Sunday, April 07, 2013


The Monthly Review is calling what we are now in stagnation. But it's stagnation with a large amount of unemployment. The U-6 rate for February was 14.3%, which strikes me as way high. That means one worker in seven is unemployed or under employed.

The above chart is from the blog of the economist Brad DeLong. It shows a severe drop in the percentage of the population in the labor force. This happens when people can't find jobs. They drop out entirely and live with relatives or live under bridges. Some go to college and run up student loans, hoping to find a job when they graduate. Some retire, if they are 62 or over. A few may be able to get on disability: people who are genuinely disabled, but would find work in a high-employment economy, which utilizes every possible worker. Some may make money doing odd jobs and getting paid in cash.

A healthy economy is supposed to employ 65-70% of possible workers: that is, adults of working age. That's where we started in 2000. We keep going down.

Factories (we still have them in the US) have unused capacity, and corporations are sitting on mountains of cash, which they don't put into expanding production, because they don't see a market for more goods and services.

Because there is no reason to invest in anything productive, that might create jobs, money tends to go to speculation: the kind of Wall Street scams that caused the 2007 financial crash.

I don't call this stagnation. I call it recession or depression. It's different from the Great Depression, because there is this huge froth of speculation on top of a real economy that is barely moving.

Remember that the entire US infrastructure needs to be rebuilt.

Remember that we need to move to different kinds of energy and to energy conservation. Solar power. Wind power. Better mass transit. Buildings that use less power and radiate less heat.

Remember that we have to face global warming: more storms, rising sea levels, more flooding and more drought. All of this requires changes to infrastructure.

If we don't do this, our entire society will crumble like the I-35 bridge.

So, there's plenty of work to be done, and a world full of people who need jobs. What is holding us back?

A society dominated by the rich and financial speculation.

Don't ever believe we can't afford to do what must be done, if society is going to survive. The rich pay far little in taxes. We can raise their taxes and rebuild America. Or we can let them keep their money and watch our society fall apart.

P.S.: I wrote, let the rich keep their money. In what sense is it their money? Property is theft, as Proudhon wrote. Great wealth is the result of an unjust and irrational allocation of resources, of laws that favor one group over another and of governments that enforce unfair laws. One person is rich because many others are poor.


Blogger delagar said...

There's no market for goods because such a huge percentage of Americans have, literally, no disposable income.

Hire some of the unemployed/ under-employed to do some of the jobs that need doing (as FDR did during the last Great Depression), put some money back into the economy, the demand for goods would rise...

But no. It's all austerity, all the way. Because Greece, or something.

8:42 PM  
Blogger Eleanor said...

delagar -- Blogger needs a like button. I like your comment.

8:35 AM  

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