The Class Struggle
Apr 12th, 2006 at 5:43 pm by Susie
Billmon explains just why people think the economy is bad:
It [the class struggle] could even make a come back if something isn’t done to bring the trends shown above back into better balance. I have no quarrel with corporate profits, particularly if I get to keep some of them, but a situation in which all the benefits of productivity growth flow to capital, and none to labor, not only defies the standard economic textbooks, but probably isn’t politically sustainable for long – at least, not without some help from guys like General Pinochet.
Why is this happening? New technologies, skill shortages, outsourcing, downsizing, the decline and fall of the union movement, changing social norms and expectations – or as John Snow might put it, learning to “trust the marketplace.” Any of the above, all of the above.
It’s sobering to think that what we’ve seen so far may be just the beginning of our journey back to the good old days of the Robber Barons. The economic effects of integrating China and India into the global labor market – what Laura Tyson describes as the mother of all supply-side shocks – could take decades to play out. And by the time they’re done, there’s likely to be a host of other low-wage countries lined up outside the factory gates. What Marx called the reserve army of the unemployed has never looked so huge.
He says this is why the government has been so encouraging of the housing bubble:
But bubbles by their nature are self-limiting, and this one may not last much longer, as even some supply siders are beginning to admit. When it deflates, the corporate conservatives are going to have a job on their hands staving off the kind of populist revolt that would make the rest of the world begin to doubt America’s commitment to the global economic order America has created. And if that happens . . . well, even John Snow – the $112 million dollar man – may start to have his doubts about trusting the marketplace.
The Bushies don’t care. They had Greenspan lower interest to get them reelected in 2004. They could care less about what comes after.
The average working stiff isn’t enjoying this economy because of the disparity between those at top and them. It’s a proven psychological fact that if you have a house worth 1 million dollars in a neighborhood where right down the street are a bunch of 10 million dollar homes, it does nothing for your level of satisfaction. The trick of the American situation is that society holds a carrot out, making everyone who earns an average wage truly believe deep down that if they work hard, they too can someday be rich. The trick is being exposed as the scam that it is, as people start realizing being able to afford the monthly payments doesn’t mean you actually have any wealth.