An Original Article by Kevin Cloyd, I apologize for the length of this article on the developing depression but Bush and the neocons have so screwed up the economy that just listing their screw-ups puts you at risk for carpal tunnel syndrome.
The following passage from Bernard Weiner’s “Getting Through the Coming Depression” caused me to spend most of the day thinking on the coming economic “Perfect Storm.”
“In his comments toward the end of his campaign, Obama talked about the necessity to put our citizens back to work, so it's possible that he will initiate huge infrastructure projects that will generate millions of salaries. Likewise, by moving ahead quickly with massive alternative-energy projects, he may be able to create millions of other "green" jobs.
However, to be able to start these massive projects, he will have to borrow immense sums of money from the international community (read: China, which is undergoing its own economic downturn.)”
http://journals.democraticunderground.com/CrisisPapers PART ONE; Seeking Viable Alternatives to Increase the Demand for LaborThe problem with this approach is that the corporate economic model has for the last four decades been based on removing as much human labor as possible from the process of production. During the Great Depression it took two to three hundred men with shovels and wheelbarrows to move as much dirt as two men can now move with a backhoe and dump truck.
But there are areas of the economy where there is a drastic need for additional labor; the “for profit” health care industry comes to mind immediately where administrators seek to staff hospitals, nursing homes, rehab facilities and mental health care providers with the bare minimum of “hands on” employees in the attempt to maximize profits.
An important benefit with increasing employment in the health care industry is that it can be achieved without the need for massive borrowing from abroad, simply improving the federal government mandated standards in staffing will achieve the goal of increased employment while improving the health care of millions. If there is extraordinary opposition from this sector on implementing the new standards then the threat of nationalizing Health Care, including the health insurance industry, must be made and implemented if the health care providers refuse to implement the new requirements.
A second area that needs far more hands-on labor is public education. In many school systems the drop-out rate is 40% to 45%. Simply increasing the drop-out age would reduce the drop out rate of public education creating a significant number of additional teaching positions. Reducing class sizes would also require a substantial increase in the number of teachers. Re-emphasizing art and music education and extra curricular activities like Spanish club, Math club and Speech and Debate teams would also require additional teachers while dramatically improving the quality and diversity of a public education.
A third area in need of additional labor is the environment. During the Bush administration many environmental regulations were gutted so rewriting new environmental regulations must be an early priority of the Obama administration. Enforcement of the remaining environmental regulations was nearly nonexistent during the Bush years. Rebuilding agencies like the Environmental Protection Agency is going to require substantial additional staffing. Complying with the new environmental regulations will force corporations to add more employees.
Using agriculture as an example there is a need for many small scale improvements to help the environment. For instance, maintaining field runoff to prevent both soil erosion and water pollution is a labor intensive project that current market forces and government regulations largely ignore. Rewriting agricultural policies to address this issue will create new jobs.
Yet another area of our economy requiring a much larger input of labor is livestock production with the goal of replacing giant factory farm barns with more ecologically friendly and more humane smaller scale facilities. Market forces are driving this industry away from smaller facilities. One way to achieve this goal is to rewrite agricultural regulations so they favor ecological friendly, smaller, more humane, facilities.
PART TWO; The Economic Impact of Falling Energy CostsThe current dramatic decrease in gasoline prices is the results of a dramatic decrease in the worldwide demand for gasoline. Since gasoline fuels much of the economy this dramatic decrease in prices reflects a dramatic decrease in economic activity across the globe.
When energy prices peaked during the summer of 2008 I thought that the increased costs of transportation would bring back some of the jobs that had been outsourced. Now that energy costs have fallen to levels not seen since the late 1990’s there is no economic reason for corporations to not continue the outsourcing of jobs.
Given this economic trend the new Obama administration and democratically controlled congress must reexamine America’s trade agreements with the goal of maintaining favorable but fair trade while protecting American jobs. Trade with nations that do not allow labor to organize into unions and trade with nations that do not protect their environment must be reduced by implementing tariffs. This will have a three fold benefit; it protects American jobs while it also improves the standard of living and the environments of our trading partners.
PART THREE; The Effects of Economic MisallocationsNo article on the economy would be complete without examining not only the ways to improve the economy by shifting additional resources into beneficial areas like health care and environmental protection without also examining areas of the economy that consume large amounts of money and labor that does little to improve to overall condition of our society.
