But I have noticed with growing interest a strange phenomenon that first appeared in the wake of the Palin announcement, kind of like the Loch Ness monster might have appeared briefly in the wake of a motorboat scooting across some Scottish pond, then submerged again, then appeared again, until finally nobody was really looking at the boat at all anymore because that re-emerging monster was so strangely familiar.

“The Palin Effect” is a familiar beast alright; it is none other than that long (we thought) debunked rhetorical 1970s chimera,

“Do working mothers damage their children?”

Can you believe that geezer has the nerve to reemerge after all this time, and what’s more, to do it in the company of a woman who admits to shooting large animals dead in Alaska and gutting them for fun?

Well believe it. It’s back. Thirty years after 1970s feminism held its funeral and catapulted Hillary Clinton into a force to be reckoned with on the political and world stage, here comes none other than Newsweek with a feature article entitled “To Work or Not,” pitched with the familiar tag:

“A new study finds that children of privileged families fare worse when the mother works outside the home. But what does the research really tell us?”

Really? A new study on the damage wrought by working moms? You mean to tell me someone is still doing these kinds of studies? Where? In a time machine? In one of the wormholes created this week when the Large Haldron SuperCollider was turned on to investigate the Big Bang? Is someone, somewhere, also burning a bra and refusing to shave her armpits? Is Gloria Steinem going to be on Oprah with Marlo Thomas again?

No, it turns out the only working moms of interest here, the ones possibly doing the most severe (possible) damage to their progeny, are the moms of privileged families, as in rich moms. Moms who are already rich, the article suggests, may be making their kids slightly fatter and less happy by working outside the home. According to a study published by University of North Carolina economist Christopher Ruhm, kids who come from low-income families with working mothers don’t seem to be nearly as disadvantaged as rich kids who come from homes in which rich mom goes off to a job.

Poor kids with working mothers actually perform at the same level on school exams, or slightly higher, than poor kids whose mothers stay at home. Rich kids, on the other hand, see a decline in their test scores under similar conditions. Rich kids with working moms also tend to weigh slightly more than rich kids with stay-at-home moms.

What conclusions are we to draw from this data?

Ruhm explains that, while no specific conclusions can or should be drawn, the data are suggestive and warrant further study and thought. Ruhm says his own wife worked while their children were small, and he doesn’t want his study to be taken as a warning that rich moms should stay out of the workplace.

“This comes down to a fundamental principle of economics: something has to give. We can’t have it all,” Ruhm says. “But I would never tell anybody what to do or not do about that. I certainly wouldn’t tell my wife.”

Right. And yet here we have this article in Newsweek strongly suggesting that poor women do their kids a favor by earning some cash for Pete’s sake, while rich moms need to understand that their desire for a career may come at the cost of little Tiffany getting a prom date (when that special time finally comes).

My own children were born on the declining cusp of the feminist movement of the 1970s, at a time when you couldn’t pick up a collection of recipes that didn’t have an article featured on the cover about the horrible dilemma faced by working mothers. Can women have it all? Should they? Does it harm the children?

Today, most women need to work. A single income is no longer sufficient to float a middle class family. The increase in the number of children in poverty is largely due to the increase in single mothers and the inadequacy of their less-than-equal wages. It takes two people working two or more jobs now to do what one guy could do back in the 50s and 60s: put food on the table. Everyone knows this. Working women have become the norm, and working mothers, while not having it easy by any bizarre stretch of the imagination, have more than proven it can be done and done well.

What interests me about the reemergence of these kinds of articles is that they are arriving concurrent with large numbers of women exiting the workforce. Back in 2000 when economists first noticed women leaving the workforce, it was assumed that with unemployment rising and jobs growing more scarce, affluent women were choosing to sit out the job hunt until their children were of school age, or even longer, because they had that choice.

That assumption was found to be false, however, by a panel of economists in a Congressional study described in a July 22, 2008, New York Times article. It turns out that women are exiting the work force for the same reasons men are: a bad economy. Women are losing their jobs through lay-offs or attrition and have been unable to find new ones. Many women are simply dropping off the charts.

Mark Twain famously noted that there are three kinds of lies: “Lies, damned lies, and statistics.” When Palin burst onto the national scene in a conservative venue with five kids in tow, a trendy suit, designer specks, a bun, and a hot body, it made a lot of people woozy. Was she a parody of a stripper librarian or the most amazing Superwoman in the History of America? Lots of tongues wagged about bringing home the bacon, frying it up in a pan, and who changes the diapers anyway? If the red phone rings at 3:00 a.m., will her hands be full of wet naps and talcum, or will she be able to put Putin in his place while applying fresh lipstick?

