BY JEFF MACKLER
The U.S. working class, the nation’s poor and oppressed, and the youth won a resounding victory on Election Day 2014 when they cast their “votes” for the most popular candidate of all—“None of the Above.” Indeed, “None of the Above” won the much-hyped midterm election “contest” hands down, when 64% of eligible voters declined to participate in the orchestrated U.S. charade that poses as real politics.
The 34 percent Election Day turnout, the lowest in 72 years, registered in large part the mass dissatisfaction with the policies of the twin parties of capitalism, who spent a combined and record total of $4 billion in efforts to turn out their supporters. The stunning election returns confirmed a number of national polls indicating that Congress’ approval ratings a few months before the elections had sunk to near all-time lows, at 14 percent or less. An earlier poll put they figure at 8 percent!
The figures are consistent with a Gallop Poll finding a year earlier, in which “60% of Americans say the Democratic and Republicans parties do such a poor job of representing the American people that a third major party is needed. That is the highest Gallup has measured in the 10-year history of this question. A new low of 26% believe the two major parties adequately represent Americans.”
The traditional “lesser evil” charade, in which the Democrats are portrayed as more receptive to working people than the Republicans, gave way to a massive rejection of both parties. The under-30 youth vote participation declined from 19 to 13 percent, with similar dramatic declines in the participation of Blacks and Latinos, who registered unprecedentedly high turnouts in 2008—a higher percentage than white voters.
This growing disillusionment with capitalist politics is in direct proportion to the concerted bipartisan attacks launched against working people on every front at every level of society. Rigged figures on unemployment notwithstanding, participation in the U.S. workforce, according to the Bureau of Labor Statistics, stands at a record low over the past decade, registering 62.7 percent in 2014. Wages during the same period have been in steep decline. Part-time, non-union, minimum-wage, no-benefits, and sub-standard working-conditions jobs are increasingly the norm.
While the quality of life of the nation’s working masses has been driven down to new depths, the ruling rich have prospered as never before, with the rich-poor gap among the highest in earth. By every measure, government policy has been to transfer trillions of dollars and vital social services of every kind from working people to the miniscule minority ruling elite—whether it be to their banks, insurance companies, corporations, military-industrial complex, or any other private for-profit institution that, in the context of the world capitalist crisis, cannot operate other than at the expense of the people.
It is not just the American ruling class that robs the working masses but the crisis-ridden ruling classes across the globe. Europe’s economy is stagnant or in decline. The same with Japan. China’s growth has significantly slowed, as have the other BRICS nations (Brazil, Russia, India, China and South Africa). Africa and the even poorer regions all suffer the consequences as the rich plunder their resources, exploit their people and bring war and devastation everywhere. There are no exceptions!
At the level of the world economy, again with no exceptions, the crises are “resolved” through the imposition of massive austerity programs implemented with abandon, as social services, health care, education, wages, and working conditions are continually eroded, regardless of which capitalist party is in power.
A late November New York Times headline that reads, “Banks are Fined $4.5 Billion in Currency Investigation” is but the tip of the iceberg.” The offenders include the top U.S. banking institutions, JP Morgan Chase and Citigroup, who were charged with and admitted to “conspiracy to manipulate foreign currency markets. “No leaders or executives were charged with wrongdoing,” according to The Times.
Last year the same banks and several others were fined to the tune of hundreds of billions of dollars for misstating the value of the mortgages and bonds they sold to the government during the 2008-9 corporate/banking “bailouts.” The fines paled in comparison to the trillions of dollars gifted by the Federal Reserve to “prevent” a meltdown of the U.S. financial infrastructure. Again, despite the trillions stolen, no one went to prison because the government’s “regulators” and “investigators” were partners in the rip off—cut out of the same class of interchangeable private and government functionaries. Yesterday’s corporate bankers routinely become today’s “investigators” of wrongdoing and visa versa.
Political activists who are beginning to challenge “the system” must ask, “Why is this happening today?” What is the reason for the crisis? Does it stem from the base greed of the trillion-dollar ruling rich and their billionaire underlings, who spend hundreds of millions on Andy Warhol paintings of Marilyn Monroe and Elizabeth Taylor auctioned off at Sotheby? Can President Obama be reduced to a cheap, lying politician whose every well-publicized “progressive” utterance is contradicted by his heinous deeds?
