A Veblenian Analysis of the Recent American Business Cycle
Adil H Mouhammed. Journal of American Academy of Business, Cambridge. Hollywood: Sep 2010. Vol. 16, Iss. 1; pg. 36, 9 pgs
Copyright Journal of American Academy of Business Sep 2010
1. INTRODUCTION
The last recession in the American economy, which started in March 2001 and ended in November 2001, lasted eight months. That recession was followed by an economic expansion(经济扩张) lasted until December 2007, an expansion of 73 months. During the economic expansion unemployment and inflation were on the average of 5.3 and 2.83 percent, respectively, and labor productivity increased by an average of about 2.5 percent. The average weekly real wages (实际收入)increased by 0.38 of one percent, because the economy was not able to create high-paying jobs. Clearly, the increase in wages was lower than the inflation rate by about 2.45 percent. That is, the American people lost 2.45 percent of the purchasing power of their income: disguised exploitation. In addition, the number of poor people was 32.9 million in 2001 and increased to 37.3 million during the expansion. The inequality in income distribution measured by the Gini coefficient was on the average of 0.44, indicating that income inequality was higher than the inequality of 1973 when the Gini coefficient was 0.35. It is fair to conclude that the majority of the American people were squeezed very much during this business cycle, as they lost part of their income due to unemployment, inflation, and poverty. If the percentages of unemployment, inflation, and poverty are added, one can obtain at least 20 percent of what can be termed the augmented(扩大) misery index (扩大)of the American working people, an index indicating the percentage of income transferred to the wealthy people.
Various theories of the business cycle are available in the literature. The real business cycle (Kydland and Prescott 1983 and 1990, Plosser 1989, and Freeman and Kydland, 2000) argues that... [continues]
Adil H Mouhammed. Journal of American Academy of Business, Cambridge. Hollywood: Sep 2010. Vol. 16, Iss. 1; pg. 36, 9 pgs
Copyright Journal of American Academy of Business Sep 2010
1. INTRODUCTION
The last recession in the American economy, which started in March 2001 and ended in November 2001, lasted eight months. That recession was followed by an economic expansion(经济扩张) lasted until December 2007, an expansion of 73 months. During the economic expansion unemployment and inflation were on the average of 5.3 and 2.83 percent, respectively, and labor productivity increased by an average of about 2.5 percent. The average weekly real wages (实际收入)increased by 0.38 of one percent, because the economy was not able to create high-paying jobs. Clearly, the increase in wages was lower than the inflation rate by about 2.45 percent. That is, the American people lost 2.45 percent of the purchasing power of their income: disguised exploitation. In addition, the number of poor people was 32.9 million in 2001 and increased to 37.3 million during the expansion. The inequality in income distribution measured by the Gini coefficient was on the average of 0.44, indicating that income inequality was higher than the inequality of 1973 when the Gini coefficient was 0.35. It is fair to conclude that the majority of the American people were squeezed very much during this business cycle, as they lost part of their income due to unemployment, inflation, and poverty. If the percentages of unemployment, inflation, and poverty are added, one can obtain at least 20 percent of what can be termed the augmented(扩大) misery index (扩大)of the American working people, an index indicating the percentage of income transferred to the wealthy people.
Various theories of the business cycle are available in the literature. The real business cycle (Kydland and Prescott 1983 and 1990, Plosser 1989, and Freeman and Kydland, 2000) argues that... [continues]
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