There is an interesting new book out by Don Peck simply called PINCHED. Peck is a features editor at THE ATLANTIC.
I read business and economics books omnivorously but I found this one to be unusually strong. There was little in the book that was new to me but I have never seen all of these issues covered and done so well all in a slim volume of 188 pages.
Peck’s main thesis is that the Great Recession that hit us late in 2008 is no ordinary downturn. Unlike past V-shaped downturns that were rough but short in tenure, this one lingers on. Some 80% of us still believe the economy is in recession even though the Federal Reserve and other august economic sources tell us that we are well on our way to solid though admittedly sluggish growth.
The two things overhanging the economy that Peck keys on are nagging unemployment levels listed at 9% but likely much higher when underemployment is put into the mix plus a real estate market that in some states has yet to touch bottom.
Both of these issues have smashed the American dream in many ways. Virtually all of us have always looked forward to a future in which our children live better or at least the same as we have lived. With unemployment and underemployment among recent college grads at high levels plus many burdened with huge college loans, many seem in a hole with little chance of fast escape. Owing a home has become a fantasy to some 20-somethings despite record low interest rates. No one will give them a mortgage and, a smart banker should not do so.
Peck also raises an issue that has been covered a great deal in the major media in recent weeks but he was on to it months ago when this book went to press. There are pockets of America where there are labor shortages. North and South Dakota, Nebraska and Wyoming top the list. But with 24% of people underwater on their mortgages (the mortgage is higher than the value of the home), many people are stuck in their communities with no hope of moving unless they declare bankruptcy (we touched on this a bit in the Media Realism series, “Mid-Sized Malaise” in October, 2010). Also, many people would not find the cold weather in these states appealing and culturally an unemployed New Yorker might not find people with a similar sense of life in North Dakota.
He touches on the income inequality that everyone is harping on these days but surprisingly, and to his credit, does not offer a simplistic “soak the rich” solution to the issue. He instead is honest and recommends “strong budget discipline and a reduction in the growth of Medicare costs, and somewhat higher taxes for most Americans.” Peck also asks for increased spending on infrastructure and innovation. Whether you agree with this prescription or not, he does not take the unrealistic route of saying that we can easily grow our way out of it or tax our way out of it.
This book is a cool headed assessment of the miserable mess that we are in. If a politician talked this way, he or she would get virtually no traction.
PINCHED will make you think. I highly recommend it.
If you would like to contact Don Cole directly, you may reach him at firstname.lastname@example.org