[Marxism] More on the "boom"
lnp3 at panix.com
Mon Jun 28 10:11:59 MDT 2004
In Defense of Marxism website
The paradox of prosperity
By Michael Roberts
The pundits of capitalism are talking up success. In the US, each piece
of economic data is greeted with enthusiasm. All the ‘experts’ on the
business TV channels and in the newspapers are crowing that the American
economy is really motoring. The officials in the Bush administration
grin with pleasure at all this talk of economic recovery.
And it is not just in the US that economic growth is on the lips of the
apologists of capitalism. After 14 long years of stagnation and
deflation, Prime Minister Koizumi of Japan tells his parliament that
Japan is now growing even faster than the US. Profits are up and
consumer and company debt is coming down. It’s all looking good in the
land of the rising sun.
And indeed, at first glance, the economic figures seem to justify all
the euphoria. In the first quarter of this year, the US economy expanded
at an annual rate of 4.5%. Japan rocketed up at over 6%. Similarly
average household incomes were reported to have risen at a 5% rate in
the first three months of this year and as we complete the half-year,
that rate has hardly slackened. And it is not just consumer spending.
Jobs are coming back in the US and Japan. For three years, Japanese and
American workers have suffered over 3million job losses as corporations
cut costs and shifted factories and operations overseas to places like
China, India and Eastern Europe.
But now in 2004, the jobs are coming back – so the figures argue. Since
April, over 700,000 extra jobs have been created in the US. At the same
time, the average wealth of the American, British and Australian
households has risen as house prices continue to rocket up. Much of this
extra wealth has been spent as families take out larger mortgages and
spend the difference.
So the crisis is over? After the threat of major recession back in 2001,
has the capitalist world turned the corner? Well, all is not what it
seems. First, Europe is conspicuous by its absence from this tale of
joy. In the heart of Germany, France, Spain and Italy, unemployment
remains stubbornly high at anything between 8-15%. Economic growth is
below 1% in Germany and barely above 2% in France or Italy. And in
Germany house prices are actually falling despite mortgage rates below
3%! As a result, German and French households are tightening their
belts. They are keeping control of their spending.
But that’s not the full story. The reality is that America’s prosperity
is skin deep. In the heartland of America there is little sign of
increased income, rising house prices or more jobs. Much of these most
desirable things are to be found on the coasts of California or New
York, or in the desert resorts of Las Vegas or Tucson. In Detroit,
Cincinnati and Chicago, there is little joy.
The reality of daily existence for even so-called middle America or for
that matter middle England is two parents working long hours in order to
obtain sufficient income to get decent health insurance, good schools, a
reliable car and pay for a big mortgage and the annual holiday. There is
no end to this process for many families with children. US healthcare
premiums have surged over 40% in the last three years and another 15% is
in the pipeline for this year. And increasingly, there is the prospect
of working until you are 70 in order to get a decent pension, now that
contributions have been squandered in the stock markets by pension fund
The prosperity that is talked about goes to the top only. Take the US.
In the 1950s the chief executive of the average corporation earned about
40 times more than the average worker. Outrageous you might say. Well,
in the year 2000, the average CEO earned 530 times the wage of the
average worker. And even after the clampdown on corporate executive pay
following the scandals of Enron etc., and the recession of 2001, CEOs
are still ‘earning’ 250 times more!
Basically the working class of America has not benefited from the
economic recovery since 2001. According to official figures, their share
of total national income has fallen to its lowest level since 1951.
Indeed, the average salary of a US worker dropped to $35,310 last year
from $44,570 in 2001! And the workers of Indiana, Ohio, Illinois and the
other big industrial states of the US still see no new jobs that can
replace the ones they’ve seen disappear over the last four years, many
of which have gone overseas to China, India, etc.
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