This is why voters are getting angrier and angrier. But they are venting all of their rage in a rightwing direction. That’s not going to help the matter. Republicans never help grow jobs. They could care less about jobs. Who cares about jobs?
Jobs means labor. Labor is the enemy of capital. Capital and labor battle it out to divide up the spoils of profits. The objective of capital is to give as little of the profits to labor as possible. That means hiring the fewest workers that they can possibly get away with, paying them the lowest wages they can get away with, giving them the worst possible benefits that they an get away with.
So the fewer workers the better, all other things being equal. Capital is always trying to eliminate jobs via mechanization, overwork, forced overtime, etc. Any way that capital can figure out to eliminate a job, they will do it. Why then should we expect capital to give two flying fucks about about how many people are working? Who cares!
As long as profits are going great, capital doesn’t care if the unemployment rate is 3% or 10%. In fact, given the choice, they would prefer it to be 10%. The higher the unemployment rate, the more pressure is put on labor. When there is an army of unemployed workers outside salivating for your job, it’s hard to get bold enough to ask for a raise or go on strike. The boss will just replace you with someone more compliant.
When the unemployment rate goes up, the stock market tends to rise. When unemployment starts dropping below a certain point, the stock market starts dropping and you see all sorts of weird articles in the business press talking about how unemployment has gotten too low. They start demanding that the Fed raise interest rates to drive up unemployment. A few weeks later, Alan Greenspan does just that. The corporate media, from “left” to “right,” raises a gigantic cheer.
The recessions are getting worse because Project Middle Class Death is working quite well.
This project formerly had Alan Greenspan at its helm. Greenspan was in charge of a ruling class project initiated in the 1970’s that was intended to reduce the wages and wealth of the US middle class by 1/3. This project had the total support of both political parties, “left” Democrats and “right” Republicans, along with the entire “left to right” spectrum of the corporate media. When it comes to class politics in the US, true liberals are rare to nonexistent.
Even the Democratic Party is sworn to neoclassical economics that only benefits the top 20%. Within that top 20% elite, there are “liberals” and there are “conservatives.” Wink wink. They sort of pretend to fight each other, but when it comes to the real deal of class politics, there’s not a whole lot of difference.
Wages have been flat since 1980 or possibly as far back as 1973. The gap between the rich and upper middle class has skyrocketed. Bottom line is that business is bad, and we are in a recession due to lack of consumer demand. Neoliberal voodoo doodoo economic hokus pokus won’t get us out of this mess.
Giving businesses and the rich more tax breaks won’t create more customers in the stores. As if businesses are not hiring more workers due to their tax burden! This is why Obama’s latest neoliberal stimulus proposal is so flawed. The centerpiece is yet more supply side tax cuts and tax breaks for US business. I can assure you that that won’t create a single job.
US businesses are sitting on a mountain of cash. They don’t even know what to do with it. Profits are going like gangbusters. If I run a business and have no customers, I have a problem. If at that same business, you give me a tax break, I now have more money. But so what? I still have no customers. Why should I hire even one more worker as long as we don’t have any more business? I run a business, not a government make-work project.
All of the supply-side neoliberal gimmickry on Earth will not stimulate demand and create more customers. As the customer base declines, the risk of deflation unfolds.
Since Republicans have nothing to offer the economy but neoclassical and neoliberal supply side tax cuts and tax breaks for the rich and business along with huge cuts in government spending, this cannot possibly help the economy. Not in any possible world can it help the economy. Not in the best of all possible Milton Friedman Fantasy Worlds can it help any possible economy.
This is where Keynesianism steps in. The only actor that can stimulate demand in such a case is government. The credit markets are dried up, and the banks have not been loaning much to business for 30 years now. There’s no money in it. The money is in doubling down at the Casino in the Sky at the latest Derivatives Magic Show table. If the banks aren’t putting money into the private sector, and business doesn’t want to borrow anyway (no customers, remember?), once again, Keynesianism tells us, it’s time for Government Man to come to the rescue.
Neoliberalism a la Milton Friedman has never been proven to work anywhere. In fact, everywhere it has been tried, it has failed. Its theories about monopolies have been proven to be incorrect.
In Latin America, it failed for last 20-30 years, such that most Latin Americans want to chuck it. Even establishment hacks at Time Magazine admit it failed in Latin America. It was tried in nearly pure form in Chile at the start of the Pinochet regime, and it so badly ruined the economy that Pinochet threw all of his Chicago boys out and went back to socialism of a sort.
In Russia, it allowed a bunch of international Jews to strip the country, its assets and its wealth blind, creating a huge number of millionaires and killing millions of Russians by reducing life expectancy. A good analysis of neoliberalism shows that it reliably ruins a country’s education and results in large declines in many health figures such as infant mortality and life expectancy. In other words, neoliberalism kills.
But neoliberalism isn’t designed to fix economies, save lives or send folks to school. The neoliberal project is one of income transfer. It involves a massive income transfer from the bottom 80% to the top 20%, especially to the top 5%. No wonder it’s so popular with “left” and “right” elites around the globe. Just what the doctor ordered!
Neoliberalism also regularly blows up economies. That’s a feature, not a bug. It’s supposed to do that. It’s called boom and bust.