Or even a more serious question: Are the elite few, the “one percent,” (actually less than 0.1 percent) who really rule the country, evil because they crave ever more trillions for their bank accounts? Or is there something more fundamental that goes to the root of the crisis?
A worthy article in the Business Section of the Nov. 13 New York Times offers an unusual insight into what amounts to a debate between an apparently critical writer, Jesse Eisinger, and his seemingly intended prey, Peter Singer, the top officer of the $25 billion hedge fund, Elliot Management. Eisinger, a regular Times columnist, economic specialist, and Pulitzer Prize-winning investigative journalist, who was ahead of the curve in predicting at least in part the 2008 economic meltdown, seemingly takes issue with a recent Singer letter to his hedge-fund investors.
Singer wrote: “Nobody can predict how long government can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth.” Singer continues: “We do not think this optimism is warranted and we think a lot of this optimism is cooked or misleading.”
To set the stage for what initially appears to be a stinging rebuttal, Eisinger refers to Singer as having an “Edvard Munch moment”—an allusion to the 19th-century artist’s agonized or existential series of works called “The Scream,” which evoke images of looming catastrophe. Eisinger similarly rejects the notion that the “zillionaire’s spending billions on inflated real estate” is a “harbinger of Zimbabwe.” The latter is a reference to Zimbabwe’s November 2008 hyperinflation rate of 79.6 billion percent at a time when the angered imperial powers cut off all credits to the Mugabe government to punish it for nationalizing the land of the previous white colonial settlers. Mugabe printed untold sums of currency to pay the nation’s bills, quickly rendering its currency worthless.
But after briefly debunking any notion that Singer might be on to something real, Eisinger writes, “There really is a lot that seems ‘fake’ about the economy and markets. The paranoia is rooted in troubling episodes.”
Eisinger’s list of troubling “episodes” is extensive. “Then came the 2008 crash,” he writes, “and a series of government-orchestrated moves that relied on the collective suspension of disbelief. Take the 2009 stress test of the country’s largest financial companies. It was a policy miracle, the crowning achievement of the rescue from the crisis. The market was still panicking months after the government and the Federal Reserve had lowered interest rates to zero, engaged in extraordinary lending facilities, infused billions in equity of all the top banks, taken over the American International Group and Fannie Mae and Freddie Mac and allowed the two top investment banks, Goldman Sachs and Morgan Stanley, to tap the Federal Reserve lending window.”
Eisinger adds that, in point of fact, the whole banking and hedge-fund industry understood that any real stress test of the banks at that moment would have revealed that they were all “insolvent.”
In short, Eisinger, a reporter for ProPublica, an independent non-profit public interest newsroom that supports investigative journalism, reveals in a few sentences that the capitalist government and all of its key financial institutions bailed out the nation’s leading but bankrupt banks, insurance companies, and related private institutions. The rough total amounts to some $30 trillion dollars!
And where, we should ask, did this estimated $30 trillion come from? Was it hidden away in Fort Knox in the form of gold, as was the case before the U.S. was compelled to abandon the gold standard in 1971? In truth, today there is no correspondence between the value of gold or any other commodity, and the currency in circulation. The only approximate measure of “value” today is the U.S. dollar, the world’s official reserve currency, that is, the currency that most of the world recognizes as the basic medium of exchange or trade for all commodities.
But here a question of critical importance is posed. Can the U.S. government or Federal Reserve simply print money or issue paper bonds to meet its financial obligations—money that has no basis in value other than the “good faith and credit” of the U.S. government? That was the case with the $30 trillion bailout!
The government literally printed the money or issued bonds (promises to pay). For the sake of argument, could the U.S. simply and instantly pay off its unprecedented national debt of $17 trillion, an amount exceeding its total GNP, by ordering its technicians to rev up the presses to print $17 trillion in cash or in government bonds? If this were the case, chaos would ensue instantly and everywhere.
But this is a subject for another article, including whether or not the unchecked printing of paper money poses, in time, the threat of inflation levels never before seen, perhaps closer to the Zimbabwe type, or perhaps a bit less! If every nation could simply pay off its massive debts in a single day of printing money, the world would be a strange place, to say the least.
