When the super-rich and their media mouthpieces tell us the economy is doing well, it’s usually easy for ordinary working people to see through the lies. When corporate pundits talk about the “stability of financial markets,” it only translates to more profits for greedy big stockholders, not real gains for working people.
For the last 15 years or so, with the exception of a few hiccups, the overpaid CEOs and their hired politicians have been telling us the economy is doing well. From their point of view, it has. From the point of view of working people and the poor, it hasn’t. Since the 1990s, the U.S. has lost millions of union industrial jobs, with good pay and benefits, due to automation and free trade agreements.
The decline in good jobs has been combined with budget cuts to social programs at the national, state, and local levels. Welfare as we knew it came to an end. Bankruptcy laws were made tougher for working people, while big corporations got government bailouts. The new jobs created have been low-paid service-sector jobs. Young people, college degree or not, face a cycle of debt. Now, home foreclosures are reaching record highs.
Yet while this is happening in the real world, all is well in the magical land of corporate corruption and deceit. Oil companies make record profits. New markets emerge on the internet. An orgy of speculation in stocks and housing has kept the market motoring along, but now things are changing. The pundits are raising alarm bells about the economy, and working-class people and progressive activists need to take notice.
The Times, They are A-Changin’
The reckoning in housing is tipping the economy into a downturn. We will probably look back and see the end of 2007 as the start of a recession. The real question is how deep this recession will be. Some evidence indicates it could be the most serious since the sharp recession of the mid 1970s and early 1980s.
Many of us have been using our homes like credit cards and our credit cards like cash. Now, there will be $200-300 billion in defaulted home loans. Rent prices will increase as homeowners move into the rental market. Besides making our lives difficult, it means that housing speculation will decline, affecting the banking system that has propped up the immense debt.
Combined with this, the New Year was rung in with oil reaching $100 per barrel for the first time ever. Food and beer prices are rising as well, making for an unhappy consumer hangover from the Holidays. New reports indicate job growth is drying up. Mass layoffs have already begun in certain sectors, especially construction.
We shouldn’t forget as well that U.S. consumption helps prop up the world export economy. Ordinary people here coming to grips with our bleak future of debt could have a knock-on effect on world (over)production, and it could result in the shutting down of industrial (over)capacity.
Big money and big banks around the world had placed their hopes on the Chinese market. Now, even the institutions of Chinese finance are involved in ridiculous amounts of overspeculation. The tremendous amount of real economic growth in China over the past period could potentially become overshadowed by shady financial deals that have no basis in real production or real profits.
If the profits of the big companies begin to take a serious hit (as they are expecting), they will take it out on our wages and social programs. The big business pundits talk about this in the coded language of “modernization” and “reform.” When they are unable to squeeze more property taxes out of us, there will be more budget cuts. Schools, libraries, and other services will be put on the chopping block.
As profits go down, they will try to keep big stockholders happy by “cutting labor costs” and “increasing productivity.” For us, that means layoffs, low wages, no benefits, and more unreasonable levels of responsibilities on the job. As if the situation wasn’t bad enough already.
The contradictions in the U.S. economy and the world financial markets run deep, meaning that this downturn could be very sharp. For activists and socialists, this doesn’t just mean we need to get scared, it means we need to get organized.
There will be an urgent necessity to fight back against foreclosures, layoffs, and cutbacks. Passively hoping for politicians, union leaders, or non-profits to alleviate the situation for us won’t be enough. Networks of activists with real ties to the working class, independent of Democratic Party control, need to be established.
Commentary by leftists on economic issues won’t be enough to face the tasks of the day. We need to rebuild rank-and-file organizations in the unions. We need to forcefully argue for community campaigns focused on mass direct action to defend our living standards. And we need to connect the class issues to the need for a split from the Democrats and self-organization of working people as a step towards building a mass socialist movement.