Feelin' Bad

Americans are in a funk. Nearly two years into our economic recovery, nobody save the rich seems to be experiencing it. According to a New York Times/CBS News poll in April, Americans are more pessimistic about the economy than at anytime since the first two months of Barack Obama's presidency, when employment was falling like a stone.

Tens of millions of Americans believe that the American economy -- which was the marvel of the world and spawned the world's largest and most vibrant middle class -- isn't coming back. Confirmation of their pessimism is everywhere around them. Corporations are swimming in cash, but they're not rehiring workers or raising their pay. The share of Americans who are working continued to shrink in 2010 and is now at its lowest level since 1983. The share of working-age women in the workplace rose until 1995, when it hit a plateau. The share of working-age men who are employed has declined from 85 percent during the 1950s to 65 percent today.

Many of the jobs that Americans previously held have gone abroad. New data from the Commerce Department show that U.S.-based multinational corporations cut their domestic workforce by 2.9 million during the 2000s while raising their employment abroad by 2.4 million. That doesn't include the millions more overseas who work for foreign contractors making American consumer goods, like iPhones and laptops, for American companies, like Apple. And, to the nearly 3 million domestic jobs that multinationals directly eliminated, we need to add all the further jobs cut by their domestic suppliers and the merchants who sold those workers goods and services.

This net job drain is something new. In the 1990s, multinational companies added 4.4 million jobs within the U.S. But that was before China opened its doors to our manufacturers (or, rather, before Congress threw those doors open even wider by voting for permanent normalized trade relations with China). That was before Asian markets really started to boom and before mercantilist Asian nations made generous offers that American companies couldn't refuse.

Since the business of America is increasingly conducted abroad, many conventional remedies for curing a sick economy have fallen flat. The Federal Reserve's most recent efforts to put more money into the economy failed to overcome the multinationals' reluctance to invest at home. Meanwhile, as jobs have fallen prey to corporate flight and automation and private-sector unions have all but disappeared, pay has stagnated or declined.

Not surprisingly, Americans are taking out their discontent on our political elites. The president's approval rating has fallen into the mid-40s. Republicans don't much like any of the dozens of GOP presidential candidates. Save for a few years of near full employment in the late 1990s, the economy, as most Americans experience it, has either been treading water or sinking for decades, and neither party has done much to fix it. Both parties' leaders still support free-trade agreements -- indeed, they are pushing to enact three new ones. It's as if they haven't heard about the Commerce Department's numbers on net jobs lost to offshoring or the overwhelming evidence of mass wage stagnation in sectors open to global competition.

It's an axiom of modern democratic politics that political leaders should lay out a plausible path to a brighter tomorrow. At the moment, no one is really doing that. The Obama administration has thrown in the towel on the one genuine remedy to the private sector's failure to create jobs -- a public jobs program -- after its initial stimulus proved too small, slow, and indirect to convince the public that it actually worked. The Republican road to prosperity, which relies on ending Medicare and starving Medicaid, has won mercifully few adherents.

In fairness to our pols, the problems of the American economy are so deeply embedded in the very nature of American capitalism that they are not susceptible to easy or even moderately difficult solutions. Still, it would be nice if some enterprising leaders took these problems seriously enough to propose some fundamental policy changes. They could start by rewriting the tax code so that it rewards domestic production, punishes offshoring, and taxes income derived from investing in far-flung multinationals at a higher rate than it does wages. Such measures could begin rebuilding our private-sector economy before it's winnowed down to just Wall Street and Wal-Mart.

Until that rebuilding commences, Americans are likely to stay in a funk. Understandably so.

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