t very often.

Raw numbers, disaggregated from where the money comes from and where it goes, tell us remarkably little. Adam Smith and Karl Marx, whose conflicting economic visions fueled our last hundred years, both walked into factories (mostly in England) and described what they saw, assigning numerical values and mathematical functions only latterly. They didn’t think their graphs and histograms were reality; they acknowledged they were only attempting to describe.

That’s the mistake I keep seeing contemporary economists making: they think their models prescribe reality, rather than describing it. Models like the supply-demand arc and the Laffer Curve are treated as magic keys that cause economic reactions. This is categorically untrue. Our economy is the actual exchange of labor, goods, and money. If statistical models don’t work, or produce incorrect predictions, then the models are wrong and must be discarded.

In other words, the economy consists of us. White or black, rich or poor, documented or undocumented, we are the economy. And any policies or models that exclude us, with our ethical concerns and lived experiences, are perforce wrong. This isn’t about political parties; both are guilty of magical thinking. It’s about a systemic disdain for ground-level work. Our economy will continue foundering until this problem is resolved.