After the crash; the pauperisation of middle-class America

9 posts / 0 new

Hi all. Have been away for a while. I just came across this article in the Guardian and thought I would share it here. Wake up and smell the coffee, folks...

However, the bad news is what prevails notwithstanding the political and media hype about "recovery". The most widely cited unemployment rate remains at 9% for workers without jobs but looking. If instead, we use the more indicative U-6 unemployment statistic of the US labour department's bureau of labour statistics, then the rate is 15.9%. The latter rate counts also those who want full-time but can only find part-time work and those who want work but have given up looking. One in six members of the US labour force brings home little or no money, burdening family and friends, using up savings, cutting back on spending, etc.

At the same time, the housing market remains deeply depressed as 1.5-2m home foreclosures are scheduled for 2011, separating more millions from their homes. After a short upturn, housing prices nationally have resumed their fall: one of those feared "double dips" downward is thus already under way in the economically vital housing market.

The combination of high unemployment and high home foreclosures assures a deeply depressed economy. The mass of US citizens cannot work more hours – the US already is No 1 in the world in the average number of hours of paid labour done per year per worker. The mass of US citizens cannot borrow much more because of debt levels already teetering on the edge of unsustainability for most consumers. Real wages are going nowhere because of high unemployment enabling employers everywhere to refuse significant wage increases. Job-related benefits (pensions, medical insurance, holidays, etc) are being pared back.

meljomur's picture
meljomur
Joined:
Jul. 31, 2007 4:01 pm

Comments

World class economist Michael Hudson (an advisor to governments) has noted the majority of the U.S.population is entering "debt peonage". Proposed austerity programs are a part of that.

The nation's wealth/resources are being sucked into finance.

"The role of a financial cheerleader is to confuse the economic issues, above all by depicting running into debt as “debt leverage” to accelerate “wealth creation.” Looking backward, we now can see that this was really debt creation. When Mr. Greenspan spoke about wealth, he didn’t mean the kind that Adam Smith referred to in The Wealth of Nations – tangible means of production. Mr. Greenspan meant balance-sheet financial claims on this wealth in the form of stocks, bonds and property claims. Adam Smith said that to count these monetary forms of wealth alongside the actual land and capital of Britain would be double counting. For Greenspan, the liabilities side of the economy’s balance sheet – what its producers owed to financial and property owners – became the only kind of wealth he really cared about."

"This inside-out perspective was largely responsible for de-industrializing, downsizing and outsourcing the U.S. economy. Mr. Greenspan’s idea of “free markets” was simply to deregulate them – covertly, to be sure, by appointing non-regulators to the government’s key regulatory positions. This resulted in asset stripping, which created some conspicuous billionaires (corporate raiders, re-christened as “shareholder activists” these days) and hence won the praise of Mr. Greenspan for ostensibly playing a positive role in “wealth creation.”

What exactly do you mean by “modern debt peonage”?

Hudson: This is what happens when wage earners are obliged to turn over all their income above basic subsistence needs to the FIRE sector – mainly for debt service but also to pay for compulsory insurance and, most recently, the tax burden that finance and property have shifted off themselves.

"The bottom line is that the economic vocabulary was turned into double-think." - Hudson

Full article here: http://www.counterpunch.org/whitney09082008.html

The same "double think" economists who led us to the collapse have been hired by Obama to fix it...using "double think".

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

I guess I am not too surprised that you are the only one to comment poly. If you read many of the comments from the article, one of most common questions many of the Brits ask about, is 'why are Americans so apathetic?'

I blame the media. Which is utter crap in the US. But even beyond that, why are 95% of Americans allowing themselves to be impoverished by the system? I can't help but think there is a prevelant feeling amongst most people that the bad stuff is happening to someone else, somewhere else.

This isn't about Democrats or Republicans. I guess I too realize they really are not that much different. This is about the corporatocracy which is destroying the American way of life for the vast majority of its citizens.

I do have small faith in the actions of some community groups. I look at Vermont and how they are attempting to implement a nationalized health care system. I hope they will be successful.

But overall I do despair for America. To borrow from our more conservative brethren on the board. I wonder how distraught the Founding Fathers would be to see this nation now being tyrannized on a massive scale by multi-national corporations which basically are interchangeable from the US government.

meljomur's picture
meljomur
Joined:
Jul. 31, 2007 4:01 pm

Well, if austerity is imposed to pay for the bankster/financier bailouts...Americans will get a taste of what a collapse really looks like. This is nothing. Maybe they'll wake up.

It drove the Greek/Spain unemployment rates above 20%. The Baltic States above 30%.

Auserity is causing their economies to shrink even as public debt explodes from a further reduction in economic activity and tax revenues.

The future of this country doesn't bode well.

QUOTE: "The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

Retired Monk - "Ideology is a disease"

.