Foremost in the latter category are the Global War on Terrorism and the war on drugs.
The War on Terrorism is actually a colonial war to control the petroleum of the Middle East that was marketed to the American people as “the Global War on Terrorism”. The GWOT has been a dismal failure. Instead of increasing the supply of oil coming out of Iraq the GWOT has actually functioned to reduce the supply of oil while generating enormous profits for the oil industry. Whether this outcome was an unintended consequence of the GWOT or an intended consequence provides a great opportunity to listen to your gut instincts. (My gut just said “unintended consequence my ass!”) In either case the GWOT has consumed vast amounts of labor, vast amounts of the Federal Treasury and transferred vast amounts of wealth to “Big Oil” by greatly increasing energy costs. Instead of curbing terrorism the GWOT has actually multiplied the number of terrorists wanting to attack American targets.
A better moniker for the GWOT would have been FUBAR.
The war on drugs is an expression of the lingering Puritan ethic of suppressing the human desire for instant gratification. The war on drugs is also a thinly disguised means for racists to imprison people of color. The war on drugs is also a manifestation of “the establishment’s” desire to imprison members of the counterculture. And it is also an example of the ever increasing example of the authoritarian personality’s influence on destroying the Bill of Rights. While the war on drugs has been quite successful in achieving these goals what the war on drugs has not achieved is significantly reducing to flow of illicit drugs.
The amount of labor and resources misallocated to wage the war on drugs is enormous, drug offenders account for approximately half of America’s prison population, the prosecution of drug offenses result in courts that are jammed forcing prosecutors to plea bargain cases against violent defendants, drug cases absorb vast amounts of police time both during the investigation and the prosecution phases. Imprisonment for drug offenses removes many young men from the labor market at the exact time they should be honing the skills required to become valuable employees while also misallocating excessive tax revenue to the increasingly privatized prison system.
PART FOUR; The Effect of Technological advances on the EconomyAdvances in technology have also had a powerful effect in further reducing the demand for labor. As noted earlier advances in machinery has enabled two workers with a backhoe and dump truck to replace hundreds of workers with shovels and wheelbarrows. Similar technological advances have dramatically increased the productivity of those workers once labeled “pencil pushers”.
In the mid-1980’s Main Frame computers developed to the point that mid-sized companies could use them to replace most “bookkeeping” tasks, at this same time advances in communication technologies like cell phones and fax machines greatly improved worker productivity. Bar code technology dramatically reduced the demand for labor in the retail industry, no longer did items have to have price labels affixed to them and checkout clerks didn’t have to memorize prices or punch them into the cash register. As advances in electronics, computing power and user friendly software accelerated the demand for mid-level management was drastically reduced, skilled labor for inventory control, accounting, shipping, receiving, pricing, routing, accounts receivable, account payable and maintaining the payroll was nearly eliminated.
To date the most important advancement in communication technology is the Internet. Today the world is literally at the fingertips of a savvy businessman who can buy from suppliers worldwide and sell his companies goods and services across the globe. The specifications of millions of products are just a few keystrokes away and instead of jetting across the globe you can have online meetings with vendors and clients from five continents while seated at your desk.
My wife is the IT manager for a small medical practice (around 10 doctors). As a patient progresses through the practice all diagnostic tests are electronically recorded and saved to medical records, the doctor’s descriptions of symptoms and diagnoses are transcribed and electronically entered into the patient’s medical records, all billings to Medicare and Medicaid are generated as are all billings to the patient and the patient’s insurance company. Needless to say the savings on labor for the medical practice, Medicare, Medicaid and the insurance companies is dramatic, without the Internet none of this would be possible.
PART FIVE; The Destructive Impact of Neoconservative Economic and Tax PoliciesThe implementation of neoconservative economic and tax policies under the Bush administration has also served to further weaken the American economy. By lowering the taxes on capital gains and dividends while reducing income taxes on the wealthy, America’s workers have had to shoulder a far higher percentage of the overall tax burden than in the past. Laws protecting the rights of labor to bargain for better wages and working conditions have been erased from the books or not enforced under Bush. OSHA regulations have been gutted or only enforced after a disaster. As the power of Unions has declined their ability to pressure government into passing new legislation favorable to labor has evaporated.
