At the 1992 Democratic National Convention, Bill Clinton adopted Fleetwood Mac’s “Don’t Stop (Thinkin’ About Tomorrow)” as his unofficial theme song. Its bouncy, optimistic strains would be reflected in Clinton’s line, four years later, that “We do not need to build a bridge to the past, we need to build a bridge to the future.”
We know now that President Clinton’s “bridge to the future” turned out to be more like Sarah Palin’s “bridge to nowhere.” From the approval of NAFTA in the first year of his administration to the repeal of the Glass-Steagall restrictions on banks in the final year, President Clinton set the stage for the destruction of American manufacturing and for the financial crisis that has effectively ended a century of American economic dominance.
Clinton had a little help from his friends, including Ronald Reagan, who first appointed Alan Greenspan as chairman of the Federal Reserve, replacing the strict monetarist Paul Volcker. Volcker had administered the necessary medicine to bring to an end the “stagflation” of the 1970’s, but he was at best an agnostic when it came to deregulation, and the free-market ideologues in the Reagan administration saw deregulation as a key to future economic growth.
Measured purely in terms of Gross Domestic Product, they were right; but deregulation, outsourcing, offshoring, and the blurring of lines between traditional banks and investment houses forever changed the shape of the American economy. While GDP grew by leaps and bounds over the past 20 years, household income remained stagnant. A rising tide lifts all boats, but sometimes it smashes some of them on the rocks.
Within days of the Obama administration declaring in October that the recession had come to an end, the national unemployment rate rose to 10.2 percent, its highest level since April 1983. Here in Illinois, it jumped by 0.5 percent to 11 percent, its highest point since August 1983.
At the time of this writing, October numbers have yet to be released for areas within Illinois, but the Rockford Metropolitan Statistical Area hit 15.2 percent in September; Winnebago County, 15.5; and Rockford, 17.2. It is not surprising that Rockford is outpacing the rest of the state and the nation. Demographics play an important role, but even more significant is the breakdown of job losses.
The United States has lost 2.1 million jobs in manufacturing since December 2007, 95,200 here in Illinois. Despite shedding as much as 25 percent of manufacturing jobs since 2001, Rockford remains a manufacturing town: 20 percent of all employment is in manufacturing, and another 20 percent is dependent on it. And even those manufacturers who have survived have found themselves squeezed by the credit crunch.
All is not doom and gloom, but the bright spots in the local economy do not augur well for the future. One manufacturer whose stock in trade is primarily after-market auto parts tells me that business is booming, but he is quick to note that he always does well when people cannot afford to purchase new automobiles.
If the economy continues to shed jobs at all levels, how can the recession have ended? As the old saying goes, Figures don’t lie, but liars figure, and economists determine the end of a recession by positive growth in GDP. Government “stimulation” of the economy has halted the decline, but if such programs as “Cash for Clunkers” have not slowed the demand for after-market auto parts, the momentary rise in GDP is likely masking continued weakness in the economy.
Because the Bush and Obama bailouts have kept mortgage rates artificially low, housing starts have rebounded, up over ten percent. Illinois added 1,000 construction jobs in October, but that barely touches the 47,400 jobs lost in construction here since December 2007, much less the 1.7 million nationally. Next to manufacturing, construction has led national job loss in this recession.
It’s no surprise that a nation that makes less and less—both manufactured products and personal income—is building less and less, too. Economists and politicians have become so focused on the big picture—the size of the economy—that they have forgotten a lesson that I learned long ago in the nature center at P.J. Hoffmaster State Park outside Muskegon, Michigan: Over time, a forest may grow and contract, but the most important changes take place as the composition of the forest changes. Once the white pines have been replaced by birches, the majestic pine forest is never coming back.
My neighbor and I may sell services to each other all year long, and the Gross Domestic Product will grow each time we hand the same money back and forth. But the wealth of the nation, not to mention our personal wealth, will never budge. True economic growth comes from the production of tangible goods, whether through manufacturing, construction, agriculture, or mining.
For several decades now, all of our political leaders have thought that they were thinking about tomorrow, when they were really only living for the moment. And now yesterday is truly gone, and tomorrow won’t be better than before.