At this point the entire advanced world is doing exactly what basic macroeconomics says it shouldn’t be doing: slashing spending in the face of high unemployment, slow growth, and a liquidity trap. It’s a global 1937. And if the result is another recession, the witch-doctors will just demand more bleeding.Robert Reich
Not only are 25 million unemployed or underemployed, but American companies continue to cut wages and benefits. The median wage is still dropping, adjusted for inflation. High unemployment has given employers extra bargaining leverage to wring out wage concessions.
Meanwhile, the American economy has all but stopped growing -- in large part because consumers (whose spending is 70 percent of GDP) are also workers whose jobs and wages are under assault.
This situation gives the lie to libertarian orthodoxy. Labor is the true Atlas; those who hold jobs create jobs.
The capitalists are not "job creators," to use the term favored by so many current propagandists. They are, at best, "necessary opportunists." The Wall Street finance capitalists aren't even that: They are unnecessary
The true Atlas has not shrugged; he has been raped. Repeatedly. He lies exhausted on the ground, blood seeping out of his anus.
That ugly image illustrates what the Wall Streeters have done to us.
Social Security and Medicare did not create our current problems; neither did unions, regulations, environmental laws, welfare -- nor even the deficit. Alas, the vampiric wealthy are using the crisis they
created to force false ideas into our collective cranium.
The truth of the matter is simple: Our economy has stalled because of low demand.
Our economy has stalled because so many people are out of work. Our economy has stalled because the capitalists keep insisting that American wages must descend to Third World levels.
When wages go down, people buy only what they need
, not what they want
. Economic growth depends on working class people buying a whole bunch of crap they don't really need.
When jobs and wages decrease, demand for those inessential consumer goods decreases. This leads to more layoffs and more pressure to cut wages even further. It's an ever-downward spiral. Don't kid yourself: The magic of the market will not cause the spiral to head upwards again; anyone who makes that case has been paid to peddle myths. As long as Mr. Average Worker has less money in his wallet to spend, the economy is going to go down, down, down
These facts are obvious. These facts used to be universally understood.
Alas, the professions of economics and journalism have been debauched. Economists understand that they can get ahead only if they tell the wealthy what they want to hear, not if they tell the truth.
Imagine the ultimate vampire novel -- a dystopian story in which the vampires have taken over the world.
The vampires are haughty and condescending; they consider themselves inherently superior.
And then they run out of donors.
Because there's no more blood, the vampires start to die -- victims of their own success.
As things fall apart, the vampires fund their own sanguinary versions of Fox News and the CATO Institute. They mount a propaganda campaign designed to convince both themselves and the donors that the problem was caused by the donors, not by the vampires. The propaganda campaign is so effective that even the donors start to believe it.
But to what end? Who is kidding whom? Even the best propaganda campaign can't change the reality of the situation.
Vampire survival depends on keeping the donor supply healthy and growing. Paradoxically, the vampires will die if they gorge themselves on too much blood.
Here's where the metaphor breaks down. It's not so easy to take blood out of a vampire and inject it into the veins of the donors. (In some versions of the vampire mythos, that process would only create more vampires.)
But it is
easy to take money from the ueber-wealthy -- from the vampiric affluent who have socked away most of the world's wealth into offshore bank accounts. This can be done via taxes.
We must raise taxes on the wealthy to what they were under Reagan, and then we must use that money to create jobs. Not any other purpose: Jobs, jobs, jobs
. Not welfare, not unemployment benefits, not tax cuts. Jobs, jobs, jobs.
Once the workers are working again, once they are spending
again, the capitalists -- the necessary opportunists -- can come up with creative new ways to convince working people to buy goods and services that they want but do not need. And things will be back to normal.