Main Street Suffers the Bruce Springsteen Effect
NEW YORK (MainStreet) Discourse in America is imperiled by the Bruce Springsteen Effect: the lyrics are injected with a blue-collar sensibility, but the main act will cater to a multi-million-dollar lifestyle at day's end. In rock music as in the U.S. economic outlook, there's a separation between letter and spirit.
It's to this paradoxical tune that the metonym "Main Street" has been employed of late with politicians and economic authorities attaching themselves to the phrase in seeming solidarity with the common man. This strategy, time and again, proves ill-begotten no matter the guttural, working class warble of the tone.
Case in point: at the end of March, Federal Reserve Chair Janet Yellen spoke at the 2014 National Interagency Community Reinvestment Conference in Chicago to present the palatable theory that the central bank has the goal "to help Main Street, not Wall Street." Yellen discussed her advocacy for the Fed's continued support for the U.S. economy in the aftermath of the Great Recession in order to alleviate the financial hardships faced by the everyday American -- unemployment, mounting debt, diminished savings. In her examples of specific Americans suffering various employment challenges, Yellen invoked a rousing conclusion: "They are a reminder that there are real people behind the statistics, struggling to get by and eager for the opportunity to build better lives." This call for improvement is certainly a road paved with the best intentions but one with no clear endpoint.
That's in part the fault of the legislative branch, which let down the middle and working classes during the financial crisis by failing to implement more stimulus through fiscal policy. The Troubled Asset Relief Program (TARP) allowed the Treasury to purchase or insure $700 billion of troubled assets to bail out the banks, and the American Recovery and Reinvestment Act of 2009 (ARRA) could not effectively save and create jobs. The Fed was left to shoulder the burden of preventing the economy from falling off the ledge by lowering interest rates and instituting quantitative easing purchasing mortgage-backed securities and Treasury bonds.But quantitative easing, of course, favored the rich: it did little to prevent increased lending (especially for the middle class), and the economic buoyancy was most felt by those with money invested in the stock market. To wit, the S&P 500 was up 29.6% in 2013 (great for those who own securities), while GDP was up 1.9% across the whole year (not great for those on Main Street). This Main Street barnstorming is a curious elixir: white shoe considerations with elbow grease palaver. And we're drinking the Kool-Aid. Exhibit B: this past weekend's New York Times Style section featured a report from Jamie Johnson that chronicles his time at the "Next Generation" conference, an exclusive White House gathering of 100 young philanthropists who will inherit billions in private wealth. The intention of the summit, to strategize the best ways to allocate this vast capital, is magnanimous. But our knowledge of this gathering which featured "hallway hobnobbing" amid panels about "Climate Change" and "Millennial Healthcare" comes with a fitting twist, which the reporter (himself worth $610 million) reveals in a disclosure: "Although the event was closed to the media, I was invited by the founders of Nexus, Jonah Wittkamper and Rachel Cohen Gerrol, to report on the conference as a member of the family that started the Johnson & Johnson pharmaceutical company." Our confrontation of socio-economic disparity even comes with its meta-narrative: the account, our very eyes into the exclusive symposium, comes from the be-gloved hand of a one-percenter who achieved inside access by virtue of his wealth. Sure, Johnson has explored, and to some extent implicated, the lives of the fabulously wealthy in his 2003 documentary "Born Rich" and "The One Percent," which explores income inequality. Still, there is something unseemly about the conveyance of this information about this anointed sect by one its own. The sad ballad of Main Street continues with news that CUNY's Luxembourg Income Study Center, a research arm that addresses income inequality, will pay economist Paul Krugman $25,000 a month irony of ironies, roughly six times the U.S. median income. This is not a full-time gig for the Nobel Laureate, but he will "play a modest role in our public events" and "contribute to the build-up" of the inequality initiative. You just can't make this stuff up. Perhaps it is an inside joke in which we are all peanut gallery participants. And as Krugman well knows, President Obama believes inequality is "the defining challenge of our age." But maybe this economic dysmorphia to be expected as researchers at Princeton University and Northwestern University, in examination of 1,779 policy issues, determined the U.S. is an oligarchy, not a democracy. The study, to be published in Perspectives on Politics, found that "[w]hen the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy." In other words, Americans have rights and privileges featured in democratic governance but that's something of a chimera; in reality they have little influence over what the government implements. That leaves us with the current economic struggles for those of us on Main Street. The Republican Governor of Oklahoma signed a miniumum wage hike ban in her state last week. 70 million Americans have no emergency savings, and nearly one in four would run out of money in 30 days. In the U.S. companies have $1.5 trillion in unfunded or underfunded pension obligations, and almost half of Americans have less than $10,000 in retirement savings, with almost a third with less than $1,000. Americans are $6.6 trillion short of what they'll need to retire. The average household has about $15,000 in credit card debt and $30,000 in student loan debt. In fact, 37 million Americans are saddled with $1 trillion in student loan debt. With a median household income dropping 7.8% since 2007, the American homeownership rate dropped to 65% last year, the lowest point since 1995. Wages have glacially increased an average of 2% per year since the recession, and long-term unemployment is high with 3.8 million workers out of work for six months or more. 7 million part-time workers would rather work full-time but haven't landed a gig. The numbers, as Yellen well knows, tell the story of the people behind Main Street and their struggles. But yet the record keeps spinning; the invocation of "Main Street" issues in American discourse is a continued demonstration of singing "Jungle Land" and then flying off in a private jet, a world away from The Stone Pony. --Written by Ross Kenneth Urken for MainStreet
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