The United States government is in the process of spending what will amount to an unprecedented several trillion dollars of taxpayer money to prevent the present Great Recession from transforming into the first Great Depression of the 21st Century.
Most of these trillions will be invested in bailing out the financial oligarchy that has brought the US model of capitalism to the brink of economic insolvency as a consequence of its extreme free market laissez-faire policies.
We’re referring to the Wall Street gamblers, the bankers who took insane risks in quest of profits, the greedy houses of high finance and, above all, the utterly irresponsible White House, Congress, and government departments that presided over their destructive practices.
Lesser trillions will be devoted to “stimulating”our stagnant, sinking economy with a massive infusion of government deficit financing — a remedy largely based on the theories of the late English economist John Maynard Keynes that were followed to an extent by President Franklin D. Roosevelt during the Great Depression. President Barack Obama has won approval of a $787 billion spending plan to revive the faltering economy (to be discussed in Part II).
While it is entirely possible American capitalism may hit bottom and stay there for a decade, as occurred in the economic meltdown of 1930s, the probability is that our country will emerge from this recession in two to five years — atrociously in debt, and weakened internationally, but back in business.
Our question — and the subject of this two-part article — is, what then? What will happen after the deep recession impoverishes tens of millions of American working families, and many millions more suffer the loss of their material assets and their houses, the value of their pensions, savings, and paychecks?
So far it is estimated that American workers have lost 30% of their net worth in the last 20 months, and it’s going to get worse as more workers lose their jobs and millions more families are ejected from their homes. Retirement assets have been reduced by at least 20%. The value of all U.S. housing will fall by a third during the recession — a drop of $4.5 trillion from a high of $13 trillion in 2006. It is going to take a long time, if ever, for these values to be recovered by the individuals affected.
As of Feb. 6, 11.6 million American workers are unemployed, or 7.6% of the workforce — but that’s only part of the story. Some 7.8 million workers in need of full-time jobs can only locate part time work. Further, some 2.1 million jobless workers are not included in the Labor Department figures. They are defined as “discouraged” workers who may have been looking for jobs for a year or so but simply gave up four or more weeks before the February survey. All told there are 21.5 millions workers who are unemployed, underemployed or jobless by “discouraged” — 14% of the labor force.
Nationally, patronage at free food banks increased 30% last year, and this too is increasing. In a front page article Feb. 20 reporting from a food bank in Morristown, N.J., the New York Times described the newer recipients as “the next layer of people — a rapidly expanding roster of child care workers, nurse’s aides, real estate agents and secretaries facing a financial crisis for the first time.”
The pain inflicted by the crisis upon the working people of our country cannot yet be calculated because it is increasing by the day and no end is in sight. So far there have been no significant domestic protests against millions of housing foreclosures, increasing unemployment and other derivatives of the capitalist recession, unlike militant worker and student actions in scores of countries around the world.
Internationally, much of the blame for the economic meltdown is sensibly directed at the American model of reckless neoliberal capitalism and its greedy practitioners and complicit government overseers. Within the US, the mass media, Washington and the business community seem not to direct a word of criticism toward the economic system itself, which is like being mauled by an obviously vicious dog but not blaming the nearby owner for letting it off the leash.
When the economy finally recovers, the American people — as President Obama picturesquely noted in his inaugural speech — will pick themselves up and dust themselves off, and return to the good old days of pre-recession America. But they were also days of the ever-widening rich-poor gap; of growing poverty and decades of stagnant wages for the working class and lower middle class (productivity has grown 70% since 1980 but wages have only increased 5%); of pitifully inadequate social services for working people; and of preposterously large government investments in militarism and wars.
This could change. Candidate Obama, in response to the electoral mood of the American people, repeatedly promised to promote “change” when elected, though far too vaguely for the White House to be held to account.
But it seems to us that objective conditions are ripe for progressive change in our country. Such conditions include:
• the deep recession;
• the recent electoral defeat of the right wing;
• public unease over endless wars and erosions of civil liberties;
• the mountainous national debt;
•long-delayed essential social needs;
• urgent problems such as the environmental crisis and a crumbling national infrastructure requiring major government intervention;
• a world in transition away from U.S. hegemony; and
• the erosion of America’s superpower status with the exception of its military might.
The demand for change should be raised anew, but with progressive and at least left-of-center goals.
Real progressive change does not materialize by simply going to the ballot box and voting for the candidate of the political center/center-right against the candidate of the right/far right. It’s a step in the correct direction, but other steps are needed, even if the goal is limited to reforms associated with modest social democracy, such as single payer healthcare, paid family leave, genuinely progressive taxation, affordable rental housing, and the like.
In the absence of mass left parties, such as those in most of Europe and elsewhere, the galvanizing agency for the attainment of progressive reform in the U.S. political system is based upon diverse and mass social movements, unified and activist in a national campaign demanding a specific package of programmatic reforms. No such campaign exists today, but it could tomorrow were there a will to do so.
Specifically, great pressure must be applied to the recession-era Obama Administration to go beyond the centrist Democratic agenda and to stop compromising with the right wing when it is possible to enact better legislation without them. The times call for a national government in Washington that will use its abundant persuasive power to lead the nation toward acceptance of a seriously progressive agenda and then fight to get it through Congress. President Obama promised change, big time. Hold him to it.