[Marxism] IMF style austerity in the works for the USA?
bbauerly at gmail.com
Fri Oct 16 07:59:39 MDT 2009
>"The first unmentionable fact is the long-term decline of the dollar, a
>phenomenon that can now be considered government policy. The business
>magazine Forbes comments: ?The Treasury Department would never admit this,
>but for the time being it's in the country's interest to keep its currency
>low because it stimulates exports for the economy's manufacturing base and
>lowers the value of the debt that the Treasury is piling up.?
>"These policies are essentially economic attacks on foreign corporations
>governments, and U.S. workers.
>A cheaper dollar means an off-shoring of America?s debt onto countries like
>China and Japan ? and foreign corporations, who are large buyers of U.S.
>currency and/or debt. These foreign entities have already issued public
>warnings about this dynamic, and will not sit forever as their investments
>turn to mush. Economic retaliation should be expected.
I am having a hard time understanding why China, Japan, Russia, oil
exporting countries and the EU would push for a decline in the dollar, as
they have been doing through their rhetoric of replacing the dollar with a
new world money (which I accept the view that it won't happen anytime soon,
would not be in these countries interest to do so, and is not structurally
possible at this moment). The only explanation I can come up with is that
they understand the key role played by the US economy in the functioning of
the global economy and it is in their own economic interest to do so. Does
this make sense or am I missing something?
>Most importantly, a cheaper dollar lowers the living standards of U.S.
>workers, since the price of foreign goods will become inflated. With a
>catastrophic U.S. debt, inflation will continue for years to come. Obama?s
>silence on the issue equals a premeditated plan to pursue the above
>objectives. Workers will thus be forced into demanding wage increases that
>match this new inflation.
Yes and no. It is true that this will increase the downward pressure on
workers in the US and the comparison to an IMF austerity program is a good
one (another would be the Volker shock). However, the long term health of
the US economy depends on a weaker dollar to spur investment in US
production and to increase the competitiveness of the US economy. This will
decrease unemployment and should increase workers incomes slightly at
What is left then is the political question of how should revolutionaries
understand the current moment and the role of the dollar? The article does
a nice job of focusing us on the impact on workers in the US, but how do we
articulate the contradiction between this and the health of the economy?
How do we offer an understanding that moves beyond an association of US
economic health with workers incomes (progressive competitiveness)? How do
we increase awareness that the former is dependent on downward pressure,
inflation and increased exploitation on the latter? Also, how do we
understand and explain the impact and role of workers around the world in
relation to both the workers in the US and the movements of the US dollar?
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