US economy spluttering along paving the way for further crisis.

What no Unions and starvation wages can do; poor and working

Left: Texas, the capitalist's brave new world for the US, a job, no future, and sleeping in your car.  The working poor.

The economic scenario is not looking so good two years after the strategists of the bourgeois claim their recession ended.  For most people the crisis is far from over and there is more to come, more foreclosures, more layoffs etc.  We shouldn't be surprised at that as the capitalists measure things differently, it's all a matter of monthly numbers for them. The optimists among them expect growth of 3% this year after growing 2.9% in 2010.  Three percent seems unlikely given the state of economic affairs but it's growth so there's no recession.

Public and private employers eliminated 1.78 million workers in May as profits are maintained by "squeezing" more productivity from existing workers and by investing in "efficiency enhancing equipment" the Wall Street Journal reports. Layoffs though are on the up which exacerbates an already critical situation.  Consumer's aren't spending on consumer goods, millions of homes are empty and as this blog pointed out earlier, some analysts forecast that there needs to be 7 million more foreclosures for the housing industry to get back on its feet.

Outlay of variable capital declines as they maintain profit margins through layoffs increasing the rate of exploitation of an existing workforce and increase production, temporarily at least, by increasing constant capital outlays through labor saving machinery and technology.  But it is obvious that by maintaining productivity at a certain level and especially if you increase it as expenditure on variable capital (wages) declines, the problem of overproduction and ability of workers to consume, to buy what we produce is exacerbated.

Republican presidential hopeful, Michele Bachmann has the answer of course as we wrote in an earlier blog, "...we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level."  She says.  And Texas is a perfect example of how successful this approach can be.  The state has created almost a quarter of a million jobs in two years according to Business Week, something the state's governor, Rick Perry attributes to "low taxes and a business friendly regulatory approach." While Texas salaries for the highly skilled exceed the national average, and unskilled worker in doesn't fare too well.  Dishwashers in the state averaged $7.90 an hour in 2009 Business Week reports  which is 10.3% below the nationwide average.   Texas sewing machine operators earn 12.6% below the national average and 9.5% of hourly workers live on or below the federal minimum wage of $7.25 an hour which puts Texas at the bottom of the heap for the state with the largest population earnign no more than the minimum wage.

These and other business friendly aspects like the state executing more people than any other, 471 since 1976 (Virginia is a distant second with 109) make Texas a safe place to make money.  "That wage gap matters a lot" says one Texas economist which encourages business to migrate from higher costs states to lower ones.  This is another example of the dead end the protectionists' argument lead us to.  Buy "American" buy "Californian" etc. the idea that we should side with our own individual, state or national employers in their endless struggle to drive their competitors from the marketplace and out "profit" them. 

The shedding of Labor power will never be solved, not permanently anyway,  through the introduction of legislation like the Layoff Prevention Act introduced by Democratic Senator, Jack Reed.  It is the right of the purchaser of a commodity to sell that commodity and Labor power as a commodity is no exception. They will also not legislate their tax loopholes away as previous legislation confirms and this wage disparity will never end. Capital will always seek the cheapest labor and the best returns.

As long as the ownership of surplus value and its allocation is in the hands of private individuals as is the process that creates it, these conditions will remain the norm.