(iPoster) The Endemic Recession: The Unique Nature of the American Economic Downturn

• In Event: Poster Sessions: Frontiers in International Political Economy & Advanced Industrial Societies
  In Poster Session: Poster Session: Advanced Industrial Societies

Abstract

In the United States, people near but not at the top of the income distribution are forced to also take on problems once reserved for people lower on the income distribution, specifically consumer debt and cost burden. It’s a remix of Jacob Hacker’s classic term of risk contagion: by consistently pitching up what it costs to have a lifestyle that is consistent with those within your income bracket, the costs of lifestyle creep are now leading to vicious cycles where all but the absolutely incredibly wealthy can get by without taking on debt, spreading out the number of people both in absolute numbers and also in terms of the parts of the economy that this type of risk affects.

Put another way, distinct features of the American political economy make it so that precarity is not strictly ameliorated with wealth acquisition. This spread of both an affective and material reality for people across the income distribution has political costs in terms of general features of American politics but also in terms of the broader macroeconomy. While economic downturns are largely understood in terms of the swift, cataclysmic busts that lead to massive job loss and asset deflation, these two features are largely centered among the working class globally. While this is also true in the United States, these things also have distinct impacts on those at the right tail of the income distribution who also, in turn, have a distinct impact on the precursors that lead to these downturns in the first place.

This paper will argue that the the distinct features of the American political economy, in creating political features that privilege the lived realities of the wealthiest among us, is unique in the ways it leverages risk not just at the consumer level, but at the level of the entire macroeconomy, making the United States economy uniquely at risk of downturn, even in comparison to other advanced economies. The recessionary features of the economy that cause the most pain are moving from episodic crises that demand state response and are instead becoming stable, permanent features. I use the term endemic recession to describe this situation. This work echoes work by Dara Strolovitch on the construction of what is considered a crisis but extends it by arguing that this type of myopia around economic response is getting worse over time as inequality gets worse. This is bad in specific, pernicious ways for working class communities and communities of color but also has economy-wide implications because the levers used in other countries to gauge economic health are uniquely hamstrung in the American context, removing many of the safeguards for protection against asset and/or speculative bubbles (the AI bubble being just the most recent of examples).

Author

• Christian Hosam, Wellesley College