They keep trying to paste a smiley face on the numbers. "They" are the pundits, politicians, realtors, retailers, bankers, and everyone else whose livelihood depends on pretending that the Great Recession is just like all the others since World War II--a blip, a momentary pause, a temporary departure from the norm.
SMILEY FACE: New home sales were up 5.5 percent in November! REALITY: New home sales were 21 percent below their November 2009 level.
SMILEY FACE: The unemployment rate fell in December! REALITY: The job increase was well below expectations.
SMILEY FACE: Retail sales climbed 0.6 percent in December! REALITY: The biggest gains were in energy and food, and department store sales fell.
This is not a run of the mill recession, a blip, or temporary. This is a massive economic dislocation caused by the Internet. It is not over, it may get worse before it gets better, and it is not likely to get better for a generation. These numbers tell the story.
More than 1 million homes were foreclosed in 2010, a record. (RealtyTrac.com) The story begins with business. It is the nature of private enterprise to seek out and exploit every advantage in the marketplace. That is what business is supposed to do, and that is what it is doing. Those who were first to understand the Internet have used it to their advantage by globalizing their business, finding cheaper sources of labor and materials, and setting up systems that profit from instantaneous communication. Because of the Internet, the average stock is owned for only 22 seconds, according to economists. The speed of transactions creates an opportunity for entrepreneurs, but also opens the door to Internet savvy con men and crooks who can buy low and sell high in ways that our regulatory system has yet to comprehend. The Internet, and its crooks and con men, brought us the housing bubble and the foreclosure mess.
4.5 million Americans have been unemployed for a year or longer, a record. (Bureau of Labor Statistics) Never before have so many American workers been unemployed for so long. Labor markets are in turmoil because the Internet has eliminated time and distance as barriers to business. Those with digital skills are making a living. But most of us--our livelihoods dependent on pre-Internet business models--are only muddling through. A large segment of workers faces economic catastrophe. With unemployment above 9 percent and no sign that it will fall much for years, this is a structural realignment. Companies with pre-Internet profit models are either collapsing entirely or ridding themselves of workers who are not Internet savvy--usually the older workers. Among the unemployed, those aged 55 or older are having the hardest time finding a job. Forty-one percent have been unemployed for a year or longer.
Median household net worth fell 30 percent between 2007 and 2009. (Federal Reserve Board) Now on to the politicians, most of whom are standing idly by as the Internet's crooks and con men destroy the middle class. This is not a right versus left thing. This is not a Republican Party versus Democratic Party thing. This is an old versus young thing. The 111th Congress was one of the oldest in U.S. history. The 112th Congress is not much younger. The median age of the current House of Representatives is 57. The median age of the Senate is an even older 61. Few of our elected representatives are fluent in digital. The problem is not that many of our politicians must depend on their younger staff to help them turn on a computer, use a keyboard, surf the web, text, or twitter. The problem is that they cannot comprehend how the Internet is transforming our world. They are intellectually incapable of crafting policies that will help us cope with our new problems or take advantage of our new opportunities. It will take a generation of elections before politicians fluent in digital replace the elderly statesmen from the paper and ink era.
Meanwhile, we are sitting ducks.
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