Weird stuff. We shouldn’t let it distract us from real economic issues, which are issues facing people today, not women. Declining wages, too few jobs, unequal pay, poor day care choices, expiring unemployment benefits, food prices that keep rising even though food stamps don’t: these are issues facing Americans, not women, and certainly not just privileged women.

It’s great to sell magazines and newspapers. That creates jobs and profit I guess.

But do we really have to return to the 70s to do it?

Yeah, right.

Neither party talked about the Federal Reserve. The “debate,” if it can be called that, is between a top tax rate of 39.5% (Obama) or 35% (McCain). On economic matters, there is considerably more agreement between the two, supposedly competing American political parties than between factions within the Communist Party of China – and the ChiComms are considerably more economically literate, too.

But ten miles down the road from the Republican Party’s Orwellian big-government love fest, Ron Paul’s Rally for the Republic drew more than 10,000 economically educated patriots, who stood and cheered at the mention of the “Austrian theory of the business cycle,” and repeatedly broke out into impromptu chants of “End the Fed!” Imagine asking John McCain what he thought of the Austrian theory – “we might as well be speaking Chinese,” said author and historian Thomas Woods.

The speakers at Ron Paul’s Rally were a little more diverse than those at the GOP’s official convention, from which Paul – a Republican congressman – was banned. There were arch-conservatives such as Howard Phillips, the founder of Constitution Party, and John McManus, president of the John Birch Society; there were “paleolibertarians” such as Lew Rockwell and the aforementioned Thomas Woods, both of the Ludwig von Mises Institute; and there were fairly mainstream Republicans, such as former New Mexico Governor Gary Johnson and a pair of former Reagan aides, who have come to believe that their party has been hijacked by a dangerous cabal known as the neocons. Oh, and there was the unpigeonholeable Jesse “The Mind” Ventura, who railed against the two-party system for giving us our national debt and also floated some questions about 9/11.

Yes, it was a bit of a motley crew assembled in St. Paul, but that’s what’s great about America: it’s not the land of the lame and home of the homogeneous but the land and home of the free and brave. The conformist conventions of the duopoly, with all of their rules and restrictions, represent an America I don’t want to visit, let alone live in. But if you want diversity, look to the Ron Paul movement: there are pro-lifers and pro-choicers. There are Christian fundamentalists and gay-rights activists. There are border hawks and free-immigration libertarians.

What the heck could unite all these people?

The answer: a sound understanding of economic reality. The Paul crowd is not agitating for an income tax of 35% or even 25% but zero percent. Why? Because they know that the power to tax is the power to destroy. And they don’t pay lip service to “strengthening the dollar” without specific proposals; they know what must be done: the Fed must go the way of Enron, for it is just as corrupt and infinitely more destructive; and gold must be restored to its proper status as monetary base.

Sure, there are “mainstream” economists who would debate these radical proposals. But at the Democratic and Republican national conventions, there was no debate. Four and a half percentage points cannot possibly distinguish a “conservative” from a “liberal” if those terms are to have any meaning. And that the banking and currency system of the U.S. is above reproach – even in light of the recent bubbles, busts, and bailouts – is a black mark against American “democracy.”

A hundred years ago, the people of America were smart enough to debate economic issues. William Jennings Bryan built an entire presidential campaign on silver coinage. The Rally for the Republic showed the American people are still smart enough to consider issues of money and banking.

While Mark Twain’s infamous line about “liars, damn liars, and statistics” is more than apt here, it’s also true that sometimes numbers tell a story more powerfully than any orator. Such is the case with a pile of numbers put together in an article in the New York Times by Princeton economist Alan Binder, who took the time to discover that, statistically speaking, during the period from 1948 through 2007, the U.S. economy grew faster under Democratic presidents than Republican presidents. (See chart below right.)

Binder reports that “data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.” He continues that that statistical difference between parties of 1.14 points, “…if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.”

In other words, what Binder is not-so-subtly suggesting is that if Americans had stayed with Democratic economic policies instead of experimenting with Republican supply-side theories, ordinary people would be a lot better off financially today: specifically, 9.33% better off. While hindsight is always 20/20, these numbers are interesting to say the least. And what’s more, they only tell half of the story.

The other half of the story, the half you may have heard much more about, is that income inequality has been steadily growing over the last 30 years, largely as a result of Republican economic policies. While the original idea was something to the effect of: more money at the top will result in more jobs and eventually more money for everyone; we know that in practice what has happened is that more money has simply floated to the top and stayed at the top. Real wages are falling, jobs are moving overseas, the middle class lifestyle that once flourished during the manufacturing era is showing signs of critical strain.

What’s worse, the trend is strengthening.