But the unprecedented 2008 financial crisis was “resolved,” so they say, when the government gifted the rich trillions of dollars in bailout funds. They purchased essentially worthless bank-held mortgages at full value—i.e., at the value reported to them by the banks—not the real value. Further, by reducing interest rates charged to banks for loans to zero, any and all of the top corporations and banks virtually instantly appeared at the government’s trough, if for no other reason than they understand that the government’s free money could be re-invested almost anywhere at rates far greater than zero percent.
Eisinger curiously ends his “rebuke” of billionaire Singer by noting a truth that cannot be denied. He writes, “There has been a shift from making investments for the health of the company and the economy toward cutting jobs and elevating share prices … No one can say how long this can go on. But it’s not sustainable. At the risk of sounding like a Singerite, doesn’t it sound just a bit—what’s the word?—fake?” Well said!
Here we get to the nub of the matter—an explanation that best reveals why the ongoing and deepening world economic crisis has nothing to do with the posturing public politics of the Democrats or Republicans, whether they be of the “liberal,” “conservative,” or ultra-reactionary Tea Party variety.
The capitalist system is mired in a long-term economic crisis because of its very nature—the absolute imperative to expand and grow or die. Today’s giant corporations are in constant battles with each other on a world scale to secure markets for their competing commodities. Each technological innovation in the productive process employed by one is quickly matched or exceeded in productive capacity by the rest. What was a state-of the-art auto factory yesterday becomes obsolete within months.
The same holds for every sphere of capitalist production. Those who employ the best, most efficient, cost-saving technologies (as well as cheapening the cost of labor) win the game, that is, until the remaining competitors are either compelled, at great expense, to introduce the next level of technology or go out of business. Wall Street’s current return to massive mergers and acquisitions is nothing less than one of capitalism’s imperatives to consolidate the power to dominate by absorbing the productive facilities of lesser competitors. Small corporations are daily eaten and digested by their larger superiors.
In the same manner, the introduction of each new technology has the effect of substituting super machines for human labor. Hence, we see the worldwide rise in unemployment and the associated worldwide decline of the manufacturing sectors in the world’s advanced capitalist nations.
The shift to low-wage poor nations is a prerequisite to survival. As Marx explained long ago—and his words today have come back to haunt the floundering capitalist world—the inherent “law of the tendency of the rate to profit to fall” is central to the explanation for the system’s periodic and unavoidable crises. Capitalists worldwide understand full well that investing in yet another round of technological innovation to beat their competitors is less and less profitable, if at all. This was the case with the world’s once largest corporation, General Motors, whose negative profit rates forced it to declare bankruptcy.
Eisinger hits the nail on the head when he proclaims an astonishing and rarely reported fact: “The largest United States corporations took 91 percent of their earnings from 2003 to 2013 and plowed them into buying back their own stock or paying out dividends….” This is the essence of what he means by the shift from “making investments for the health of the company and the economy toward cutting jobs and elevating share prices.”
Why invest in building relatively unprofitable factories that produce commodities that have already saturated world markets and whose rate of profit is ever declining? Why hire workers to do this? This simple statistic, “91 percent,” goes a long way in explaining why today’s U.S. stock market stands at an all-time high when jobs are at an all time low—since the last Great Depression.
Historically, capitalists “plowed” some 15 percent of their earnings into speculative ventures like the stock market and banking institutions. The rest went into ever new and expanded “means of production”—that is, giant factories and new machinery to extract and process needed raw materials. These required workers in the tens of millions and more.
But in today’s world of “casino capitalism,” stock market, hedge fund, and other such speculative financial ventures that play with capital are the rule, not the exception, and ever more so when the government essentially offers free money to the corporations that do so.
For the past seven years, to supposedly save the economy from collapse, the government’s policy of “quantitative easing,” or buying near worthless bank mortgages and bonds at massively inflated prices determined by the banks themselves, has poured trillions of dollars into the coffers of the major banks and corporations, which, in turn pour it into the stock market, thus driving indices to historic highs that result in incredible gains—on paper, that is. The fortunes of the ruling class are thus “grown” massively while they produce in the real world of jobs and commodities, in proportion, little or nothing!
