US unemployment is now 9.7%. The US media is warning us that high US unemployment will continue into the forseeable future, and many Americans will never work again. This is said with the same finality of Thatcher’s TINA (There is no alternative). This is so because the US plutocrats have decided it is so.
There will be high unemployment because the US private sector is not creating jobs. It’s not in part because banks no longer lend much to the private sector. They cut back on that 20-30 years. There’s much more money to be made in financialization of the economy, in speculative investment, derivatives and other financial wizardry and in debt-driven real estate booms and bubbles.
Bottom line is that new US jobs will be created by the US government or not at all.
This reality is now hamstrung by the fiscal austerity madness that haunts Washington, and threatens to throw the US into its Third Depression. The first was in 1873. The second was in 1929. Both parties and the G-20 world economies are pushing Hooverism. Even Roosevelt showed up in 1932 pushing Hooverism. His campaign was to out-Hoover the Hooverites – he ran on a platform of balancing the budget. You don’t balance budgets in a Depression, or even try. That’s one lesson we thought we learned in the Depression.
The austerity measures shoved down the throats of both Greece and Latvia, poster children for neoliberal structural adjustment, haven’t worked. All of the tax increases on the middle and lower classes and the devastating government budget cuts have nuked the economies of Greece and Latvia, deepening their Depressions. The more they cut, paradoxically, the more it fucks the economy, hence the more the deficit grows. The more you cut the deficit, the more it grows. Think about that one a bit, neoliberals. The same thing is happening in Ireland.
What’s all this silliness based on? The Hooverian notion that tax increases on middle and lower classes and devastating budget cuts in a Depression will “restore confidence to the private sector and investors.” Problem is that this neoliberal crap didn’t work in 1929, and it won’t work now. It won’t work, ever, because it doesn’t.
One wonders why the plutocrats are pushing something that they must know, if they are sane at all, doesn’t work. In Latvia, they were up front and honest about it. The economy plunged by 20%, and wages crashed. The plutocrats were open that the gutting of Latvian wages was the purpose of the austerity crap. Apparently a similar agenda is going on elsewhere.
What else?
In neoliberalism, if you bankrupt the state, the state has no money to spend in the economy. You need to rely on the private sector for everything. Less government spending in the economy means more cash for the private sector.
Another agenda is privatization. Canadian states are discussing selling off 10% of what they own to private interests. This is probably another agenda for austerity.
No war but the class war.
It’s not only the only motto for the Left (fuck Cultural Marxism), but it’s always the only motto for the rich, the upper middle class and the capitalists. If the motto is good enough for them, why is it not good enough for you, oh workers?
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Done in your usual funky style Mr Lindsay. You are to political debate what Funkadelic and George Clinton are to funk. As you point out the ruling class knows all about class warfare: it’s the Left at times that doesn’t get it.
Neoliberalism goes through periodic episodes of “creative destruction”. Recessions are great times for the big capitalists. That is when they eat the smaller capitalists for breakfast, lunch and tea. Austerity works because it disciplines and cows the working class, and if successful leads to a lowering of wages, counteracting the tendency of the rate of profit to fall. Which means bigger profits for the bigger fish in the capitalist pond.
As consumption declines, many small and medium businesses go under, and are bought up at bargain prices by bigger businesses – the process of monopolisation, or capitalist cannibalism. Privatisation also liberates public assets, often at bargain prices (British Council housing – under Thatcher’s Right to Buy). This can free up money for consumption…
In the UK, at unemployment rose under Margaret Thatcher to 3 million, worker militancy declined and the last bastion of radicalism in the National Union of Mineworkers was destroyed, along with the mining industry. Labour practices were deregulated, the trade union was abolished, secondary picketing was made illegal, closed shop short time working and casual working practices became more widespread. Fortunes were made as inner cities became unsafe and schools and hospitals were not repaired.
I am not enough of an economist to how recessions are supposed to “bottom out” under austerity measures. Take Chile under Pinochet in the 1970s as the Chicago School test case, regularly touted as the economic miracle of neoliberalism. After a million Chileans had deserted the country, how exactly did the economy recover and, more importantly, whom did the recovery benefit? And how many suffered from malnutrition?