Failure by Design
The Story behind America's Broken Economy
Publication Year: 2011
In Failure by Design, the Economic Policy Institute's Josh Bivens takes a step back from the acclaimed State of Working America series, building on its wealth of data to relate a compelling narrative of the U.S. economy's struggle to emerge from the Great Recession of 2008. Bivens explains the causes and impact on working Americans of the most catastrophic economic policy failure since the 1920s.
As outlined clearly here, economic growth since the late 1970s has been slow and inequitably distributed, largely as a result of poor policy choices. These choices only got worse in the 2000s, leading to an anemic economic expansion. What growth we did see in the economy was fueled by staggering increases in private-sector debt and a housing bubble that artificially inflated wealth by trillions of dollars. As had been predicted, the bursting of the housing bubble had disastrous consequences for the broader economy, spurring a financial crisis and a rise in joblessness that dwarfed those resulting from any recession since the Great Depression. The fallout from the Great Recession makes it near certain that there will be yet another lost decade of income growth for typical families, whose incomes had not been boosted by the previous decade's sluggish and localized economic expansion.
In its broad narrative of how the economy has failed to deliver for most Americans over much of the past three decades, Failure by Design also offers compelling graphical evidence on jobs, incomes, wages, and other measures of economic well-being most relevant to low- and middle-income workers. Josh Bivens tracks these trends carefully, giving a lesson in economic history that is readable yet rigorous in its analysis. Intended as both a stand-alone volume and a companion to the new State of Working America website that presents all of the data underlying this cogent analysis, Failure by Design will become required reading as a road map to the economic problems that confront working Americans.
Published by: Cornell University Press
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Title Page, Copyright
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Table of Contents
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List of Figures
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It surprises me that even with the slimmest of books one accumulates a mountain of debts, but so it goes. Although almost all of the larger insights in this book are channeled directly from conversations with other EPI researchers and writers, both past and present, I hesitate to list them because I might forget some. Among current EPI research staff, Kathryn Edwards, Kai Filion, Elise Gould, Andrew Green, Larry ...
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For more than 20 years The State of Working America has provided an unvarnished look at the living standards of low- and middle-income Americans. Along the way, it has established a reputation as the gold standard in tracking trends in income, wages, hours, jobs, and inequality, leading the Financial Times to call it “the most comprehen-sive independent analysis of the U.S. labor market.” This effort has reflected two core ...
The Great RecessionThe damage done and the rot revealed
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T he unemployment rate in the United States stood at 9.6% in August 2010, well over double the rate that prevailed in the same month in 2007, the year before the Great Recession hit. August 2010 also marked the fifth anniversary of Hurricane Katrina making landfall on the Louisiana coast. Drawing parallels between Katrina and the Great Recession may sound like the beginning of an argument for compla-cency in the face of the worst economic crisis since the Great Depression—after all, ...
The Great Recession’s TriggerHousing bubble leads to jobs crisis
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D ecember 2007 marked the official end of the economic expansion that began in November 2001. The official end of the Great Recession occurred in June 2009, making it the longest recession to hit the U.S. economy since before World War II. This chapter details the damage done since the recession began and the failure of the While an increase in housing foreclosures provided the spark, it was the poor economic choices and mismanagement of the previous decade that provided the tinder for the ...
The Policy Responseto the Great RecessionWhat was done and did it work?
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While the official beginning of the Great Recession is the first month of 2008, the first defensive actions traditionally taken to fight recessions—cuts in the short-term interest rate controlled by the Federal Reserve—were already well underway by then. As the first ripples of the housing bubble’s burst were felt in the financial sector, the Federal Reserve (exquisitely sensitive to the needs of banks and financial institu-The rationale behind interest rate cuts is that cheaper debt will spur families to buy ...
The Great Recession EndedMore Than a Year Ago—so, “Mission Accomplished”?
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T he official recovery from the Great Recession began in the middle of 2009. So, is the work of policy makers done?The Recovery Act stopped the downward spiral, but unless further action is taken to spur job growth, then the unemployment rate is likely to hover between 9.5% and 10% for the next year, making it two straight years at this elevated level. This extended pe-riod of high unemployment will continue to inflict great damage and cause insecurity ...
The Cracked FoundationRevealed by theGreat Recession
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J ust as Hurricane Katrina revealed underlying weaknesses in the physical, economic, and social infrastructure of New Orleans, the Great Recession has revealed similar In the quarter-century following World War II, economic growth in the United States was rapid and equitably distributed. To be sure, social and economic inequalities were rife, but the trajectory for the typical American family was steady economic prog-ress. Beginning in the late 1970s, this trajectory flattened as wage growth slowed to ...
Where to from Here?
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T he pressures placed on America’s working families by economic policies that pro-duced slow-and-unequal growth ended up not just stressing them, but also break-In August 2010, the unemployment rate stood at 9.6%, essentially the same level it had been a year before. Most forecasts (private and public) for 2011 project that it will be at essentially the same level a year from now. The economic challenges over the next few years are daunting; just returning to the 2007 status quo will take several ...
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The Economic Policy Institute, a nonprofit Washington D.C. think-tank, was created in 1986 to broaden the discussion about economic policy to include the interests of low- and middle-income workers. Today, with global competition expanding, wage inequality rising, and the methods and nature of work changing in fundamental ways, it is as crucial as ever that people who work for a living have a voice in the economic ...
About the Author
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JOSH BIVENS joined the Economic Policy Institute in 2002. He is the author of Everybody Wins Except for Most of Us: What Economics Teaches About Globaliza-tion and has published in both academic and popular venues, including USA Today, The Guardian, Challenge, and Worth. He is a frequent commentator on economic is-sues for a variety of media outlets, including the NewsHour on PBS, the Diane Rehm ...
Page Count: 102
Publication Year: 2011
Series Title: An Economic Policy Institute Book
Series Editor Byline: John Smith, Will Wordsworth