The “success” of this American “model” today has led to virtually the entire capitalist world following suit. Japan’s new Prime Minister Shinzo Abe’s economic formula, dubbed “abenomics,” was patterned after the U.S.’s “miraculous recovery.” Massive Japanese Central Bank subsidies to failing corporations were combined with massive attacks on workers, including a major sales-tax increase aimed at robbing the many to save the few.
The result? Initially, but briefly, a terrific success took place for the banking elite. But today? Japan’s second quarter growth declined 7.3 percent, followed by a 1.6 percent decline just announced for the third quarter. Similar figures have been posted for virtually all of Europe, matched by major declines in growth in nearly all of the BRICS nations. China’s growth rate has declined by close to 50 percent.
“Recession in Japan Stirs Worry in Europe” was the mid-November headline for a New York Times article that stated, “The U.S. is about the only growth beacon in the global economy. … But it looks like the rest of the world is going to be relying on the U.S. as consumer of last resort.”
But is it? Another Times article few days later, Nov. 22, headlined, “Is the Economic Outlook Great or Awful?” noted several major weakness in the so-called U.S. recovery, including a major drop in the price of gas and oil stemming from both a decline in world demand and a likely domestic slowdown as well. The article notes that previously optimistic estimates in U.S. GDP growth have been reduced from 3.5 percent to 2.5 percent.
Furthermore, a Nov. 21 National Employment Law Project report, entitled, “Manufacturing Low Pay: Declining Wages in the Jobs That Built America’s Middle Class,” included some startling figures:
• “Nine out of ten Americans believe that a strong manufacturing base is very important to our country’s standard of living, according to a poll conducted by the consulting firm Deloitte for the Manufacturing Institute. When asked what type of facility they would support to bring jobs to their community, a manufacturing plant was at the top of the list.” But the report continues:
• “Manufacturing wages now rank in the bottom half of all jobs in the United States.”
• “While in the past, manufacturing workers earned a wage significantly higher than the U.S. average, by 2013 the average factory worker made 7.7 percent below the median wage for all occupations.”
• “The perception that manufacturing jobs are highly paid disguises how many workers are stuck at the bottom. Today, more than 600,000 manufacturing workers make just $9.60 per hour or less. More than 1.5 million manufacturing workers—one out of every four—make $11.91 or less.”
• “Manufacturing wages are not even keeping up with inflation. Real wages for manufacturing workers declined by 4.4 percent from 2003 to 2013—almost three times faster than for workers as a whole.”
Perhaps a final comment on the economic recovery is in order. Median-adjusted income for 2013 was $2100 less than when President Obama took office in 2009 and $3600 lower than when President Bush took office in 2001.
President Obama’s $30 trillion bailout to corporate America was accompanied by devastating attacks on virtually all social programs as well as unprecedented attacks on the wages and quality of life of the American working class—euphemistically called “the middle class” by corporate America’s media pundits and politicians. The “new jobs” claimed by Obama are overwhelmingly low-wage—often minimum-wage—zero-benefit, part-time, and temporary. Banks and corporations routinely stuff their coffers with trillions of dollars more by utilizing rigged “laws” written by their government “representatives” at every level to collude with banks around the world to establish tax havens to shelter their profits from U.S. taxation (see several reports from the Bureau of Economic Analysis).
Separating the truth about the functioning of the corporate world from the “fake” world created by its paid media defenders is a not an unimportant issue. Capitalism’s “democratic” election antics—today virtually year-round, corporate-organized, and almost theater-like spectacles—are designed to camouflage the daily theft from working people of their livelihoods.
The unprecedented rejection of this reality in 2014 was an act of wisdom of the great majority. In time it will be reflected in massive working-class mobilizations in the streets and at the point of production, and in the formation of a mass fighting workers’ party that will challenge the capitalists for government power and open the path to socialism. This fundamental organization of the working class and all its allies requires the patient building of a revolutionary socialist party deeply rooted in the day-to-day struggles of workers everywhere.
Photo: Wall Street protest against 2008 bailout of the banks. By Tony Savino / Socialist Action