Deregulation, the most sacred of the many sacred cows of the neoconservatives, allows for many short term profit gains but as a long range policy insures that the excesses of greed overpower all concerns for the greater good of society. Deregulation allows corporate officers to place their own interests above the interests of the stockholders. Deregulation allows time tested accounting practices to be replaced with ”Enron accounting.” Deregulation allows economic transparency to be replaced with “off the books” transactions. Finally common sense says that if baseball, football and basketball require rule books so should banking, accounting, CEO salaries and “free trade.”
The Conclusion to Part One; Increasing the Demand for LaborThere are ways for the Federal government to both empower labor while dramatically improving healthcare, the environment, education and our food supply. To achieve this both the democratically controlled congress and the new Obama administration will have to stand up against powerful economic interests. At the same time the Obama administration and the democratically led Congress will have to “sell” these policies to the public. Keep in mind that these changes will not be seen as favorable by America’s corporate owned main stream media. President Obama did a fantastic job of grassroots organization during the campaign and may be able to use his organization to ramp up support for change at the grassroots level. Congress is an all together different critter and they are going to be less than helpful when it comes to slapping the face that’s attached to the hand that signs campaign donations.
What are the odds for success in this? With an antagonistic media and a reluctant congress, far less than 50/50.
The Conclusion to Part Two; The Economic Impact of Falling Energy Costs As the economy slides further into a depression deflationary prices will destroy much of the wealth of the Middle Class which is stored in the value of their homes. Plummeting housing values will more than offset any gains from decreased energy costs. As deflation continues more and more businesses will fail deepening the depression and causing additional unemployment. Decreased energy / transportation costs will increase the forces for additional outsourcing as transportation costs fall causing additional unemployment.
What are the odds of Obama being able to break this cycle? Given the looted Treasury Obama will inherit from Bush buying a lotto ticket seems like the wiser investment.
The Conclusion to Part Three; The Effects of Economic MisallocationsRichard Nixon was able to ease tensions with Communist China during the Cold War because he was a republican. Any similar gesture by a democratic president would have been shouted down immediately by the republicans as being “soft on communism. The Obama administration and the democratically controlled congress will face the exact same reactions (soft on terrorism, soft on drugs) if they attempt to disengage from Iraq or reduce criminal penalties for drug possession.
What are the chances of ending these wasteful and foolish policies? About the same as the chance of catching a snow ball in hell.
The Conclusion of Part Four; The Effect of Technological Advances on the EconomyOver the last two generations very few of the returns from increased productivity from technological improvements have gone to the workers. Without the federal government acting to level the playing field between labor and management this trend will continue. While Obama did an excellent job of turning out support at the grassroots level I have little faith that Congress will dare bite the hand that pays for their reelection campaigns.
The chances that any reforms will be substantive aren’t much better than the chances of being dealt four of a kind at the poker table.
The Conclusion to Part Five; The Destructive Impact of Neoconservative Economic and Tax PoliciesObama's plan to allow the Bush tax cuts to the wealthy expire is a step in the right direction but rebuilding the many regulatory agencies gutted by Bush is going to be a long and difficult task that even when completed will not have an instant effect on growing the economy.
Just as the Bush administration exhibited their flagrant disregard for the citizens of New Orleans in the aftermath of Hurricane Katrina, our current dire economic situation is a direct and predictable result of the neoconservative’s flagrant disregard for the well being of the average American citizen. At every opportunity Bush and his neoconservative allies have screwed over the average American citizen in favor of “the haves and the have mores.”
The economic crisis is a direct and predictable result of deregulation. Throwing out the economic “Rule Books” and replacing them with “deregulation” has resulted in the near destruction of several vital sectors of the economy including the Middle Class and the working poor, the real estate sector, banking, lending, investment companies, segments of agriculture, the Big Three American automakers, and too many more to list.
When you drop a platter and it shatters it’s impossible to predict where the many shards will land, all you can do is clean up the mess after the crash. Currently we are in no position to attempt to design a way to rebuild the economy simply because we have no idea what will be left when we start rebuilding after the crash, up to, and including, the solvency of the government of the United States of America.
The Great Depression lasted for half of a generation and contributed greatly to the causes of World War II. Don’t expect anything very much different from this depression.
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