It is both astounding and refreshing to see the Wall Street
Journal get back to the good old days of publishing pieces based on their merit
and not their partisan orientation. It has done so with the article that was
written by William A. Galston under the title: “The Economic Roots of American
Retreat” and the subtitle: “Enduring a jobless recovery has discouraged many
from supporting a robust U.S.
foreign policy.” The article was published in the Journal on March 19, 2014.
Galston looks at the numbers, tells what they are, and makes
a preliminary assessment as to what they mean without getting into wild
speculation, and without constructing elaborate theories that might lead to
conclusions benefiting one philosophical stance or the other. Only in the end,
does he venture to make a few non-partisan observations that may benefit both
sides of the argument. In the meantime, he gives the reader an explanation as
to the reasons for that title and that subtitle, with the numbers that he cites
in the first paragraph.
He begins with the fact that a survey has found that 56
percent of the American public says it is more important for America to
minimize its involvement in the Ukrainian crisis than to stand up to Russia's
actions. He then cites another poll which shows that 57 percent of the American
public believes America
is still in recession. Those two numbers are so close; the inescapable
conclusion is that if there is an American retreat in foreign policy, it is that
the public wants to devote more attention to domestic matters, and less to
foreign issues.
Galston emphasizes that point by doing no more than suggest:
“people are cautious, and 12 years of costly wars have intensified that
caution.” This leads him to the inevitable conclusion that the attitude “it's
time for nation-building at home” will prevail against foreign challenges that
do not seriously threaten the country. This also means that until the people
feel America
is strong at home, they will continue to reject supporting the idea of their
country guaranteeing global security.
He leaves it at that for the political hacks to make of it
what they want, and he moves on to something else. To explain the discrepancy
that exists between the numbers which say the GDP has grown enough by 2011 to
exceed the peak level of 2007 – and between the feeling that the Great
Recession has not yet ended, he cites the fact that the number of jobs has not
regained its previous level. To make that point clear, he begins with the
observation that at the start of an economic recovery, hiring used to begin 2
or 3 months after the rise in production. This is called the lag time between
the recovery and the hiring.
That lag time has changed, says Galston, and he shows how by
citing another set of numbers. He tells that after the 1990-91 recession the
lag time stretched to 10 months. The time stretched further to 16 months after
the 2001 recession. And it has stretched once more to something like 36 months
after the Great Recession. He goes on to say that something fundamental has
changed regarding that lag time, but does not explain why.
He only says that this reality has contributed to the
feeling the recession has not ended. He then cites another set of numbers that
also contributed to the feeling. It is that the standard of living for most
people has eroded. He shows how this happened gradually between 2008 and 2013
when it barely began to inch upward. Putting all the numbers and the ideas
together, he cites the fact that “Median household income today is barely
higher than it was a quarter-century ago in 1989.”
He explains why the above has happened by saying that there
has been a shift in the structure of the American economy. He tells that wages
in America
have fallen from 55 percent to 50 percent of the national income. Total
compensation fell from 66 percent to 61 percent. At the same time, however, the
after-tax profit of corporations that used to oscillate between 5 percent and 7
percent of GDP, have surged to an all-time high of 10 percent.
Only now does William Galston make the connection between
the reality that is shown by the numbers, and the general feeling that is
expressed by the population. He says: “During the Cold War, [we] were sustained
by the belief and the fact that we were all in it together.” He explains with
the following set of numbers. Between 1967 and 1984 the share of the national
income had not changed in that 17 percent or so of the national income went to
the top 5 percent of the population, and another 17 percent went to the middle
fifth (indicating the middle 20 percent of the population also known as a
“quintile”).
The feeling of being in it together has now changed, he
says, because the numbers have changed. He tells that the income of the top 5
percent has risen from 17 to 22 percent of the national income while that of
the middle fifth has fallen from 17 to 14 percent.