Serious Strategists of Capitalism are Beginning to Panic.

Richard Mellor

Afscme Local 444, retired

As the state forks over $4.5 billion of taxpayer money today to subsidize agriculture, most likely agribusiness, due to the Trump tariffs, debt is again reaching massive levels. This article below published at Forbes.com confirms what Michael Roberts has been saying for some time in what he describes as the Long Depression which is the title of his last book. It is also what we have been saying for some time on this blog. We have stressed also that Trump has exacerbated this situation as he has laid the “whip of the counterrevolution” on the backs of the US working class and workers internationally.

The working poor have for a long time been major sectors of the US poverty statistic as they earn too much to qualify for some of the meager social benefits that US capitalism provides for its workers that it claims to love so much. People work three jobs and still can barely make it. One job might provide health care. The problem is the working poor and the truly unemployed poor are constituting a larger sector of the working class. During the Great Recession people were defaulting on home loans and paying car loans as they could at least sleep in their cars and get to work.

This author is a strategist of capitalism. We can see that there are sections of them beginning to panic, not simply over the political crisis and the end of an era in which the two parties of capitalism had a monopoly, but the more strategic thinkers like this author fear revolutionary consequences.  After giving some statistical examples of the poverty and declining conditions of US workers he writes: "What’s genuinely astonishing to me is that the private sector doesn’t see the immense danger in all this—not simply the prospect of a collapse from enormous household debt loads, but the prospect of civil unrest after another huge correction like the one in 2008. Our current course is unsustainable"

He is right and he is warning his class of the dangers ahead.

I was reading just yesterday that union leadership representing Disney workers has just made a tentative agreement on the latest contract covering their members and are boasting that the workers will reach $15 by 2021 and hoping they accept it.  Given that the leadership offers no road to a real victory and gains that will lift people out of poverty, the members may well do so, but who knows in this present period. We did not foresee the teachers/educators strikes and that movement and their actions have changed the game and frightened the union hierarchy as much as the bosses.  Contracts like these will not halt halt the anger and the massive social crisis that this blog has explained is inevitable as the crisis of capitalism deepens.

The agreement is a another pathetic example of the union hierarchy’s policy of “strategic retreat”, a recognition that they cannot and will not stop the decline in living standards of their members and will not derail the social upheaval that the author below correctly predicts. $15 an hour is presently poverty wages in California and most of the US and will continue the trend as by 2021 nothing will improve. The author suggests some meager measures that can be taken by the capitalist class to avoid this "civil unrest". But this is not possible in the best of times and certainly will not be possible when the next crash is upon us which is not too far down the Road

It’s important for working people to read the serious capitalist journals like the Wall Street Journal, Financial Times, Business Week etc. and more importantly to read between the lines, read it from a class point of view and get some understanding of how they are thinking and also the differences and disagreements among them.  For those of us that write for and support this blog, this view from a serious strategist of capitalism simply confirms for us that the phone conference discussions we have about the week’s events and the possibilities ahead have allowed us to keep our heads above water. If you want to join our conference calls please contact us at: we_know_whats_up@yahoo.com  and we can talk.

America's Real Economy: It Isn't Booming

Peter Georgescu 

Walter Holm, age 67, a Vietnam veteran is living at Transitions, a homeless recovery center in Columbia, SC in 2016. There are other aging veterans who are homeless and looking for work, but not finding it.  (Photo by Linda Davidson / The Washington Post via Getty Images)

Ostensibly, for the past ten years, our economy has been recovering from the 2008 collapse. During the past few years, our comeback seems to have gained momentum. All the official indicators say we’re back in boom times, with a bull market, low unemployment and steady job growth. But there is an alternative set of data that depicts a different America, where the overlooked majority struggles from month to month.

The Nation recently published a stunning overview of the working poor and underpaid. One of the most powerful data points in the piece described how empty the decline in unemployment actually is: having a job doesn’t exempt anyone from poverty anymore. About 12% of Americans (43 million) are considered poor, and yet they are employed. They earn an individual income below $12,140 per year, and slightly more than that for a family of two. If you include housing and medical expenses in the calculation, it raises the percentage of Americans living in poverty to 14%. That’s 45 million people.

At that level of income, there’s almost no way to pay for food and shelter in any sizeable American city. That means people now can both be employed and homeless. Rajon Menon writes, for The Nation:

In America’s big cities, chiefly because of a widening gap between rent and wages, thousands of working poor remain homeless, sleeping in shelters, on the streets, or in their vehicles, sometimes along with their families.

Fewer and fewer people have savings to weather time between jobs or an emergency expense. A third of the U.S. population has no savings and another third has saved less than $1,000. Two-thirds of American households, by this measure, are desperately scrambling to make ends meet from check to check. Nearly half the American population earns too little to live on comfortably:

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One-third of all workers earn less than $12 an hour and 42% earn less than $15. That’s $24,960 and $31,200 a year. Imagine raising a family on such incomes, figuring in the cost of food, rent, childcare, car payments (since a car is often a necessity simply to get to a job in a country with inadequate public transportation), and medical costs.

Even in households that combine income from two wage-earners, it’s rarely enough to live on without anxieties about money. It takes an average of a little more than $100,000 per year now for a household to be able to live without anxieties about money.

Slow and steady inflation has eroded buying power over the past decade. According to The Nation, the minimum wage rose to $7.25 by 2009, but since then inflation has eroded 10% of its buying power. So this year, someone will have to work 41 additional days to make the equivalent of the 2009 minimum wage.

• Healthcare costs are projected to go up 20% in the coming year.
• Credit card debt has crested at a trillion dollars and is projected to increase at 4.7% by 2020.
• Wages have been increasing by only 2.9% per year.
• For the young, education debt has reached a record $1.52 trillion.

How long is this sustainable?

What’s genuinely astonishing to me is that the private sector doesn’t see the immense danger in all this—not simply the prospect of a collapse from enormous household debt loads, but the prospect of civil unrest after another huge correction like the one in 2008. Our current course is unsustainable. And for all the proposals for changes in public policy to ameliorate income inequality, only the private sector can get the nation on a better track by raising wages, increasing benefits and investing in new ventures and expanded markets.

There are numerous ways in which our wealthiest companies could help change the course of our economy. Here are some suggestions from Larry Thompson, former executive VP for PepsiCo, and his coauthors writing for Fortune magazine:

• Get involved in early education for children of employees. Programs that start at birth can lift their earnings by up to 26%. At PNC Financial Services Group, their Grow Up Great program has served over 2 million children throughout the U.S., through grants to organizations that support early learning in math, science, and the arts.
• Fund higher education for existing employees. In collaboration with Southern New Hampshire University, Anthem Insurance (ANTM, -0.06%) recently began making associate’s or bachelor’s degrees available at no cost for 50,000 eligible workers. Another company, FedEx, partners with nearly 20 higher education institutions including Western Governors University.
• Businesses also should look to re-employ the long-term unemployed, Frontier Communications has hired more than 250 of the long-term unemployed in 2014 alone by eliminating most qualifications and simply observing how well applicants communicated.

These initiatives only scratch the surface, but they are exactly what all companies need to be thinking of doing. If every employer in America came up with even just one modest step—higher wages, regular profit sharing, tuition reimbursement—to help workers spend and save more, the nation would begin to right itself economically. It needs to happen now. We’re running out of time.

Peter Georgescu is the author of Capitalists Arise! You can follow him at Linked In and Twitter.
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