10.2 TRUMPS 10K: ROOT CAUSES OF ECONOMIC FAILURE

JAZZMAN CHRONICLES. DISSEMINATE FREELY.

“We have spent the better part of a year locked in a tedious and unenlightening debate over health care while the jobless rate has steadily surged. It’s now at 10.2 percent. Families struggling with job losses, home foreclosures and personal bankruptcies are falling out of the middle class like fruit through the bottom of a rotten basket.”

Bob Herbert, Columnist

On the same day a government report revealed that the official unemployment rate unexpectedly topped ten percent the Dow Jones Industrial Average held its ground above the symbolic 10,000 mark. Since March the Dow has surged over 3,500 points while the unemployment rate has witnessed a steady rise to the highest figure in a quarter century.

The positive correlation between the Dow and unemployment is powerful evidence that the creative minds of Wall Street do not believe corporate profits are dependent on a thriving American working class. Indeed, since their mindless manipulations of the marketplace nearly triggered a total meltdown and a global depression, they have assumed an attitude of unabated arrogance. Their perception of events appears to be that they played it to their advantage. They won. They parlayed their collective failure into a multi trillion-dollar gift from the government that they used to line the pockets of their executives while further consolidating wealth and successfully fighting back congressional attempts to reassert regulation of the marketplace.

The disconnect could not be more clear. Wall Street has all but recovered from the catastrophe they created but the people on the streets of commerce are suffering more than ever. The irony could not be more biting for despite the blame-seeking pontifications of right wing media, conservative politicians and global free trade economists, the American people hold little responsibility for the circumstances that very nearly brought the entire system crashing down into the pit of depression.

The people were guilty of no more than buying in to the American dream, a dream our leaders assured us was not only safe, right and proper but our patriotic duty. Within hours of the terrorist attack that would lead to two ill-conceived wars and perpetual deficit spending, then president George W. Bush asked us for only one thing: Whip out the credit card and go shopping. From that day to the meltdown, the president never tired of preaching from the highest pulpit in the land the virtues of home ownership and the kingpins of Wall Street stood behind him with their easy money and cheered him on.

No, the people are only marginally to blame for believing our leaders and for trusting our economic representatives and forgetting what our parents and grandparents (who still remembered the Great Depression) so often warned us: If it sounds too good to be true it probably is.

No, the lion’s share of blame for a near economic implosion belongs to the economic theorists and their political collaborators in both major parties for perpetuating the myth of self-regulating markets.

From a scientific perspective, I do not mind that they were allowed to play out their experiment to its conclusion but not to abide by the overwhelming evidence of the result transforms economics into a black art in which results are conjured rather than earned.

They were responsible for convincing our political leaders (with campaign contributions as well as arguments) that we could create a thriving and functioning economy based on the smoke and mirrors of financial ingenuity or what the elder Bush once called “voodoo economics.” They were wrong. They were so wrong it nearly destroyed the world as we know it. They were dead wrong. Unfortunately, they have not had to face the consequences of their misdeeds.

Having brought us to the brink of total collapse, they are now in a full-throttle mode of denial. It is as if they want us to believe that what happened was simply a convergence of random events. Having convinced us to give them the money they required to keep the ship afloat, they want us to believe it could never happen again. Having re-established their profit margins, they don’t want us to look at the books. From the Federal Reserve to the housing market, they are fighting back regulation on every front and it appears they are winning.

Tragically, by fighting their battle on this front, we are prevented from looking past regulatory failures to the other core causes of economic distress. Indeed, if we had adequate regulation in place we might have avoided this particular crisis (or at least its critical status) but we would still be facing the consequences of job exportation, rising personal debt and declining wages.

Tragically, beyond regulation, we have not even begun to address the systemic fault lines of our evolving economic system. They include the decline of labor unions, a failure of technological innovation to provide a replacement for America’s disappearing industrial base, and the elephant in the room: trade policy.

One is tempted to say that our current president has fallen into the trap of old school thinking, a trap that has ensnared Democrats as well as Republicans in modern history. When he explains that unemployment is simply a lagging indicator, it suggests that he does not believe that any specific measures are required to remedy the problem. When he suggests that education is the key to America’s future economic well being, he is inviting the worst kind of blame seeking. Education is not responsible for our current crisis and improved education even in the sciences will not in itself translate to future prosperity.

