Since mid-2008, the crisis has deprived unprecedented millions of their jobs, income, homes, and wealth, with the total value of the losses amounting to thousands of billions of dollars. A desperate population demanded explanations and solutions; they wanted changes that would x this economic disaster. So we dumped the Republicans and hoped for an economic revival from Obama, who talked a very good game during his campaign.
Once in office, however, Obama followed Bush's sorry example, and for political reasons (future campaign contributions and the hope of avoiding massive, and very well funded attack ads on TV) his administration continued pouring trillions of dollars into the nance industry (thereby guaranteeing the debts of, and at the same time investing in, the nation's biggest banks and insurance companies). These steps were supposed to "kick-start the economy" and "get the economy moving again" and "x the credit markets," so as to allow us, we all hoped, to resume the happy, high-consumption pleasures of the economy before the crisis hit in 2008.
The problem is, this strategy was and is absurd. Why? Because if such a resumption were to succeed (far from certain in the first place), it could only return the economy to the same web of problems that produced the crisis in the first place.
Workers in the US are now holding back on expenditures as they hunker down for what they correctly sense will be a long period of unemployment, lost pensions, decimated retirement accounts, and insecure jobs and incomes. And, as they spend less, economic recovery is thereby undermined. Obama and his minions futilely hope that consumers will somehow resume borrowing and spending, but that cannot happen. Why not? Because consumers are tapped out -- that's why they defaulted on all those loans that set off the crisis. And even if they were by some miracle made capable of resuming their borrowing and spending -- aliens dropping billions of dollars from UFOs? -- they would (given their systematically lowered wages) sooner or later have to default once again, and we would once again be back to where we are now.
In short, an exhausted, anxious, and over-indebted working class cannot sustain the following:
1) a corporate sector facing permanently reduced consumer spending, struggling with its own excessive debts and unable to get credit as in the past,
2) a government now adding trillions to its national debt which will require more taxes from, and/or less provision of government services to, that same working class.
We are, therefore, faced with a crisis that requires basic structural change
The simple fact is that no supercial, back-to-business-as-usual program of throwing trillions at big banks, big insurers, and large auto companies -- to boost the stock market, get everyone happy and spending again -- will work. Short-term upswings just like this were repeatedly followed by crashes during the FDR years in the 1930s. Painfully, people then learned just how deep and serious that depression was. Will we need to rerun that tragic scenario and pay its heavy price in extended suffering again, today? Most likely we will, since people seldom learn from the lessons of the past.
We can no longer postpone the traumatic impact of the end of rising wages in the '70s by still more work and more indebtedness. Those options have been exhausted. Workers can't work more. They physically can't handle it. Families are stressed beyond words, largely because women abandoned the households where they had been holding the emotional life of the family together. And families literally cannot carry any more indebtedness. Debt limits have been reached. This is implosion time.
So why again did real wages stop rising in America but not in Europe?
Five reasons, in somewhat more detail this time.
First came the 1970s technological revolution, associated mostly with the computer. Humans were increasingly replaced by computer-aided machines--30 to 40 people tracking inventory in a supermarket were replaced by a scanning system and one person watching a computer. This substitution happened everywhere, in every almost every industry and service, and the number of jobs was thereby greatly reduced.
Secondly, jobs were cut by the worldwide revolution in telecommunications and the Internet, which made it ever more feasible to move production to low-wage countries, outside of the US. There, US-based corporations increasingly chose to take advantage of cheaper workers, less stringent environmental regulations, lower taxes, and officials who were much more open to taking a bribe.
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