Economic Nightmare Shows Need for New Aim and Direction for the Economy

The U.S. labor force participation rate stood at 61.5% in November 2020, the lowest rate in 44 years. According to Investopedia:

The labor force participation rate is a measure of an economy’s active workforce. The formula for the number is the sum of all workers who are employed or actively seeking employment divided by the total noninstitutionalized, civilian working-age population.

Note that this metric includes those who are not employed, meaning that the labor force participation rate is actually lower than 61.5%.

In related news, nearly 60% of Americans withdrew or borrowed money from their IRA or 401(k) during the never-ending “COVID Pandemic.” Further, tens of millions are still unemployed and 700,000–900,000 people are still filing initial unemployment claims every week (40 weeks in a row).

In addition, Trading Economics recently reported that:

The US economy cut 140K jobs in December [2020], missing market expectations of a 71K rise. It was the first decline in employment levels since a record 20.787 million loss in April [2020].

On January 7, 2021, Challenger, Gray & Christmas, Inc. reported that:

[C]ompanies in the Entertainment/Leisure sector, which includes hotels, restaurants, amusement parks, and movie theaters, announced the highest number of cuts in 2020 with 866,046, 5,688% higher than the 14,963 announced in all of 2019.

On January 8, 2021, the Economic Policy Institute stated that:

Long-term unemployment (27 weeks and over) continues to rise, increasing by 27,000 in December [2020]. The share of the unemployed who have been unemployed at least 27 weeks is now at 37.1%.

While the official unemployment rate was 6.7% in December 2020, the real unemployment rate according to many exceeds 20%. Not surprisingly, many people plan to take on a second or third job just to stay afloat. The situation today is such that many do not even have enough to cover a $400 emergency.

Over the past 10 months, about 110,000 restaurants have permanently closed and several thousand more businesses are expected to shutter their doors forever in the coming months, with or without “stimulus” money. Car sales, it is worth noting, fell about 15% in 2020. And as for corporate bankruptcies, S&P Global Market Intelligence reported on December 15, 2020 that, “There have been 610 bankruptcies this year through Dec. 13, exceeding the number of filings seen in any year since 2012” (emphasis added).

The multi-faceted nature of the still-unfolding economic nightmare is such that millions of U.S. renters are thousands of dollars behind in rent while many are homeless and others are spending several hours in long food charity lines in many cities. On January 6, 2021, the Center on Budget and Policy Priorities stated that:

Some 29 million adults — 14 percent of all adults in the country — reported that their household sometimes or often didn’t have enough to eat in the last seven days, according to Household Pulse Survey data collected December 9–21.

The real number of people experiencing “food insecurity” is higher.

On top of all this, wages and salaries have been cut for millions of workers, as have benefits and retirement contributions. Annual salary increases have been frozen as well. More people are living paycheck to paycheck. And more than eight million Americans have sunk into poverty in under 10 months. So-called “stimulus checks” are simply too small and too infrequent to make any lasting positive changes. “Stimulus bills” seem to only further enrich the wealthy and exacerbate existing inequalities.

As if the news could not get any grimmer, a June 1, 2020 headline in the Wall Street Journal read: “CBO [Congressional Budget Office] Says Economy Could Take Nearly 10 Years to Catch Up After Coronavirus.” Ten years!

The economic nightmare that is unfolding is also a global phenomenon, meaning that there is a multiplier negative effect across the board. Poverty, inequality, debt, and unemployment have increased significantly in many countries. It is one thing for a few countries to experience severe economic decline and decay but it is something else entirely when more than 100 countries simultaneously experience significant economic deterioration. This is especially true in an increasingly interconnected world. The imperialist World Bank is already talking about (another) “lost decade of growth” for many countries, coupled with massive debt accumulation in Western and other countries. The U.S. alone has tacked on at least $5 trillion extra dollars to the nation’s debt in less than a year.

This is the tip of the iceberg. There is no shortage of depressing statistics. The economic nightmare is not going away anytime soon. There is no vaccine for the economic catastrophe gripping the world. A vaccine will not stop growing inequality, poverty, debt, and unemployment. More than a few believe that rising unemployment rates, poverty, debt, and inequality will lead to civil unrest, violent protests, and political and economic conflicts.

The pain is deep and widespread—far worse than the 1930s or 2008. The scale and damage of the current economic decline is quantitatively and qualitatively bigger than previous recessions and depressions. In many ways, there really is no such thing as “economic recovery” under capitalism. That is a loaded and misleading phrase that the short-sighted rich and their political and media representatives like to overuse. Objective developments and contradictions have given rise to an economy that largely rolls from crisis to crisis. The so-called “new normal” is deeper crisis.

The actions of the rich and their governments did not prevent the 2008 economic collapse. Nor have the steps taken by the government and the private U.S. Federal Reserve after 2008 prevented the much-deeper 2020 economic collapse just 12 years later.1 With enormous amounts of debt still accumulating at all levels, with endless digital money printing, with more stock market bubbles growing, and with no real government oversight and accountability for what is unfolding it is hard to see a future without another momentous economic collapse. Then what? More of the same failed policies and arrangements from a failed state? How long can that go on? Where does this leave people, society, and the environment? Will there be pressure to continue to believe that things will still somehow be OK?

These and other economic data point to an economic system that is obsolete, one that habitually leaves millions unemployed, insecure, and unsure of their fate and well-being. Voluminous data expose a historically-exhausted economic system that cannot unleash its full productive capacity and instead lays waste to enormous human potential while the rich get richer even more rapidly. Nothing has stopped the tendency of the rich to get richer while the poor get poorer. No major problems have been solved in capital-centered societies.

Lurching from crisis to crisis is backward, irrational, and inhumane. The necessity to fight for an alternative and build the New is sharper than ever. This cannot be done by following the ideas, views, outlook, and agenda of the rich and their cartel parties; they offer no solutions, just more disasters. The rich have not come up with anything that overcomes the deep problems documented by thousands of economists and sociologists for decades. The rich and their representatives are opposed to a self-reliant, balanced, vibrant, diverse economy that is human-centered and recognizes that humans are born to society and depend on society for their livelihood and well-being.

An economy based on the aim of maximizing profit as fast as possible for a tiny ruling elite is an economy that belongs in the past. It is a failed economy. It cannot open the path of progress to society. A new aim and direction are needed for the economy. Along with this there is a need for democratic renewal of the political process so that the will of the people can be given effect. The rich must be deprived of their ability to carve up and use a productive socialized economy for their narrow privileged interests.

  1. The 2020 economic collapse was intensified and accelerated but not caused by the “COVID Pandemic.” []
Shawgi Tell is author of the book Charter School Report Card. He can be reached at stell5@naz.edu.. Read other articles by Shawgi.