Five Reasons Why Crisis Persists [View all]

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http://truth-out.org/news/item/10805-five-reasons-why-crisis-persists


This crisis is not going away. Officially begun late in 2007, nearly five years later, no end is in sight. Trillions in government-funded bailouts and interventions failed to do the trick. The private sector's hyped resilience disappeared. "Recoveries" proved weak, uneven and short-lived. The president who rode the crisis into power risks being ridden out by its persistence.

It is difficult to imagine and impossible to count all the costs of this persistence. Consider, just for examples, (1) damaged physical and mental health of the unemployed, (2) rising anxiety about increasingly insecure jobs and benefits, (3) strained and destroyed relationships, (4) interrupted or aborted educations and (5) lost skills and job connections. Consider, too, the gross inefficiencies (tens of millions of unemployed alongside trillions in unused raw materials, tools, equipment, offices, factories and stores; millions of empty homes alongside millions of people rendered homeless by the crisis).

Five major reasons shape this crisis's persistence. First is the exhausted purchasing power of the US working class. Capitalist employers raised profits by replacing workers with computers since the 1970s and by relocating production jobs to lower wages abroad. Later, they likewise exported white-collar and service jobs. The previous century's history of steadily rising real wages ended and thereby threatened the rising consumption which had created ever more jobs in capitalism's virtuous cycle. Starting in the 1970s, that cycle turned and became vicious instead. Real wages stopped rising as jobs dried up. For a while, rising workers' debts papered over the vicious cycle. But eventually, the combination of rising debts and stagnating wages exhausted the working class' purchasing power. Today, workers' real wages continue to stagnate or fall and they cannot sustain more debt. Since big business, the banks, the Fed, Republicans and Democrats have done nothing to deal with the basic real wages problem in the US economy, the crisis persists.

Second, large nonfinancial corporations, in their competitive rush to low-wage investments in China and elsewhere, have created yet again excessive capacity to produce creating more pressure on already-depressed US workers' real wages. They cannot sell all their automobiles, electronics, and so on. So, they reduce hiring - which only worsens their selling problems. They accumulate hoards of cash for which they cannot find profitably productive outlets. They blame politicians - yet, make sure those politicians say and do nothing about the wage problem or the irrationality and social irresponsibility of those corporation's self-defeating capacity-building investments. So, the crisis persists.