Roger, you make several valid objections to Scott Lilly's claims, but I think you have really misunderstood Lilly's arguments when you say this:
First he compares today's economy to the Great Depression. That is a typical scare tactic to make people think the economy is a disaster.
...
The conditions under the Great Depression saw 25-30% unemployment while today we sit at 6.1%, a historical low.
You are talking about how today's situation compares with the situation
during the Great Depression. However, one of Lilly's main points is that today's situation is very reminiscent of the situation
just before the Great Depression. The big similarities between then (circa 1920-1928) and now (2000-2008) is that minimum wages were low, money was channeled from the poor to the rich in that worker productivity rose sharply (during 1920-29 by 63%, during 2000-2007 by circa 20%) while inflation-adjusted wages fell (during 1920-1929 by 9%, during 2000-2006 by circa 2%), and the general public became poor enough not to be able to purchase all the goods and products that the supply side was producing. That, according to Lilly, was a major reason for the Wall Street crash of 1929 and the following Great Depression. And while worker productivity has not risen so sharply or wages fallen by so much during the current decade as during the 1920s, this means that there are similarities in the development of the American economy in the decade before the Great Depression and the decade we exist in now.
A few claims by Lilly: During 1994-2000 inflation-adjusted income for middle-income families rose by 14%, while during 2000-2006, the last year for which data is available, inflation-adjusted income for middle-income families fell by 2%. Another interesting figure is that in 2006, the top ten percent of American households accounted for 49.32% of all household income in 2006. This is the highest figure ever. In 1928, right before the Wall Street crash of 1929, the top ten percent of American households earned 49.28% of all household income. In 1996 they accounted for 43% of all household income in the United States, and in 1976 they earned 33% of all household income. If Lilly is even remotely right, the richest people in America have indeed become proportionally richer than other Americans, while the middle-income Americans have become poorer during the Bush years, although they became significantly richer during the Clinton years. (You are right that Lilly does not discuss the Clinton-era IT bubble at all.)
My point is that it is not correct to claim that Lilly compares today's situation with the state of the American economy when the 1930s depression was well underway.
Ann