It is obvious by now to every man and woman on the front lines of our working force that the primary reason for our decline is that our jobs are being shipped overseas. The workers that remain are compelled to accept lower and lower wages with less and less benefits on the grounds that we must compete with workers in India, China, Malaysia and other nations that exploit labor. The trajectory of this phenomenon is a downward spiral for American workers without relief.

We cannot restore balance through protectionist policies (or policies that protect our workers) because other nations – most notably China – finance our debt. Were we to impose tariffs or place limits on foreign made goods in order to make American industry more competitive, the Chinese would not need to call in our debt. They would simply have to stop buying American treasury bonds to force us to submission.

What then can be done for America’s beleaguered working class?

It is (as a great playwright once said) a delicate balance. The Chinese certainly hold the obvious aces in our trade relationship but they do not hold them all. We should begin reversing the trend by convincing our trade partners, including China, that our current policies are killing the golden goose. The foundation of the global economy is and will continue to be a vibrant consumer society. If we proceed as we are we will decimate the consumer base. The Europeans may be less susceptible to the erosion that is gutting America’s middle class because they are less inhibited in using government labor protections but what is happening here has infected them and the process will continue to an inevitable disaster.

China may be the least of our problems in this regard. In their embrace of green technologies they have shown an ability to recognize inevitable trends and adjust accordingly. Other nations like India will be more difficult to persuade but then they do not hold the leverage that China does.

America itself must show the way by ending the anti-labor practices that have become more and more commonplace since the days of Ronald Reagan. It is imperative that congress passes the Employee Free Choice Act to establish the principle of majority rule essential to the right to organize. If we expect other nations to fall in line we must become a leader in the international rights of labor movement rather than a laggard.

It will be a long and difficult struggle transforming the free trade mandate into a fair trade mandate but the sooner we begin the better. Unfortunately, with the unemployment rate already unconscionably high and trending higher, we do not have time to wait for trade policy to change and we do not have time to wait for the lagging indicator theory to fail.

Corporations have responded to the current crisis as corporations do: by cutting costs – primarily labor costs. When they come back on line they do not hire back American workers or open American plants. Wherever possible they will use cheap labor in nations that notoriously exploit workers.

Here lies the crux of the matter. Since corporations will not respond to the needs of labor, the public sector must fill the void. When the economic stimulus package was announced there was much talk of public works projects: rebuilding bridges, repairing highways and roads, building an interstate mass transit system, replacing an outdated electrical grid, improving water systems, recycling systems, rebuilding levies and dams, on and on. Unfortunately, these projects were largely neglected as our state and local governments simply used the money to fulfill their obligations and pay their debts.

We need public works on a permanent basis and the corporations who do business in America must foot the bill. It is the only means by which anything resembling full employment can be achieved. It is a goal worthy of any democracy and one that eventually will be considered a fundamental right. It is achievable now because of the unemployment crisis. Our crumbling infrastructure, the building blocks of our economy, has never been in greater need and it is the only way to turn this ship around.

The great virtue of public works is that it can be employed to all our pressing needs, including the most critical need of all: the poisoning of our atmosphere and resultant global climate change.

With all the elements in place to move on this important issue, it is unfortunate that our government has become so dysfunctional. With public awareness reaching a critical mass and the party that is supposed to represent the working people in control of congress and the executive branch, acting on public works should be a cakewalk. In a normal, functioning democracy it would be but in our democracy we allow a single turncoat senator the power to override a decisive majority by virtue of the archaic rules of a distinctly anti-democratic body. We further allow virtually unlimited corporate funding to buy our electoral process.

We cannot allow this circumstance to continue. At a time when critical action is needed on so many fronts we are stymied by ridiculous rules of order. It is time to end them. By whatever means we must find a way to restore the power of government.

A democracy is a terrible thing to waste.

Jazz.

JACK RANDOM IS THE AUTHOR OF THE JAZZMAN CHRONICLES (CROW DOG PRESS) AND GHOST DANCE INSURRECTION (DRY BONES PRESS). A COLUMNIST FOR THE NATIONAL FREE PRESS, WORLD EDITION, HIS CHRONICLES HAVE BEEN POSTED ON NUMEROUS CITES OF THE WORLDWIDE WEB. SEE WWW.JAZZMANCHRONICLES.BLOGSPOT.COM.