America’s Great Recession – Where Has All the Money Gone?Posted: May 12, 2012
Politicians of both parties, talk show hosts and news commentators all agree that the U.S. can no longer afford Social Security, Medicare, education, or union wages. In a word, we can’t afford each other. The only cure for the recession is poverty.
Yet this is a rich country in resources, and even in cash. After all, the clever speculator who sold the last overpriced home just before the bubble burst still has that cash. The hedge fund tycoon who was rescued by the Federal Reserve is back in business, and business is doing well! Even the Federal Reserve, which forked over some $16 trillion in emergency loans on a moment’s notice has been pretty much paid back. The Great Recession, which was declared “over” in July, 2009, has somehow been handed intact to the rest of us, along with lectures about our inability to go get a job.
How did this happen? More, who’s to blame?
Normal recessions or depressions result from a collapse of demand for the goods and services trying to be sold. The main market for American (and World!) goods and services has been, for many years, the American consumer, whose income has been flat for some 40 years, while the productivity per worker, partly because of automation, has steadily increased – more goodies for the same hours of work. Have you noticed whenever productivity raises have been reported in the media, the report has been followed by, “economists have applauded the increase, pointing out that demand will increase from the increased purchasing power of America’s working people?”
America’s workers never got the wage increases – because of weakened unions, failures of politicians to raise the minimum wage, chronic unemployment, competition from third world low-wage outsourcing, and the propaganda of corporations. We all like wage increases, but they have an even more important purpose in any economy – providing the motor that keeps an economy growing. Contrary to the blather of Capitalist America, wealthy businesses are not the “Job Creators” that elite politicians like Mitt Romney – and many Democrats – claim: no employer hires people to make products that consumers want, but can’t afford, to buy.
In the 1950’s Henry Ford 2nd was escorting the president of the Auto Workers Union, Walter Reuther, around Ford’s new automated factory, pointing out the marvels of the new assembly line, and asked “Well Walter, how’re you going to sign up these machines in your union?” Reuther replied “Well, Henry, how’re you going to sell cars to them?” It was Ford’s father, who initiated the $5 day,( a 113% raise), that made it possible for workers to buy the Model T that they were making. Why have industrialists forgotten that lesson in basic economics?