Monday, October 20, 2014
Divide and Conquer Club Polish Their Badges Over Glowing GDP Report
Sunday's Janesville Gazette headlined an article about how Rock County's GDP growth is among the best in the nation. Sounds great, doesn't it?
Unfortunately, there was alot that wasn't highlighted in the article. The most glaring item is the fact that Rock County's gross domestic product in general was starting at a lower baseline than most U.S. communities since GM closed in late 2008.
An example of this effect is New Orleans. It boasts some of the best economic growth indicators in the country. Why? Because it's rebounding from the devastation of Hurricane Katrina with the help of billions in federal taxpayer dollars. Yes, government plays a huge role.
The housing mortgage crash of September 2008 coupled with the GM closure was our little hurricane. Sure, the devastation was nowhere near what N.O. experienced, but we lost at least 2,000 family raising "production" salaries along with another 1,000 in coat-tail operations. Even though those jobs have not been replaced, my hat is off to those surviving small businesses that have adapted to these new pressures. But any growth starting from that new "bottom" beginning in 2009 will be a greater percentage of the principal than if starting from a higher position in 2006.
The good news is Rock County's establishment did not go further south after the dust settled in the post-GM era. The bad news is the number of Rock County residents on FoodShare has rocketed 107 percent since 2008.
So boasting a leading GDP growth rate in 2014 is not exactly a sure sign of explosive new job growth or an improving economy like it would have been 100 years ago. In 1914, that indicator would have meant Rock County's economy is sizzling hot, but back then GDP growth was a result of job expansion driven by labor. Today, it is job contraction driven by automation and capital.
That also means a higher GDP growth rate today is increasingly the result of fewer people working harder to produce more - for less. According to the Gazette story, production is up 6% since the 2009 Great Recession bottom baseline.
It's not about jobs.
In this new era, it's a report showing that legislative policies designed to increase wealth at the top are indeed working with lower wages and fewer jobs, AND a local economy starting from a comparatively lower baseline than many (but not all) communities. Unfortunately, this is what the GDP growth rate story tells me the most.
Interestingly enough, the Gazette enlists the opinions of the divide and conquer booster club, Forward Janesville, and their county government liaison, whose legislative agenda and economic development principles bolster the logic of my viewpoint.
But instead of keeping their optimism in check, they confidently polish their badges, "we're leading the pack" and give credit to several businesses "expansions." Business expansions whose taxpayer sponsored "incentive" packages were guaranteed not by creating more jobs, but predicated on fewer jobs than they currently provide - not mentioned in the story.
I also sense that timing and political logistics play a role for the claims and credit they seem to be taking just two weeks before an election. To put it another way, had Romney and Ryan won the White House in 2012, the Ryan/Hendricks/Walker Kochtopus would have held up the area’s increased GDP report as a result of their policies and political victory. So on another hand, these folks are gaming the narrative.
Locally, what their displayed optimism (and timing) does is further perpetuate the false notion that incentive packages loaded with tax credits, tax cuts, forgivable loans and free stuff for the top - works - and somehow make businesses hire employees they don't need. They want to keep that gravy train rolling, yet at the same time they lack the same confidence and optimism to guarantee positive job growth in exchange for those incentives. With that said, I'm not trying to justify the "incentive" charade at all. Just trying to align their confidence game with their optimism.
Lastly, these fine folks gloated and giggled over people whose backs were against the wall after GM closed because they were left with no choice but to take considerably lower wages for their work. That's not what I would call an inspiring community spirit. Or, when your economic development team views higher wages, civil rights, pensions and employee medical leaves as burdens on economic development, you're not exactly creating a welcoming environment for workers to provide economic security for themselves or their families.
It's further telling they referred to themselves in the past as the ambassadors of optimism. They had to - because it's not about jobs.
RNR - How the Janesville Gazette Can Help Rock County (Jan. 2011)
RNR - Janesville Is Not Paul Ryan's Kind Of Town
Mother Jones - Americans Working Harder Charts
Posted by Lou Kaye at 12:05 AM