30 March 2009

It's the Distribution, Stupid

Two items in the news yesterday left me wondering, again, whether schizophrenia is the norm today.

The first item said that IBM was axing yet 5,000 more Americans in favor of, according to the surmise of the article, Indians. The second item was a report that one economist saw a light at the end of the tunnel, as it were. He predicted the recession would end sooner than other economists and pundits have been predicting.

What none of the positive spin predictors, pundits, and prognosticators has delivered is a reason to believe them, since they offer no explanation of how "insufficient demand" will be replaced with "sufficient demand" in the days to come. Until that happens, reasonable people will reach conclusions based on direct experience. They may not know exactly what "insufficient demand" means to an economist, but they recognize when they, and their neighbors, can't afford to spend today what they spent yesterday or last week or last year.

Here is some of the direct experience that matters:

- High value jobs continue to be sent to places like India, Russia, and China. The cheaper wages are due partly to repressive governments and partly to currency manipulation. "Insufficient demand" worsens everytime one middle class wage earner is traded for greater corporate profit.

- Income and wealth skewing to the few from the many continues unabated, if not accelerating. "Insufficient demand" worsens as income concentration grows.

- Government continues to protect large capital sinks, in particular the so-called Financial Services sector of the economy. Said sector is approaching the proportion of national income (GDP) which it held up to and during the Great Depression. Would the last insurance company leaving Hartford turn out the lights? "Insufficient demand" grows as these too big to fail corporate leviathans amass yet more billions from the pockets of taxpayers.

- All that job creation touted by Bush (remember him?) was overwhelmingly in low wage, low skill jobs (I refuse to call them occupations much less careers). "Insufficient demand" grows each day a job is created with earnings below yesterday's median income.

- It is accepted wisdom among the policy wonks, sociologists, political scientists, and historians that modern (post agrarian, at least) societies can be described by a two by two matrix, or two sides of two coins. I'll discuss in the coin metaphor.

We have the Bad Coin: on one side is fascism, wherein the State and the Capitalists control the society for their mutual benefit, not that of the polity at large. (For those who consider the f* word one which ought not to be spoken, I direct you to any history book [well, one written before 1980]. Therein you will read how Mussolini coined the word, and what he defined it to mean.) On the other side we find a society where the many are poor, and the few are rich. There is no middle class, as we came to know it in the USofA during the 1950's and 1960's.

We have the Good Coin: on one side is Democracy (not a Republic; be clear here, the USofA is not, by its Constitution, a Democracy) where the State is not deferential to Capitalists. On the other side we find a society where there are few poor and few rich, mostly in this middle class, where productivity accrues to earned income and capitalists earn just enough to dissuade them from selling out and working for wages like the rest of society. This was the fantasy of (the original) Adam Smith, capital as a non-dominant input to production; the English economy when he wrote was not the idyllic free market of which we have been told. It certainly does not exist in contemporary USofA.

What we face is not a drift, but headlong rush, thanks to Newt Gingrich, Phil Gramm, and two generations of Bush to a small pouch of Bad Coin. It is a small pouch because so few will have coins. What is clear to those not being paid to shill for Big Business is that as income continues to concentrate, the economy continues to suffer from increasing "insufficient demand". That's economist jargon for the simple fact that most folks simply have no income to buy stuff. Mr. Obama uses the term, as do his surrogates, but neither he nor the surrogates sees the disconnect between bailing out the Financial Services corporations, and the need to regenerate a middle class that is the dominant middle. This recession (no matter what occurs, it will not be called a Depression) will continue unabated until such time as income/wealth distribution returns to a level akin to the 1970's. There is no other way to end it. Mr. Obama's head and heart are in the right place, but until he can stomp on the right wing wingnuts, the headlong rush will continue.

Big Media is complicit here, since it has, for at least 3 decades, been Big Media rather than Local Media. Big Media is about cheap goods sold dear just like any capitalist, rather than being the Fourth Estate, that wide ranging antagonist of power, whether that of the State or Capital. And, of course, there is the inherent conflict of interest; it would be declasse' for Big Media to bother other corporations, friends don't pester friends.

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