In 1947 the median family income in the U.S. was $23,400. By 2007 it had (roughly) doubled to $50,233, after hitting a pinnacle of $58,400 in 2005. During that same time period, the income of the top one tenth of one percent of all households has soared from $2 million to over $10 million. So, while the family smack in the middle of the census tables saw a doubling, more or less, of household income, the family at the very top 1/10th of 1% saw household income increase fivefold.

According to an AP article released on Labor Day, “all the data that Wall Street has seen lately seems to be pointing to a dual economy, one in which businesses are generally faring better than consumers.” The article continues, stating, “Evidence of this divergent economy keeps building — the average consumer is suffering, but business spending, particularly abroad, appears to be keeping the U.S. economy from sinking severely, even as the financial sector continues to struggle.”

In other words, yet another batch of numbers seem to show that U.S. businesses are holding up because exports and investment overseas are going well. Consumers, who have seen their jobs go overseas with all that corporate investment, are hurting. The fact that business has been able to thrive and prop up the economy while Americans wither on the vine is disturbing to say the least. That raw fact raises difficult questions about the capacity for the free market to self-regulate in ways that are not severely harmful to the U.S. populace at large. The mantra of the free market is sounding more and more hollow; and for sure it isn’t helpful at the grocery store or the pump these days.

If healthy businesses do not create healthy families, plentiful jobs, and consumers with money to spend, what interest should working Americans take in keeping business healthy? At the very least, the latest statistics indicate that issues of free trade, fair wage and labor laws, bankruptcy, and health are urgently in need of review and probably reform. The similarities to the the Depression era are striking.

The U.S. is not facing another Great Depression, or that, at least, is the consensus among experts. However, the U.S. working family is facing a painful protracted period of declining wages, increasing costs, and seeming governmental indifference.

When rhetoric, ad campaigns, and punditry grow tiresome (and do they ever), sometimes it helps to look at the numbers and ask yourself, am I voting my own interest? Am I better off than I was ten years ago? More and more Americans know the answer to that question without even having to think about it. They don’t need Alan Binder to prove it to them statistically, but it’s nice to know he can.

So, somewhere between $250,000 and $5 million is an imaginary line drawn in the economic sand that separates the middle class from the flat-out wealthy.

The million dollar question is, precisely where is that line located?

Newsweek columnist Dan Gross points out in an engaging column on the topic that an informal poll conducted by CNBC found that only 35% of the people making over $250,000 a year considered themselves rich, even though the median household income as of 2007 was only $50,233. Only the top 1.2% of U.S. households report incomes of $250,000 or better, and only 20% of all U.S. households report household incomes greater than $100,000. In some states, such as Mississippi, the median annual household income is closer to $36,000. That means in Mississippi, half of all household incomes reported are lower than that.

Statistically speaking, these figures suggest “middle class” technically ends just shy of $100,000 per year per household, with some leeway this way or that depending on the specific state. This also feels intuitively right to me, speaking as a person who has for the past five years lived right in that income ballpark. Most of the working people I know in West Michigan have an annual household income in the $40,000 to $80,000 range, and most of the people who make more than that are people that we (at the lower income level) would consider rich.

But statistics and emotions are two very different things. In some of the priciest cities in the nation, a household income of $250,000 will not buy you a home in a really nice neighborhood. That’s obscene, but we have to ask ourselves if that fact alone means that a household placed squarely in the top 1.2% of all working American households is really experiencing the kind of distress that warrants tax relief. Certainly the family that can’t buy the house they want would say yes. And yet, a family in Mississippi getting by on $20,000 each year would say, “Give us a break.”

I recall as a child assuming my family was more or less “middle class.” My father was the sole breadwinner for a family of four kids and my stay-at-home mother. We had a small house in a city neighborhood inhabited mostly by factory workers.

By the time I entered high school I’d become painfully aware of an entire income class several rungs above us; the families of attorneys, dentists, accountants, and other white collar workers. These families also considered themselves to be “middle class.” Their lifestyle was so much more upscale, their problems so seemingly high-class (from my vantage point as a teenager in hand-me-downs), that I started to refer to our family as “lower middle class” or “working class.”

The blue collar/white collar distinction became a big deal in high school and an even bigger deal in college, where my blue collar roots branded me an interloper on campus and a traitor inside my old neighborhood: the worst of both worlds. It seemed to me that the fight over ownership of the middle class label was being won by white collar workers, with blue collar families by that time widely seen as uneducated and slightly more brutish by nature.

That was 35 years ago. Now, my husband and I have three jobs between us and worry about our health and our retirement. We seem to work all the time, and we’ve already accepted that we likely will never retire. We won’t be able to afford it, even though we’ve worked for our entire lives. A single healthcare crisis could sink us in a very short time, even though we both have insurance through our jobs. (We are still paying off about $7,000 in medical debt accrued for three days in a hospital over a year ago. That was what was left after insurance, for only three days’ admission.)