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

There have been a few times where I've heard people repeat the sort of axiom that a large segment of the population would have to be enduring quite extreme hardship before a revolutionary movement were to arise. (btw Meljomur, is that proper English? I think americans have lost the art of the subjunctive sense) The exception would be the American Revolution, where the "middle class" (of those times, so to speak) decided that it did not have to tolerate any restraints on its persuit of prosperity. The French and the Russian revolution, whetever the critical role the "middle class" played in them, depended upon the uprising of "the people". As did the fascist revolution of Germany. So I'm not sure what type of direction things might go if americans did decide to "get active", so to speak. Sorry to be tongue in cheek about such an unpleasant issue.

But I have to say the the next step to follow the pauperization of the middle class is the criminalization of the already impoverished. News lately is that state prisons in California are being forced to release about 300,000 inmates, due to the fact that the state cannot provide them with adequate facilities and medical care. The counties have the space, but not the budget. Is it so hard to imagine that after a few news stories of the Willie Horton variety that the voters might be convinced that private prisons can offer the required services to the state at bargain prices?

I don't mean to come across as cynical or pessimistic, I'm just trying to point out that there's a lot of work to be done laying the groundwork for a long-overdue progressive campaign. It seems that the few among us who are interested in making this happen are still in the formative stages of deciding what the campaign is going to look like, then will come the question of how to convince enough people to go along with it. The "new economy" thread by polycarp is promising. It seems like a pragmatic rather than ideological type of perspective. It challenges the fundamental structure of our system in ways that can be adapted to meet people's immediate needs. But it doesn't give up on "old school" types of solutions such as "medicare for all" and food stamps.

What is Germany doing right?

nimblecivet's picture
nimblecivet
Joined:
Jul. 31, 2007 4:01 pm
Quote nimblecivet:

There have been a few times where I've heard people repeat the sort of axiom that a large segment of the population would have to be enduring quite extreme hardship before a revolutionary movement were to arise.

I think that's probably true. At which point the plutocrats may decide to suppress rebellion with New Deal Part II, or the US will become a police state and people will be slaughtered (in greater numbers and in more direct ways than they are at present). The latter is clearly unacceptable, but I don't really want the former. I don't want the US Empire to be propped up for another 50 years, or for more Americans to be able to attain the so-called American Dream. The toll that takes on the rest of the world is immense. American-centrists (which constitutes most Americans?) seem to forget that there are other people and living things on this planet.

An end to imperialism *and* the prevention of (classical) totalitarianism. Can it be done? How?

Quote nimblecivit:It seems that the few among us who are interested in making this happen are still in the formative stages of deciding what the campaign is going to look like, then will come the question of how to convince enough people to go along with it.

I'm starting to think the convincing can only be done by example. Living simply and as self-sufficiently as possible.

Garrett78's picture
Garrett78
Joined:
Sep. 3, 2010 9:20 am

I don't think that a New Deal II would necessarilly involve propping up U.S. imperialism. I understand where that's coming from, and it would be naive to think that a domestic agenda can be practically divorced economically from its situatedness within the global economy. On the other hand, as these issues won't be solved overnight so to speak, a New Deal II could be part of the solution rather than a perpetuation of the problem.

Anyway, living by example is key I agree. I remember my family talking about the Great Depression and how sharing food was critical. They had potlucks regularly. That way each person could buy one type of item at a better price and the group would benefit from the value by sharing, each person contributing an item that was necessary for a complete diet. In my opinion, the food-stamp program is the most successful and beneficial program. Food stamp benefits should be expanded and there should be no lifetime limit. So what I'm hoping to see is a reform of the financial industry such that the housing market is reformed according to progressive political principles. At that point it will be possible to address the need for continuing, expanding, and reforming housing assistance without propping up the financial system as it currently is being operated and maintained for the benefit of the plutocrats. I think there could be expanded benefits for those willing to undergo drug testing. As long as that doesn't include marijuana (which by the way as an aside I haven't smoked in several months, much to my detriment).

nimblecivet's picture
nimblecivet
Joined:
Jul. 31, 2007 4:01 pm

I guess the one unforeseen advantage to Americans becoming progressively poorer, is that as a nation they cannot wreck the environment so terribly.

Personally, I think it is already too late for America to change course. It already is on the a fairly rapid decline. I just hope for most people's sake it isn't as violent and ugly as has been predicted by many. What is gun ownership in the USA again?

I really wish my family wasn't there.

meljomur's picture
meljomur
Joined:
Jul. 31, 2007 4:01 pm

We could list the positives. Illegal immigration ceases to be a problem because the issue is sneaking into Canada or Mexico for healthcare.

We save on college tuition and ed loans because nobody gains by higher ed when there are only field worker jobs.

Geriatric medicine costs more, so if people die earlier we save huge amounts on end of life care. Work them till they drop and save.

Literature will have the inspiration of Dickens to spark new narratives of the American Drama. No longer will the hero have to succeed. It is all Bleak House. No Great Expectations left.

DRC's picture
DRC
Joined:
Jul. 31, 2007 4:01 pm

Currently Chatting

Earth's credit card has been maxed out!

If Earth's resources were a credit card, we have already maxed out our entire allocation for this year. The think thank Global Footprint Network announced that August 19th was “Earth Overshoot Day,” meaning that all the resources we use after that day exceed what our planet can produce in a single year.

Powered by Pressflow, an open source content management system