Bernardo Carpio writes:
This is my analysis of what’s happening: US multinational corporations are now generating 50% of their revenues from overseas. At the same time, 70% of their domestic sales are made to the top 30% of the US population. I would hypothesize that the bulk of this 30%, say 20%, draw a large percentage of their income from the international sales of US firms.
That means that around 70+% of the revenue of the big corporations are obtained either overseas or from 20% of US citizens who derive their income primarily from overseas sales. As China, India, Brazil, etc. continue to develop rapidly and as the US stagnates the percentage of US corporate revenues generated abroad will grow even further in the next few years.
A drastic divergence has thus evolved between the interests of the top 20% or so of the US population that directly benefit from globalization and the rest of the US population. The economic collapse of the bottom 80% is of no consequence to the elite. They can thrive even if the bottom 80% becomes completely destitute. Observe how US corporations have recently been making record breaking profits despite the US’s 20%+ (in reality) unemployment rate.
Since a thriving domestic market seems to be of no importance to the health of the big corporations, the elite will among other things push for further outsourcing (to increase profits drawn from foreign revenues), cuts in welfare benefits, lower taxes, and other measures detrimental to the bottom 80% but favorable to their own material interest (and their globalization efforts).
So long as people at the bottom do not rebel, I believe that some form of economic equilibrium can be attained even with such a scenario. As pundits have been saying, the US has evolved into a banana republic with extreme economic inequality, fabulous wealth amidst widespread poverty, and a weak domestic manufacturing sector.
Robert, how do you think Americans can escape from this trap?
The era of Fordism has come and gone. For the longest time now, the capitalists have not pretended that a strong domestic market is a good thing to have. It’s been all class war, all the time for 30 years now. Primarily, only the top 5% have seen their income share rise in recent years. That’s people making over $110,000/year. So the people making over $110,000 year have been making out like bandits and wildly increasing their slice of the pie while everyone below that is either seeing their share stay the same or seeing it decrease.
As a vehicle for income redistribution, the US neoliberalism of the past 30 years has only benefited those making over $110,000/yr, who have been taking trainloads of cash from those below, mostly those making below $55,000/yr.
Between $55,000-$110,000, their share has been flat.
As a domestic market would seem to be key to the success of any business, I would expect Fordism to be more popular. But it’s been dead for decades now. I assume that corporations simply do not care about the domestic market at all. It doesn’t make sense, but show me any evidence that they do care.
Bernardo lays out very well why the reasons for this might be. Indeed, the top 20% of the income bracket seems to be driving most US sales. That is people making over $56,000/yr. I understand that they are spending the majority of US money in sales – possibly up to 60% or more. If your market is satisfied by selling to the upper middle class and people overseas, who cares about the bottom 80% – those of us making less than $56,000/yr.?
If you watch TV or read any major magazine, you can see this with your eyes. It seems like 80% of the ads in Rolling Stone and Time and on CNN are selling high end products. These ads are aimed only at those making over $56,000/yr. The rest of us don’t matter.
So the domestic market is defined as those making over $56,000/yr. That’s where all their sales are coming from. As long as this elite group is doing great, those making less than $56,000/yr can buzz off and be impoverished at will. As long as massive money transfer occurs from those making below $56,000/yr to those making over $110,000/yr, it will be in the interest of this top group to keep the game going.
Indeed this is something like a 3rd World country. A 3rd World Country is defined by an insanely wealthy elite, a tiny middle class and masses of teeming poor. There is typically not much of an internal market, as the poor have no money to buy anything, and the middle class is anemic. The rich often make their money via internal monopolies or export of goods, often agricultural products or minerals. Certainly they do not seem to rely much on an internal market.
The politics of any 3rd World is all class war, all the time. Whatever meager amount of money the bottom 80% have, the elite is constantly trying to take every last dollar. It’s amazing how this is sustained, because at some point you would assume that there is nothing more to squeeze out of the poor.
The 3rd World model also exemplifies Marx’s dictum that under capitalism, the rich get richer, and the poor get poorer. This is exactly what happens, by design, in 3rd World countries. It is also what has been happening, also by design, in the US under 30 years of neoliberalism.
Outside of class consciousness, it is simply not possible that any remedies will take place, and things will just get worse.
However, we have a seriously confused and angry electorate that is engaging in “wave” elections. 2008 swept in Democrats, and there was talk of the Republican Party becoming extinct. Then in 2010 we had the biggest Republican sweep in 80 years or so. None of it makes sense. It’s just an angry electorate that has no clue about anything, much less the differences between the parties, randomly flying from one party to the next.
The most common question asked in a rural White area 35 miles from me, “What’s the difference between rightwing and leftwing?” No one seems to have a clue. This an area that has been voting strongly Republican for at least the last 20 years and probably much longer.
People are working class and don’t have much money. Everyone is a “conservative” by default, and if you aren’t, you are derided as an outsider or a weirdo. But no one seems to understand what “conservative” means. Knowledge of economics is essentially zero. Although working class, this group has less than zero working class consciousness.
I don’t foresee much hope except that with these wave elections and extremely volatile electorate, we might be able to get some progressive folks in with one of these crazy waves.
There does seem to be a mass base of very angry populism in the US these days. They are aroused against what they call elites, the “banksters,” and increasingly the rich and the corporations. But this populism is very confused, lashing out like a machine gun. Much of it is diffused into anti-Semitism as the rich and the banks are seen as synonyms for Jews. A lot of the rest is wasted in quixotic charges against the Federal Reserve (“End the Fed”).
I monitor comments on the Net a lot, especially Yahoo comments on their news stories. These comments are very rightwing, but lately I have seen more angry populism against the rich and corporations than I ever have in my lifetime.