Our combined income is greater than $50,000 but nowhere near $100,000, and we do not look or feel rich. We feel stressed. We feel worried. We feel tired. Most people, looking at his truck-driving job and my entry level clerical job and freelance moonlighting work, would consider us “working class” even though we are both educated. The jobs we have are the jobs we have been able to get in the area in which we live. I worked my way through college (twice), and my kids had to do that, too.

Looking at the world today, it does seem to me that 1.2% of the population has successfully co-opted the “middle class” label. What’s more, the middle class label seems to me to have been floating upward for nearly forty years now, and if it floats any higher, it will turn in on itself, and we will all be living in some absurd economic farce. Perhaps that is how we are living now, and I just tire of thinking about it.

Whatever your feelings, whatever number you personally would choose to define the folks in the middle, it’s a pretty good bet you will include yourself in the category, and that you will feel strongly that you deserve more tax breaks. That much we know for certain.

But $5 million? How many houses does McCain own?

Plenty of “stupids” both implied and explicit are being bandied about.

Serious thoughts about the economy? Not so much.

Meanwhile, the U.S. economy has deep, unprecedented problems. Very serious problems. Problems so large that I think it is no exaggeration to say that they threaten to tank the United States politically, eventually relegating us to the world status of, say, Iceland – only without any of the socialized perks like healthcare and forward thinking energy policies.

While voters worry about who is wearing a flag pin and who will or will not raise their personal income taxes, inflation is hitting record levels; levels not seen in 17 years. The inflation rate for July alone was 1.9%. If the Fed raises interest rates (one conventional way to tame inflation), then mortgage rates will rise and lending will freeze up even more than it already has, driving the already catastrophic housing sector into an even deeper downward spiral, with the attendant loss of even more jobs, and yet another increase in foreclosures.

If inflation continues at this rate, the results will be just as toxic. Already there is talk of another economic stimulus rebate package, even though the first one was horrendously expensive and barely caused a blip on the consumer purchases screen. People needed that money to pay bills.

So there are no easy answers, but what strikes me in this campaign is that few are even asking the questions. Right now, Fannie Mae and Freddie Mac stock continues to deteriorate (20% in the past week alone) and the buzz is not about whether the recently passed rescue package will be used, but when and how. Remember, the rescue was tacked onto a foreclosure relief bill that was stuck in Congress for a year while representatives argued about “moral hazard” at an individual homeowner level. Once it turned corporate, boom, that bill was pushed right through, with the caveat, “We will likely never have to use this.”

Did anyone ever believe that?

Nouriel Roubini, the economics professor who correctly predicted the subprime crash and whom a recent New York Times article calls “Dr. Doom,” expects the cost of the Fannie/Freddie bail-out to hit $1.5 trillion before it’s all over. The famously bearish Roubini is quoted as saying, “A good third of the regional banks won’t make it,” and more disturbingly, “Our biggest financiers are China, Russia and the gulf states. These are rivals, not allies.” Roubini expects the worst to come throughout most of 2009, with a gradual recovery toward the end of that year, but he also notes, ominously,

We’re in uncharted territory where standard economic theory isn’t helpful.

He isn’t the first to say so. Henry Paulson of the U.S. Treasury has said as much, and all anyone has to do is look at Ben Bernanke’s face every time he speaks to Congress to understand instantly that we are in deep and confusing trouble. The man constantly looks like he’s about to wet himself.

Anyone who reads my posts for Amateur Economists can guess without any help which direction my personal politics lean, but I want to put it to the voters that, whatever your personal beliefs and political inclinations, now is not the time to indulge in American politics as usual with the chest thumping and flag waving and name calling and Boilermaker contests. Now is a time to listen very hard to policy making statements from both sides, to examine voting records and past behavior, and more than anything to ask yourselves how you will survive the coming hard times if no one who understands them is at the helm.

Thus far, what economic “policy” we have had has been reactive and seat-of-the pants. We’ve been plugging up holes in a leaky dike with wads of chewing gum. I don’t know if we have six months to waste, but it will be at least that long before a new administration is firmly in place and probably longer before that administration is able to formulate anything resembling an active response to the oil problem, the housing problem, the credit crunch, the bank failures, the crumbling infrastructure, the loss of American industry and jobs, declining wages, the healthcare crisis, and so much more.

John McCain owns seven homes, some of them condominiums, and all of them expensive. Barack Obama really was born in the U.S., does have a birth certificate here, and owns a million dollar home (just one though) near the Chicago law school where he used to teach. Both of them wear flag pins.

There. Now can we get serious?