The Economy: Think the Government Will Fix It By Phillip Reynes
The recession was long underway when the stock market crashed last September—it had been going on for nine months already as all who follow such things know. Yes September the month when the government nationalized Fannie Mae and Freddie Mac followed shortly by the investment house Merrill Lynch was forcibly merged into Bank America; the next day Lehman Brothers crashed and people like me cheered. This was quickly followed by the nationalization of AIG—the worlds largest insurance company—which unlike Lehman Brothers was considered “to big to fail.” Credit froze and orders for goods as well as investments halted, trade slowed dramatically, and unemployment started to soared. Yes the recession was here and fast looking like it might rival the great depression of the 1930's.
So far in this recession the US economy has lost more then 6.7 million jobs. Do the math and you'll see that comes to 11,600 jobs a day for nineteen months. As an anarchist my heart sang with joy for I know well that if it all comes down we will have a chance at building something better. I read with no small glee, as the Economic Policy Institute (EPI) stated that the whole made in the labor market was actually even bigger. They pointed out that to keep up with population growth the US economy needs to add about 127,000 jabs a month just to stay even. So over the nineteen months of this economic catastrophe that comes to an astounding 2.4 million more jobs. Now add that to the 6.7 million lost and you find we have 9.1 million fewer jobs then before this mess started. The EPI predicts that by the end of next year more then one in three workers (thats more then 50 million people) will have experienced either a spell of unemployment or underemployment!
This is an incredible opportunity for anarchist in America to make real headway in showing just how badly capitalism exploits the working man. One of the easiest ways is to just tell the truth and not let politicians on either the left or the right get away with spinning this into something other then what it is namely greed and exploitation of the worker. What follows here are some simple and verifiable facts so that you can call politicians and the uninformed on there dogma.
This economy and its collapse is founded upon events that took place starting as far back as Reagan—the star of Bed Time for Bonzo and oh ya a president. Reagan and his advisers accorded the finance industry a special status in our economy. It was Reagan who started the moves to make the movement of capital across state boundaries easier, he started the deregulation of finance and the removal of regulations separating commercial and investment banking. These are well known and indisputable facts.
Wall Street took full advantage of having a president who represented them over the people. From 1973 to 1985 the financial sector of the US economy never earned more then 16% of domestic corporate profits. In 1986 it reached 19% and by 1990 it had reached a high of 30%. In the last decade it reached 41%!! The fanatical industry is an industry that takes care of its own and you can see this in how they have paid themselves. From 1948 to 1982 pay for financial executives compared to other industries executives ranged between 99% and 108%. In the years from 1983 to 2007 it shot up and was 181% in 2007 making a financial executives earnings 81% higher then an equivalent executive in another industry.
Wealth brings power and as the financial sector became ever more wealthy they acquired more political power. We all hear the statements of people like Reagen “Whats good for Wall Street is good for America” (he didn't coin the phrase but he did say it on several occasions) and sadly the people on the street believed this crap. Bill Clinton was no better, as he was as much a corporate whore as Reagan in many ways. It was Lawrence Summers (Clinton's treasury secretary that said:”Financial markets don't just oil the wheels of economic growth; they are the wheels.”
Obama may in some small ways be better then Bush was but he is non the less as much a corporate whore as is bush or Reagan or Clinton. Since taking office Obama has given enormous sums of money—4.7 trillion and rising—in the form of bailouts of one sort or another to financial institutions. Yet only 800 billion to programs targeting the recession proper, i.e., putting people to work, green energy and the like.
The idea is flawed and goes like this. If the government provides money to banks banks will lend to consumers. The problem with this idea is that in the economy of the average worker incomes are flat and in many cases declining. This means that conditions can't improve. Thus, even though bank lending is down the profits and stock prices of many banks are back to where they were before the crash! Yes not only are many banks who received billions making as big a profit as ever they are paying huge bonuses to boot. We need to point this out as loudly and as often as we can.
Basically Obama has given out to much money with to few conditions to to many financial institutions on to favorable terms. He has given this out to the very people who did this to the economy, to the very ones who cased the crash. This has dampened the peoples trust and shaken the every day mans confidence and we need to shout this from the rooftops at every opportunity. The fact is bailouts not only did not loosen credit it never could have loosened credit for the simple reason that wages are flat or declining and citizens are in deep debt with little in the way of home equity to barrow upon.
Better yet, the failure of the bank bailout has made it harder for Obama to do a second stimulus package targeting jobs. Yes the 800 billion helped slow the free-fall but there is not much chance of there being another stimulus because Republicans are calling for a reduction in deficit spending. The fact is the economy can only continue to shrink in the foreseeable future because consumption can't go up. Wages as I said earlier are falling and households have lost six trillion in equity in the housing bubble and so there is nothing to spend.
State and local governments are going to have to cut budgets. Workers who have long been holding good jobs will be let go or laid off and may also default on mortgages. This is compounded by the fact that almost 24% of homeowners (where talking 16 million homes here) have home debt that in fact exceeds the value of there home—this is called being upside down. It is forecast that if property values continue to drop then by next year 48% of homes will be upside down.
Add to this lovely mix the deficit hawks. They want tax increases and entitlement cuts and if they get there way they will make life hell on earth for the working man who will not get help and be left high and dry while Wall Street gets even fatter. Could you ask for a better recruiting tool for Anarchists? It does not matter that durring the great depression these same fools got there way in 1937-38 and the result was more unemployment and greater hardship. Then we had a president with balls but there in no Roosevelt on the political horizon today. So the only way further unemployment rises can be stemmed is through more direct stimulus to the working class but the political right will fight it tooth and nail. They will say what about the deficit? What about the free markets? Keep government out of the job sector is what they will cry. The question of course is what about the working man but this is a question that they have not asked because fundamentally they do not care. They fail to see that the choice now is between running up the debt creating work or running up the debt because revenue in all areas of government collapses. The political right can't see this because there dogma trumps reality in all cases. But there is another path anarchy. We believe in community. We believe in the worker. We will be there as it all falls down.